news

[pricewaterhousecoopers visited the site and believed that most of the evergrande real estate projects that met the conditions for delivery were actually not completed and delivered, and even "a piece of vacant land"] cailianshe reported on september 13 that relevant officials of the china securities regulatory commission answered reporters' questions about the administrative penalty case of pricewaterhousecoopers. in recent years, our commission has continued to maintain a high-pressure situation against illegal activities in the securities market, highlighting key points, strictly and severely cracking down on financial fraud, fraudulent issuance and other behaviors, and strictly enforcing the responsibilities of issuers and intermediary institutions. in the early stage, our commission severely imposed administrative penalties on evergrande real estate for illegal activities such as false records and fraudulent issuance of corporate bonds in its 2019 and 2020 annual reports. pricewaterhousecoopers was the audit agency of evergrande real estate during the above period. our commission investigated whether pricewaterhousecoopers violated the provisions of the securities law of the people's republic of china in providing audit services to evergrande real estate and preparing and issuing relevant documents during the above period. we conducted in-depth field investigations and evidence collection, conducted comprehensive inquiries and interviews, fully retrieved relevant documents and materials, and sought support and assistance from relevant parties to complete the investigation efficiently and in accordance with the law. after investigation, it was found that pwc failed to perform its duties diligently and violated multiple auditing standards in the process of performing the audit of evergrande real estate's 2019 and 2020 annual reports and bond issuance services, and multiple auditing procedures failed. first, the audit working papers were distorted. about 88% of the records in the real estate project observations were inconsistent with the actual implementation, and the contents of the working papers were seriously unreliable. second, the on-site visit procedure failed. most of the real estate projects that were considered to meet the delivery conditions during the on-site visit were actually not completed and delivered. some of them were still not completed and delivered when our association conducted on-site investigations, and were even "a piece of vacant land." third, the scope of sample selection was out of control, allowing evergrande real estate to replace samples and excluding real estate projects marked as "not allowed to go" by evergrande real estate from the visit samples. fourth, the document inspection procedure failed. for example, when verifying the delivery list without abnormalities, in fact, a large number of owners signed and confirmed the date later than the balance sheet date. fifth, the review procedure failed. the on-site visit procedure review work was perfunctory, and the review personnel issued the review conclusion based entirely on the "trust" of the on-site visit personnel. on the one hand, pwc failed to perform its duties diligently, failed to correctly judge the actual situation of evergrande real estate's overall revenue recognition in 2019 and 2020, failed to maintain reasonable professional suspicion of the abnormalities in evergrande real estate's financial data, failed to effectively identify evergrande real estate's large-scale and high-proportion financial fraud, and even turned a blind eye to the signs and trends of evergrande real estate's financial fraud; on the other hand, it issued a standard unqualified audit report and issued a statement guaranteeing the truthfulness, accuracy and completeness of the financial data for five bond issuances, which was a situation where the documents produced and issued contained false records.