According to a number of ** reports, Evergrande's liquidators are preparing to sue PricewaterhouseCoopers, which has audited Evergrande for more than 10 years. The move could lead to high-profile allegations of negligence at one of the Big Four accounting firms.
The liquidators of Evergrande's Hong Kong-listed holding company, Du Aidi and Wong Wing Sze, who were appointed last month to make claims against the audit firm, have spoken to at least two law firms, according to three people familiar with the matter. The talks were in the early stages, the people said, adding that the presence of the talks did not indicate that the Evergrande liquidators had found any evidence of PwC's wrongdoing, or that litigation would necessarily take place.
PwC served as Evergrande's auditor from 2009 until the outbreak of Evergrande's debt crisis in 2021. During this period, PwC issued an unqualified audit report on Evergrande's financial position. However, as Evergrande's debt crisis intensified, PwC's audit report on Evergrande was also questioned.
In October 2021, PricewaterhouseCoopers announced its resignation as an auditor of Evergrande. In the resignation statement, PwC said it was unable to obtain sufficient information and explanations to conduct the audit.
Evergrande's liquidators argued that PwC had been negligent in its audit of Evergrande, which led to Evergrande's debt crisis being covered up. If Evergrande's liquidators ultimately decide to sue PwC, it will be one of the largest lawsuits against the Big Four accounting firms worldwide.