China urges state-owned companies to cut PwC, report says
picture alliance / Jens Niering | Jens Niering
Audit firm PwC faces harsh consequences in China after Evergrande bankruptcy.
Reuters reports that regulators have asked state-owned clients to change auditors.
More than 30 Chinese companies, including Bank of China and China Life Insurance, have since changed auditors.
The Evergrande bankruptcy has had severe consequences for auditor PwC in China. Regulatory authorities, especially the Ministry of Finance, are said to have asked large state-owned clients to change auditors. This was explained by two sources to the Reuters news agency.
More specifically, the authorities gave a so-called “window guidance” – an unofficial, verbal instruction to state-owned financial institutions. This goes back to at least April, the sources explained. However, it is not clear whether all state-owned companies received this instruction.
PwC loses mandates for Bank of China and China Life Insurance
More than 30 Chinese companies have since changed auditors, including the state-owned Bank of China, China Life Insurance, PICC, China Taiping Insurance and China Cinda Asset Management. Reuters concluded this from company reports.
In the spring, Chinese authorities made massive allegations of fraud against Evergrande. The company is said to have inflated its balance sheets by more than 70 billion euros. Even then, the auditors were also in the spotlight. According to Bloomberg PwC in China faces a record fine of one billion yuan (130 million euros) and the closure of branches because of Evergrande.
Neither PwC nor MOF responded to Reuters' request for comment.