In this clip, we discuss the massive audit failure by PwC's China unit related to Evergrande, one of the country's largest property developers. Chinese regulators imposed a six-month suspension on PwC and levied a record fine of $62 million after finding that the firm's auditors turned a blind eye and even tolerated Evergrande's fraudulent activities during 2019 and 2020 audits.
Evergrande overstated its revenues by approximately $78 billion between 2018 and 2020. The auditors failed to maintain professional skepticism, perform adequate due diligence, and issued false audit reports that inaccurately portrayed Evergrande's financial health. Shockingly, 88% of PwC's observations regarding Evergrande's real estate projects were fabricated or inaccurate, and the auditors excluded certain properties designated by Evergrande as "off limits" from their audit samples.
This scandal could be considered worse than Enron, as the auditors were actively complicit in the fraud. Despite the severity of the misconduct, only 6 PwC partners and 5 staff members were fired, while many more were likely involved.
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27 сен 2024
