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PwC Responds to Criticism Over Evergrande Audit Amid Legal Threats and Regulatory Scrutiny

PwC, one of the leading 'big four' accounting firms, has issued a strong response to an anonymous letter circulating on social media that criticizes its role in auditing China Evergrande Group, a prominent property developer. The firm, which distanced itself from the letter on April 16, served as Evergrande's auditor for over a decade until its resignation last year amidst disputes over the audit of the company's 2021 financial accounts.


PwC Responds to Criticism Over Evergrande Audit Amid Legal Threats and Regulatory Scrutiny

The letter in question, titled "Who led PwC into the firepit that was Evergrande?", has not been authenticated. It attributes blame to a senior figure within PwC and raises concerns about the firm's corporate culture. PwC has swiftly rejected the allegations, stating, “We believe the letter contains inaccurate statements that could tarnish PwC’s reputation and infringe” its legal rights.


PwC Hong Kong has escalated the matter by reporting the letter to relevant authorities and has pledged to treat the incident as a high priority. Additionally, the firm has reserved the right to pursue legal action against those responsible for creating, spreading, and disseminating the letter.


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The situation surrounding Evergrande has attracted significant regulatory attention in China, with the company's chairman, Xu Jiayin, facing a lifetime ban from the securities market due to alleged financial misconduct. Evergrande has faced additional legal challenges, including a winding-up order from a Hong Kong court and accusations of a $78 billion revenue overstatement by its onshore unit.


Chinese authorities are reportedly investigating PwC's role in auditing Evergrande, although no decisions regarding penalties have been announced. Meanwhile, PwC is contending with a separate controversy in Australia, where its local branch is accused of sharing confidential government information on future tax legislation with clients and partners for commercial purposes.


These developments underscore the challenges facing PwC on multiple fronts, both domestically and internationally, and highlight the firm's efforts to defend its reputation and integrity amidst ongoing scrutiny and allegations.


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