Since news broke that PricewaterhouseCoopers had agreed to $80 billion in false income for Chinese real estate giant Evergrande, the firm has lost clients. Now employees are starting to leave the company.
According to Bloomberg The threat of regulatory sanctions has rattled PwC’s China staff. It’s not known how many people have left the firm, but partners at other firms have received dozens of job inquiries, Bloomberg sources say. According to Bloomberg, the fine should be at least 1 billion yuan (1.46 billion kroner).
Thirty-six listed companies have so far dropped PwC as auditors. Some 26 of them have hired new staff, with two-thirds choosing either EY, Deloitte or KPMG.
It is also reported that many Chinese companies are in talks with other audit firms and are waiting for the outcome of the Chinese regulator's decision before deciding whether to switch from PwC to other auditors.
In 2022, PwC China audited about 400 listed companies, with 291 partners and more than 1,700 auditors.
Dealing with former PwC clients and reviewing their findings can be costly and time-consuming. “New auditors may have to check everything from scratch,” said Lu Yong, an analyst at Bloomberg Intelligence. Companies that change auditors will also attract more scrutiny, so only those confident in their financials will choose to go with the other Big Four audit firms, he added.
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