Some of the world’s largest accounting firms are stepping back from China’s struggling property developers as a number of delayed financial results has broadened the uncertainty over how large the sector’s worst-ever crisis really is and raising concerns of hidden debts, reports the Financial Times. Big Four accounting firm PwC, which audits more than a dozen listed Chinese developers, is under investigation in Hong Kong over its Evergrande audit. It and Deloitte have resigned as auditors of at least five Chinese developers in the past three months.
Shimao, one of China’s largest property companies, said last week that PwC had resigned after it did not provide information related to “trust loan arrangements,” a form of financing often used by mainland Chinese developers. Shimao said it had been unable to complete a review on the matter in time due to Covid-19 restrictions. PwC declined to comment.
A total of 10 developers have announced they are delaying their audited results ahead of a March 31 deadline after the sector was hit with a series of defaults. Big Four auditors have signed off on the accounts of China’s real estate developers for years despite warning signs that they might not be able to meet their large financial obligations.