PwC lost Big China clients after Evergrande-linked probe

PricewaterhouseCoopers LLP lost a handful of Chinese clients in May alone, adding to a list of more than a dozen firms it stopped auditing in the country in the last two years. 

China Taiping Insurance Holdings Co. said on May 27 it appointed KPMG as its auditor for 2024 after PwC retired, just as China Merchants Bank Co. replaced it with Ernst & Young. China Railway Group, China Electronics Huada Technology Co. and People’s Insurance Company (Group) of China Ltd. are among the others that changed auditors. 

The latest business losses underscore the challenges for PwC as regulators examine its auditing role for China Evergrande Group. The firm has come under intense scrutiny after China launched one of the biggest investigations into financial fraud in history.  

Those Chinese companies contributed to at least 150 million yuan ($20.7 million) in fees, based on their annual filings. In addition, Eastroc Beverage Group canceled a shareholder vote that would have reappointed the firm as its auditor. 

Authorities said Evergrande’s main onshore unit, Hengda, overstated its revenue by 564 billion yuan in the two years through 2020. Chinese government authorities are probing PwC’s involvement as a former auditor for the real estate giant, people familiar said in March. A representative for PwC declined to comment on Wednesday. 

In recent years, PwC resigned as an auditor from at least 10 Chinese property companies, including Sunac China Holdings Ltd., Shimao Group Holdings Ltd., Sino-Ocean Group Holding Ltd. and Agile Group Holdings Ltd.