By Julie Zhu
HONG KONG (Reuters) – Auditor PwC has misplaced its largest mainland China-listed consumer, Financial institution of China, to rival EY, including to an exodus of clientele amid a regulatory investigation into its work on troubled property developer China Evergrande (HK:) Group.
State-owned Financial institution of China had as lately as March acknowledged plans to reappoint PwC as its auditor for 2024 however in a submitting late on Monday mentioned it plans to nominate EY. The choice will likely be submitted for shareholder approval, it mentioned.
PwC, as soon as the main auditing agency in China, declined to remark.
Financial institution of China paid PwC 193 million yuan ($27 million) in auditing charges final 12 months, filings present. That is greater than the mixed auditing charges from its three subsequent greatest domestically listed purchasers for 2023: China Life Insurance coverage, China Telecom (NYSE:) and insurance coverage large PICC. The trio have additionally dropped PwC as a consumer, based on filings.
Not less than 50 Chinese language corporations, lots of that are state-owned enterprises or monetary establishments, have both dropped PwC as their auditor or cancelled plans to rent the agency in current months, a Reuters examination of filings reveals.
As of March, PwC was the auditor for about 110 corporations listed in mainland China, based on the corporate’s web site.
Chinese language authorities have been taking a look at PwC’s audits of Evergrande which has been accused by the securities regulator of a $78 billion fraud – an investigation that’s anticipated to lead to heavy fines. PwC audited Evergrande for nearly 14 years till early 2023.
Since at the least April, regulators have requested a number of giant state-owned purchasers of PwC to drop the auditor, sources have mentioned.
They’ve additionally suggested that state-owned corporations and listed corporations ought to be “extremely cautious” about hiring auditors which have acquired regulatory fines or different penalties up to now three years.
About half of the company purchasers which have dropped PwC have been snapped up by EY and KPMG, the Reuters examination of filings reveals.
PwC has been BOC’s auditor since 2021. Previous to that, EY audited BOC for eight years. Chinese language guidelines stipulate that state-owned corporations mustn’t make use of the identical auditor for greater than eight consecutive years.
($1 = 7.1338 )
