Hong Kong, mainland Chinese regulators cooperate on probes of PwC’s Evergrande bookkeeping
- Based on a 2019 agreement, the Ministry of Finance can assist the Hong Kong regulator in its investigation of cases involving auditing papers on the mainland
China’s Ministry of Finance and Hong Kong’s audit regulators are assisting each other in their separate investigations of PwC’s audit work of the now-liquidated China Evergrande Group.
“Under the memorandum of understanding (MOU) signed between the Ministry of Finance and Hong Kong’s Accounting and Financial Reporting Council [AFRC] in 2019, the two regulators are mutually reliant on each other regarding investigations,” said AFRC chairman Kelvin Wong Tin-yau.
The Evergrande investigation should fall under the purview of cooperation between the two regulators under the MOU, as Wong noted that the agreement allows the two sides to provide assistance to each other in their investigations. He, however, did not allude to any particular case.
The MOU calls for the Ministry of Finance to assist the AFRC in its investigation involving audit papers on the mainland, while Hong Kong’s regulator will extend the same courtesy to the other side, according to Wong.
Evergrande, which was ordered to undergo liquidation by a Hong Kong court in January, had inflated its sales by US$78 billion in the years leading up to its downfall in 2021, China’s securities regulator said in March.
The AFRC and the Ministry of Finance have conducted separate investigations into the Hong Kong and mainland units of PwC, respectively, on the quality of the company’s audit work related to Evergrande.
