PwC has been fined a combined HK$1.3bn ($166mn) and banned from taking on new clients in Hong Kong for six months after regulators found serious failures in its audits of Evergrande. The penalties, announced by authorities and reported by Financial Times, mark one of the most significant regulatory actions against a major global accounting firm in recent years.
The Securities and Futures Commission said PwC committed “serious breaches of auditors’ professional duties” during its review of Evergrande’s financial statements in 2019 and 2020. In a parallel move, the Accounting and Financial Reporting Council imposed a six-month ban preventing the firm from accepting new clients, describing the audit shortcomings as “egregious.” Two former PwC partners were also fined a total of HK$10mn for their roles in the misconduct.
As part of the fallout, PwC’s Hong Kong division will set aside HK$1bn to compensate minority shareholders of Evergrande, many of whom suffered significant losses following the developer’s collapse. The crisis at Evergrande, which defaulted in 2021, exposed deep financial strains in China’s property sector and sent shockwaves through the broader economy, where real estate accounts for a substantial portion of household wealth.
Regulatory scrutiny of PwC has intensified in the wake of the scandal. In 2024, mainland Chinese authorities concluded that the firm’s local operations had “concealed or even condoned” fraud at Evergrande in the years leading up to its downfall. The Hong Kong penalties now add to the mounting legal and financial consequences facing the firm.
PwC acknowledged the shortcomings in its audit work, stating that its performance “fell well below” both internal standards and stakeholder expectations. The firm said resolving the regulatory actions is a necessary step as it seeks to rebuild trust and reinforce audit quality.
