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PwC to Face Heavy Penalty from CN on EVERGRANDE Audit Scandal; Liquidators Considering Commencing Lawsuit: Rumor
In mid-March, the China Securities Regulatory Commission (CSRC) accused Evergrande Real Estate, a subsidiary of EVERGRANDE (03333.HK), for recording an exaggerate profit of RMB564.1 billion in the 2 years prior to the default in 2021, and demanded correction and imposed a fine of RMB4.175 billion, with founder Hui Ka Yan being banned from entering the securities market for life.

PwC did not warn about EVERGRANDE's financial situation in its 2019 and 2020 results reports. Financial Times quoted insiders and retired partners as saying that the PwC's partners were concerned that the company is facing the largest amount of fines and other penalties in its history in China, and that there is internal strife among the company's senior management.

According to the report, PwC's partners expect the firm to face disciplinary action over EVERGRANDE's audit, surpassing 2023 fine of RMB212 million imposed on its peer, Deloitte, for notable audit deficiencies for CITIC FAMC (02799.HK), with its Beijing office being closed down for 3 months.

Last Friday (17th), state-owned enterprise (SOE) PICC GROUP (01339.HK) announced a change of accountant, with Ernst & Young replacing PwC, which was appointed for only 3 years.

An insider close to the liquidators said that liquidators are considering suing PwC.
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