On 23 April 2026,The Securities and Futures Commission (SFC) reached a landmark HK$1 billion settlement with PricewaterhouseCoopers Hong Kong (PwC HK) following an investigation into the audit failures of China Evergrande Group. The SFC determined that Evergrande’s FY2019 and FY2020 financial statements were materially false, primarily due to the systemic premature recognition of property sales revenue.Audited revenue was overstated by RMB213.9 billion (44.79%) in FY2019 and RMB350.2 billion (69.03%) in FY2020. Consequently, reported profits of RMB33.5 billion and RMB31.4 billion masked actual losses of RMB7.12 billion and RMB19.9 billion, respectively.
The SFC identified severe breaches of professional duties by PwC HK, including a failure to maintain independence and a lack of adequate professional skepticism. Crucially, the firm was found to have acquiesced to management’s manipulation of audit samples and site inspections, facilitating the concealment of financial irregularities and the fabrication of supporting documentation.While the agreement involves no admission of liability, the HK$1 billion fund will be used to compensate independent minority shareholders via an independent administrator. This unprecedented resolution marks the first time auditors of a defunct company have provided direct compensation to harmed investors, signaling the SFC’s intensified commitment to auditor accountability and market integrity
Source: https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=26PR62