According to a report by Reuters on Tuesday, July 16th, one of the Big Four international accounting firms, PwC, is considering cutting half of its financial services auditors in China.
Anonymous sources informed Reuters that PwC’s layoffs in China began last week and are expected to be completed within a certain period of time.
PwC’s financial services audit business in mainland China reportedly has at least 2,000 employees, with main centers in Beijing and Shanghai, providing services to clients such as banks, insurance companies, asset and wealth management firms.
The sources also disclosed that the company is planning to reduce around 20% of its audit teams and non-audit business employees.
A spokesperson for PwC stated in an email, “In light of changes in the external environment, we are making some adjustments to better optimize the organizational structure to meet market demands.”
In March of this year, Chinese securities regulatory authorities accused the real estate giant Evergrande Group of inflating its income by $78 billion (over 564.1 billion RMB) over the two years up to 2020. Since then, the Chinese government has been reviewing the role PwC played in Evergrande’s accounting practices.
PwC had been the auditing firm for Evergrande for nearly 14 years until the beginning of 2023.
On May 30th, Bloomberg reported, citing informed sources, that due to errors in auditing Evergrande, PwC is facing a record fine of at least 1 billion RMB (138 million USD) from Chinese regulatory authorities, and some of its mainland China offices will cease operations.
In recent months, as regulatory authorities investigated PwC’s auditing of Evergrande, more clients have been leaving the firm, particularly state-owned or state-controlled enterprises and financial institutions in China.
According to Reuters, in the past few months, over thirty listed Chinese companies, including China Life Insurance, China Cinda Asset Management Co Ltd, Bank of China, and PetroChina, have indicated that they will no longer hire PwC as their auditors.