Xinhua | September 14, 2024
The China Securities Regulatory Commission Friday announced an administrative penalty on PwC for failing to live up to its obligations in auditing annual reports and bond issuance of Evergrande Real Estate Group.
The commission announced the confiscation of PwC's revenue of 27.74 million yuan (about 3.91 million U.S. dollars) related to the Evergrande audit case and a fine of 297 million yuan, bringing the total to 325 million yuan.
The penalty comes as PwC failed to meet its auditing responsibilities for 2019 and 2020 annual reports and bond issuance of Evergrande Real Estate Group, according to the securities regulator.
PwC violated multiple audit standards and requirements during the audit process, did not make correct professional judgments, and failed to detect significant and widespread financial fraud, the commission said.
In a separate statement, the Ministry of Finance said it will impose fines totaling 116 million yuan on PwC, confiscate its illegal gains, order a six-month business suspension, revoke its Guangzhou branch, and issue an administrative warning.
Li Baixing, a professor of accounting at the Capital University of Economics and Business in Beijing, said the penalty demonstrates the authorities' strict supervision of and zero-tolerance attitude toward the illegal activities of accounting firms.
Punishment is a means to an end, but not an end, said Dai Deming, a professor of accounting at the Renmin University of China. Improving the quality of practice at accounting firms is a persistent challenge that demands the efforts of both the firms and their regulators, Dai noted.