PwC steps down from auditing heavily-indebted property developer Evergrande
PwC has resigned as Evergrande’s auditor following a series of disagreements with the heavily-indebted property developer over its audit of the firm’s 2021 accounts.
In a filing to the Hong Kong stock exchange, Evergrande said its board had decided to replace PwC as the company’s auditor after the two parties failed to reach an agreement on completing the audit of the Chinese firm’s 2021 accounts.
PwC claimed, according to the filing, its inability to obtain sufficient “information and evidence” on various “significant matters” had prevented it from setting out a timeline on its ability to complete the audit of Evergrande’s accounts.
The auditor pointed to Evergrande’s failure to provide information on matters including the value of the developer’s property portfolio, its compliance with loan agreements, and the financial status of its subsidiaries, the filing said, citing PwC’s resignation letter.
PwC’s exit comes after Hong Kong’s accounting watchdog launched an investigation in August into the Big Four firm’s 2020 audit of Evergrande .
Evergrande currently sits at the centre of China’s ongoing property crisis, following its announcement last year that it is facing “tremendous pressure” in generating sufficient cash flow to repay its $300bn (£245bn) debts.
The Shenzhen-headquartered firm is considered to have defaulted on its $22.7bn worth of offshore debts after it missed a series of payments late last year.
PwC’s resignation as Evergrande’s auditor could now hinder the property firm’s push to publish its 2021 annual accounts.
The embattled developer said it had temporarily appointed Hong Kong accounting firm Prism as its new auditor in the run-up to its annual general meeting.
PwC declined to comment. Evergrande was approached by City A.M. for comment.