PricewaterhouseCoopers has agreed to pay HK$1.3 billion ($166 million) in fines and compensation to settle regulatory investigations into its audit work for collapsed Chinese property developer China Evergrande Group. 

Hong Kong’s Accounting and Financial Reporting Council (AFRC) imposed a HK$300 million fine and a six-month suspension barring PwC from accepting or performing audit work for new listed clients. In a parallel agreement with the Securities and Futures Commission (SFC), PwC Hong Kong committed to paying HK$1 billion into a compensation fund for eligible independent minority shareholders of Evergrande.

Hong Kong’s audit watchdog said PwC had disregarded clear evidence of premature revenue recognition, knowingly permitted unsupported consolidation adjustments, and failed to maintain professional skepticism despite multiple red flags.

The settlement marks the latest chapter in a sweeping fallout for the Big Four firm stemming from one of China’s largest accounting frauds, according to Bloomberg. Beijing accused Evergrande of inflating revenues by more than 560 billion yuan ($82 billion), and in 2024 Chinese regulators fined PwC 441 million yuan and suspended the firm for six months in mainland China, calling it a case of turning “a blind eye” to fraud. 

That earlier penalty triggered a significant exodus of state-owned enterprise clients, major Chinese corporations, and Hong Kong regulators, along with staff departures, Bloomberg said. 

PwC served as Evergrande’s auditor for more than a decade before resigning in January 2023, citing audit-related disagreements. PwC China, which covers Hong Kong, audited Evergrande directly, while its mainland partnership, PwC Zhong Tian, worked with Hengda Real Estate Group, Evergrande’s mainland unit. Although Evergrande is headquartered in China, it fell under Hong Kong regulatory jurisdiction because its shares formerly traded in the city, the news agency said. 

The AFRC also issued public reprimands to PwC and two of its former partners and required the firm to provide periodic updates on remedial actions over the next 12 months and arrange staff training, according to the report. 

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