PwC has resigned as auditor to the troubled property firm, China Evergrande, heaping further pressure on the developer at the epicentre of China’s property crisis.
Evergrande’s board recommended the resignation of PwC after the two firms could not “agree on the timetable and the scope of work in respect of the assessment on the group’s going concern basis”, as well as the “procedures required for the assets impairment assessment”, a regulatory filing said.
In its 16 January resignation letter to Evergrande’s audit committee and board, PwC said it still had not received information relating to “significant matters” of the 2021 audit, including cash flow forecasts and the consolidated financial statements of the group.
The lack of information meant PwC was “unable to determine the scope of any necessary additional audit work and is also not in a position to provide a reasonable estimate of the time required to complete the audit for the year 2021”, according to the auditor.
The delayed audit of Evergrande’s 2021 financial statements is hindering the group’s attempts to restructure its debts, the statement said.
As such, the company’s board decided to appoint another auditor in an attempt to “complete the audit work as soon as practicable”.
Evergrande defaulted more than a year ago and its efforts to reach a solution with creditors is under close scrutiny with various deadlines having been missed.