PwC Hong Kong is withholding partner payouts worth hundreds of thousands of dollars each after regulators dropped a record HK$1.3 billion (roughly $166 million) penalty on the firm for its role in auditing China Evergrande Group.
The Accounting and Financial Reporting Council (AFRC) fined PwC HK$300 million and slapped the firm with a six-month ban on accepting new public interest entity clients. On top of that, the Securities and Futures Commission (SFC) ordered a HK$1 billion settlement designed to compensate minority shareholders who got burned by Evergrande’s misstated financials.
The audits that missed a $300 billion problem
PwC’s Hong Kong operation signed off on Evergrande’s financial statements for fiscal years 2019 and 2020. Those statements, regulators concluded, were materially misstated. Evergrande’s liabilities exceed $300 billion. The company became the poster child for China’s real estate debt crisis, eventually collapsing into liquidation.
This isn’t the first time PwC has been penalized over Evergrande. In September 2024, PwC Zhong Tian, the firm’s mainland China counterpart, was fined 441 million yuan (approximately $62 million) and hit with a six-month suspension by Chinese regulators.
