PwC refutes social media claims on Evergrande audit

Firm addresses "false allegations" regarding its work for the company

PwC refutes social media claims on Evergrande audit

Insurance News

By Mika Pangilinan

PwC has refuted the “false allegations” made in an anonymous letter that surfaced on social media, accusing the firm and its partners of misconduct in their audit activities for China Evergrande Group.

A statement from the company said the letter featured “inaccurate statements” that could damage its reputation and infringe upon its legal rights. It also confirmed that PwC Hong Kong has reported the matter to relevant authorities.

According to the statement, which was reported by Bloomberg, PwC is “treating this incident with high priority.”

PwC has been the subject of scrutiny after China launched a major financial fraud investigation into Evergrande’s primary onshore division, which reportedly overstated its revenue by substantial margins in the fiscal years 2019 and 2020.

As part of the inquiry, Chinese authorities have been looking into the extent of PwC’s responsibilities as former auditor of the embattled real estate giant.

The anonymous letter raised questions about PwC’s involvement in potential accounting discrepancies at Evergrande, as well as other issues related to corporate governance.

Bloomberg said it was unable to verify the authenticity of the letter.

PwC faces challenges in Australia and the UK

In addition to its challenges in China, PwC has also encountered regulatory issues elsewhere.

The firm recently committed to enhancing its governance controls in Australia following allegations of a serious conflict of interest related to the disclosure of government tax plans to its clients.

Last month, PwC Australia brought on Karen Lonergan as chief people officer and said her appointment was a “critical” part of a five-point action plan aimed at strengthening internal culture, improving governance, and increasing accountability.

“PwC has taken swift and significant steps to advance its cultural transformation over the last several months, yet we know meaningful change takes time,” said Kevin Burrowes, CEO of PwC Australia. “Karen will be an asset to our leadership team and is the right person to ensure the steps we have taken to date are comprehensively embedded into the fabric of the firm.”

Meanwhile, in the UK, PwC was fined £5.6 million for audit failures related to its work with Babcock International Group Plc.

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