By Julie Zhu
HONG KONG (Reuters) – Auditor PwC has misplaced its largest mainland China-listed shopper, Financial institution of China, to rival EY, including to an exodus of clientele amid a regulatory investigation into its work on troubled property developer China Evergrande (HK:) Group.
State-owned Financial institution of China had as not too long ago as March said plans to reappoint PwC as its auditor for 2024 however in a submitting late on Monday mentioned it plans to nominate EY. The choice can be submitted for shareholder approval, it mentioned.
PwC, as soon as the main auditing agency in China, declined to remark.
Financial institution of China paid PwC 193 million yuan ($27 million) in auditing charges final yr, filings present. That is greater than the mixed auditing charges from its three subsequent largest domestically listed shoppers for 2023: China Life Insurance coverage, China Telecom (NYSE:) and insurance coverage large PICC. The trio have additionally dropped PwC as a shopper, in response to filings.
Not less than 50 Chinese language corporations, a lot of that are state-owned enterprises or monetary establishments, have both dropped PwC as their auditor or cancelled plans to rent the agency in latest months, a Reuters examination of filings reveals.
As of March, PwC was the auditor for about 110 firms listed in mainland China, in response to the corporate’s web site.
Chinese language authorities have been PwC’s audits of Evergrande which has been accused by the securities regulator of a $78 billion fraud – an investigation that’s anticipated to end in heavy fines. PwC audited Evergrande for nearly 14 years till early 2023.
Since no less than April, regulators have requested a number of giant state-owned shoppers of PwC to drop the auditor, sources have mentioned.
They’ve additionally suggested that state-owned corporations and listed firms must be “extraordinarily cautious” about hiring auditors which have acquired regulatory fines or different penalties prior to now three years.
About half of the company shoppers which have dropped PwC have been snapped up by EY and KPMG, the Reuters examination of filings reveals.
PwC has been BOC’s auditor since 2021. Previous to that, EY audited BOC for eight years. Chinese language guidelines stipulate that state-owned corporations mustn’t make use of the identical auditor for greater than eight consecutive years.
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