PwC, one of the world’s four largest accounting firms, is facing deepening business troubles in China as it grapples with the consequences of its audit of the Evergrande Group.
According to a report by Bloomberg on June 2, at least 10 partners in Hong Kong are set to resign in the coming month, adding to the 20 partners who have already left in the past six months. In mainland China, around 77 partners have resigned since December of last year, as revealed in documents submitted to China’s unified regulatory platform for accounting firms.
Some partners were reportedly dismissed due to business reasons, while others chose to voluntarily retire or join other firms, with their personal reasons remaining undisclosed. PwC declined to comment to Bloomberg on the matter.
PwC China (known locally as Zhongtian) was fined 441 million yuan (61.2 million USD) by Chinese regulatory authorities last year for its audit work on Evergrande Real Estate’s financial reports from 2018 to 2020. The regulatory body also suspended PwC China’s operations for six months starting in September of last year.
As per PwC’s website, PwC China’s revenue dropped by approximately 11% to 6.3 billion yuan in 2024.
The exit of partners in Hong Kong also indicates that the company is feeling the impact of its China business troubles in Hong Kong. Insiders told Bloomberg that PwC Hong Kong and China are legally separate partnerships but operate cooperatively and effectively pool their business gains and losses.
According to data from the Chinese Institute of Certified Public Accountants, as of June 2, PwC has 220 partners in mainland China. As of December 31, 2024, PwC had 250 partners in Hong Kong according to an insider.
The auditing regulatory body in Hong Kong is still investigating PwC’s role in the Evergrande audit.
In recent years, PwC has faced a series of contract terminations from listed companies. In 2023, PwC Zhongtian had 106 client companies listed on the A-share market with total audit fees of 947 million yuan, ranking second in the industry. However, by 2024, only 29 of these clients chose to continue their cooperation, and the audit fees for 2024 plummeted to 125 million yuan, dropping out of the top ten in domestic audit fees to 18th place.
On May 26, PwC resigned as the auditor for Xinchengyue Service after uncovering undisclosed fund transactions amounting to 2.27 billion yuan with related parties during the audit, leading to a complete breakdown in their relationship.