Hong Kong Regulator Probes PwC on Evergrande Audit
What’s new: Hong Kong’s accounting regulator launched an investigation of China Evergrande Group and its auditor PricewaterhouseCoopers (PwC) as the developers’ debt woes rattle global markets.
The city’s Financial Reporting Council is investigating Evergrande's accounts for the full year of 2020 and the first half of 2021, it said last week citing concerns over inadequate reporting on the company’s operating risks. The council is also looking into PwC's audit of the 2020 accounts.
The regulator said it received a public complaint against Evergrande.
The context: Evergrande, China’s most indebted developer, sent jitters through global markets as concerns intensified over contagion of its debt crunch.
The crisis at Evergrande has led to sell-offs of developers’ bonds and a drop in sentiment among homebuyers. Evergrande’s stock plunged 80% this year and was halted in Hong Kong for the past two weeks pending news on a possible sale of its property services unit.
The Financial Reporting Council said Evergrande as of year-end 2020 reported cash and cash equivalents of 159 billion yuan ($24.7 million) and was unable to cover its current liabilities of 1.5 trillion yuan. The company has further borrowings of 167 billion yuan maturing in 2022. The regulator said Evergrande didn’t make any explicit statement regarding uncertainties in its operations.
Quick Takes are condensed versions of China-related stories for fast news you can use.
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