In view of the seriousness of the allegations, the Hong Kong Finance and Finance Bureau is responsible for initiating an investigation in order to protect the investor public and the broader public interest involved in auditing listed entities, and to maintain the public's confidence in the integrity of the accounting profession.
The Zhitong Finance App learned that on April 19, the Hong Kong Financial Services Council said it had noticed that a report letter had been circulated and was widely reported by the media. The report expressed serious concerns about PricewaterhouseCoopers's quality management system and the potential lack of quality in the audit carried out by China Evergrande (03333). According to the Board, in view of the seriousness of the allegations, the Hong Kong Finance and Finance Bureau is responsible for launching an investigation in order to protect the investor public and the broader public interest involved in auditing listed entities, and to maintain public confidence in the integrity of the accounting profession.
According to the bureau, its main allegations include failure to establish and maintain an effective quality control system to ensure audit quality and compliance with professional standards and applicable laws and regulations; failure to comply with professional standards relating to customer acceptance and maintenance of customer relationships when providing audits and other professional services to China Evergrande Group; failure to assign appropriate personnel to key positions in the quality management system of accounting firms, which may impair the firm's monitoring function; and failure to implement proper audit procedures for China Evergrande Group audits.
The Hong Kong Finance Council said that when any misconduct or violation of the Accounting and Financial Reporting Council Ordinance is discovered, the Hong Kong Finance Council will not hesitate to take strict enforcement action against the firms and individuals involved.
According to reports, recently, an open letter entitled “Who brought PricewaterhouseCoopers into the Evergrande fire pit” continued to ferment in the market. The letter stated that the person ultimately responsible for PwC's failure to audit Evergrande was Zhao Baiji, and revealed many issues such as PwC's internal audit quality management and personnel crackdown.
On April 16, PwC issued a statement saying that it recently noticed that an anonymous letter claiming to be “some PwC partner” was posted and spread on certain social platforms or media. The anonymous letter contained serious misinformation about PwC and some of its partners, and used this false information to maliciously attack PwC and some of its partners.
PricewaterhouseCoopers stated that the relevant statement clearly contradicted the facts, seriously infringed on PwC's commercial reputation and legal rights, and had a bad impact. PricewaterhouseCoopers takes this matter very seriously and has taken steps to deal with it.