When we focus on the turmoil between Xu Jiayin and PwC, we may be standing at a tipping point in a new Chinese capital market.
This is not just a story of massive debt, financial fraud and audit failures;
First, let's talk about Xu Jiayin and his Evergrande empire. Xu Jiayin, the man who single-handedly built China's real estate giant, has shaken the entire industry with a series of financial operations. According to reports, Evergrande has inflated its revenue by more than 560 billion yuan and profits by more than 90 billion yuan in two years. Financial fraud on this scale is not just a numbers game – it is about the family dreams of tens of thousands of home buyers, about the stability of the country's economy, and more importantly, about the foundation of trust in the capital market.
And PricewaterhouseCoopers, a former industry leader, has played a dubious role in this financial farce. According to the open letter, PwC issued an "unqualified opinion" report for 12 consecutive years when it audited Evergrande. This seemingly golden endorsement has actually become a talisman for Evergrande to continue its financial game.
Pushing open the door of PwC, we have to face the uneasiness of the entire accounting and auditing industry. The demise of Arthur Andersen and the alleged permissiveness of PricewaterhouseCoopers remind us of the importance of an audit report on a piece of paper – it represents credibility, it represents truth, and it represents the tangible interests of countless investors and the public.
Now, when the situation changes, we see contradictions and doubts within PwC. The open letter alleges that PwC China's management and audit quality has been thrown into disarray and paralysis. If this is true, then the credibility of the audit services they provide to companies such as Evergrande will be greatly reduced.
The next question is, how can we prevent similar tragedies from happening again? First, it is important to strengthen supervision and international consistency in auditing standards. Second, the protection of incentive systems and audit independence cannot just stay on paper. Finally, increasing penalties for audit failures may have a deterrent effect.
However, the more fundamental solution may lie in strengthening the monitoring capacity of the public, investors and the media, and raising the expectations and demands of society as a whole for financial integrity. After all, every investor's share of money should be respected and protected.
In the turmoil between Xu Jiayin and PwC, we not only see the fragility and risks of the capital market, but also an opportunity to improve and enhance the transparency and integrity of our economy. The road ahead may be bumpy, but only by facing up to the problem can we usher in the real sunshine. The hope that the capital market, built on the foundation of truth and trust, is no longer an unattainable dream.