ECONOMY

China Proposes Doubling Audit Fraud Fines

Published: Mar. 2, 2026 4:44 p.m. GMT+8

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China has proposed tougher penalties for audit fraud and stricter oversight of accounting firms in draft amendments to its Certified Public Accountants (CPA) Law, marking the legislation’s second revision since it took effect in 1994.

The draft, released Friday for public consultation through March 28, would raise the maximum fine for audit misconduct from five times illegal income to 10 times. The change would align the CPA Law with the Securities Law’s existing penalty standard.

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China’s draft CPA Law proposes tougher penalties for audit fraud, increasing fines from 5x to 10x illegal income.
The revision aligns penalties with the Securities Law, addressing discrepancies seen in Evergrande’s 2018–2020 audits.
Stricter oversight includes mandatory onshore storage of audit papers and hefty fines or license suspension for violations.

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Who’s Who

Hengda Real Estate Group Co. Ltd.: Hengda Real Estate Group Co. Ltd., a unit of China Evergrande Group, was involved in financial fraud. Its 2018 audit was penalized under the CPA Law, resulting in a 116 million yuan penalty. Later audits (2019 and 2020) were penalized under the Securities Law, incurring higher fines and confiscations of 325 million yuan.

China Evergrande Group: The China

PwC China: PwC China faced penalties for its audits of Hengda Real Estate Group Co. Ltd. Its 2019 and 2020 audits were penalized under the Securities Law, resulting in 325 million yuan in fines. The 2018 audit, under the CPA Law, led to a 116 million yuan penalty, highlighting a discrepancy the new draft aims to address.

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