The Big Fours Quitting Auditing For CCP-linked Listed Real Estate Enterprises

New York, NY, April 2nd – Several CCP-linked listed real estate enterprises have postponed the release of their 2021 fiscal year statements. Meanwhile, multinational accounting firms are quitting the auditing process for those companies. As a result, all auditing processes are transferred to a local audit company in Hong Kong. Chinese real estate companies are facing more debacles other than the huge incoming debt crisis.

A total of 10 CCP- related real estate listed companies announced a delay in publishing their annual fiscal reports before March 31, after a series of debt defaults. It is reported that PwC, one of the “Big Four” accounting firms, is under investigation in Hong Kong due to Evergrande’s audit business. Within three months, PwC and Deloitte have resigned from their auditing for Shimao Group, Hopson, Sunac China and Powerlong Properties. According to public information, Deloitte, PwC, KPMG, and EY have spent three years developing large-scale operations in China and Hong Kong, occupying a dominant position in the field of accounting and auditing.

The Big Fours accounted for more than half of the 270 U.S-listed Chinese Concept stocks. The Big Fours have been signing audit documents for years to endorse those Chinese companies. However, more evidence shows that those real estate companies will not be able to redeem huge debts. The Big Fours might be confronted with joint or several liability if they continue to provide auditing services for those high-risk businesses. Some bondholders have considered filing malfeasance lawsuits against the auditing process.