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China Fund News reporter Zhang Yanbei

The recent dismissal storm of PricewaterhouseCoopers, a world-renowned accounting firm, may have spread to the fund industry. According to the announcement, some fund companies recently changed the accounting firm for their funds, and PricewaterhouseCoopers was replaced.

Some fund companies dismissed PwC

On August 7, Baoying Fund issued an announcement stating that from now on, the accounting firm of its subsidiary Baoying Xiangze Hybrid will be changed from PricewaterhouseCoopers Zhongtian Accounting Firm (Special General Partnership) to Rongcheng Accounting Firm (Special General Partnership). The above changes have been reviewed and approved by the Baoying Fund Board of Directors, and have been notified to the fund custodian in accordance with relevant regulations and the fund contract.

On August 6, CSOP Asset Management released an announcement on the change of accounting firms for its funds, involving 51 funds. The announcement showed that the date of the change was August 2, and the accounting firm before the change was PricewaterhouseCoopers Zhongtian Accounting Firm, and after the change, it was Ernst & Young Huaming Accounting Firm.

On June 29, Red Soil Innovation Fund announced that starting from June 25, the accounting firm for the company's 22 funds will be changed from PricewaterhouseCoopers Zhongtian to Ernst & Young Huaming.

A person from a fund company said that the fund manager will comprehensively consider the company's demand for audit services, refer to the relevant regulations on the selection of accounting firms, and after a bidding process and evaluation results, decide to hire a certain accounting firm as the company's financial statement and internal control audit agency.

Another industry insider said, "Generally speaking, fund companies may change accounting firms periodically based on factors such as audit fees, years of service, independence requirements, etc. Changes are not uncommon, but they are not frequent either." In his opinion, the fund companies' replacement of PwC with other accounting firms is not unrelated to PwC's credibility crisis.

"Perhaps more fund companies will replace PwC in the future, especially those companies whose contracts with previous auditing agencies have expired, and they will take the lead," he further said.

Wind data shows that among the 12,088 public funds on the market (only the main code is counted), 5,432 funds are audited by PricewaterhouseCoopers, accounting for nearly half, far ahead of all 24 accounting firms that serve as auditing agencies.

Mass dismissal by financial institutions

Due to its involvement in financial fraud by a well-known real estate company, PricewaterhouseCoopers is experiencing a crisis of trust and has lost many large orders from financial institutions.

Public information shows that PricewaterhouseCoopers was formed by the merger of Pricewaterhouse and Coopers & Young in London, UK in 1998. It is also one of the Big Four international accounting firms, the other three being KPMG, Deloitte and EY.

On May 31, the China Securities Regulatory Commission’s official website announced a penalty decision for Evergrande Real Estate’s fraudulent bond issuance and information disclosure violations, ordering Evergrande Real Estate to make corrections, giving it a warning, and imposing a fine of 4.175 billion yuan. The China Securities Regulatory Commission also stated that it is advancing an investigation into related intermediary institutions. Among them, the intermediary institution that has received the most attention is PricewaterhouseCoopers.

Previously, PwCChina EvergrandeThe audit agency had cooperated with Evergrande for 14 years since its listing in 2009 until the cooperation was terminated in January 2023. In the past decade, China Evergrande's annual audit report was issued with an unqualified opinion by PricewaterhouseCoopers. In fact, before the punishment "boot" landed, PricewaterhouseCoopers had fallen into a crisis of trust due to the Evergrande Real Estate audit case.

In March this year, the China Securities Regulatory Commission concluded an investigation into Evergrande Real Estate for suspected illegal disclosure of bond information. After an in-depth investigation, the Ministry of Finance of China found that PricewaterhouseCoopers may have played an illegal role in Evergrande Group's accounting practices, and therefore decided to impose severe penalties on it.

Affected by this, many listed companies and financial institutions have cancelled their cooperation with PwC.China Taiping、China Insurance Group、China Life InsuranceListed insurance companies such as China Post Insurance, China Fortune Life Insurance, and Three Gorges Life Insurance have also recently announced their "parting ways" with PricewaterhouseCoopers.

also,Bank of China、China Merchants Bank、Hangzhou Bank、Haitong Securities、China CindaLarge listed financial institutions such as China Renaissance and China Everbright have also terminated their contracts with PwC.

Editor: Joey

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