Involved in Evergrande's 560 billion fraud turmoil, PricewaterhouseCoopers began to be abandoned by A-shares!

Livestock Corps 2024

2024-05-31 13:59Posted in Guangdong financial field creators

PwC's reputation in the Chinese market is likely to be rotten, and more than a dozen A-share listed companies have terminated their audit contracts with PwC.

On the evening of May 30, PetroChina announced that it would cancel the employment contracts of PricewaterhouseCoopers Zhongtian and PricewaterhouseCoopers. In the audit business, PetroChina no longer cooperates with PwC.

In addition to PetroChina, more than 10 A-share listed companies have all cleared PwC, including Chinese People's Insurance Company, China Merchants Bank, China Merchants Port, China Railway Railway, Dongpeng Special Drink, CIMC, Qingdao Port, Tsingtao Beer, Guangdong Electric Power A and Mindray Medical. Why is that? How did PricewaterhouseCoopers, the world's Big Four accounting firm, fall out of favor in China's A-shares? Like a plague god, everyone avoids it.

The problem lies with Evergrande. Since its listing in 2009, Evergrande has been employing PricewaterhouseCoopers as the company's exclusive auditor, and it is the only one. In the 14 consecutive years of cooperation, Evergrande paid PwC as much as 288 million in audit fees. PricewaterhouseCoopers, who took the money, had a serious dereliction of duty in its financial audit of Evergrande. In the 14-year audit, PwC has never questioned Evergrande's financial report, giving the green light to Evergrande's financial report.

But what does PwC do? It is an independent third-party auditor. Because we can't let listed companies be both referees and athletes. Therefore, in the design of the listing system, an independent third-party auditor was arranged to review the financial reports of listed companies to avoid fraud by listed companies. What is outrageous is that Evergrande has inflated its income by 564.1 billion yuan in two years, and PricewaterhouseCoopers has not found out any false accounts.

Is this a deliberate release of water? Or take the initiative to cooperate with Evergrande and join forces to counterfeit? Regardless of the outcome, PwC has made major mistakes in its audit of Evergrande Group and needs to bear significant responsibility. The biggest blessing for PwC is that Evergrande Group, which committed financial fraud, is a Chinese company. If it was an American company, PwC could simply declare bankruptcy.

A typical case is the financial fraud case of Enron in the United States, which inflated its profits by 600 million US dollars, which was about 5 billion yuan at the exchange rate at the time. This may not seem like a lot of money, but in the United States, Enron was fined $500 million and then forced to declare bankruptcy. Why is this happening? Because Enron had to compensate investors for their losses, the compensation was as high as $7 billion. The three investment banks behind Enron were also fined $2 billion.

The Enron founder died in the course of the lawsuit and was still fined $12 million, the CEO was fined $40 million and sentenced to 24 years in prison, and the CFO was fined $20 million and spent six years in prison.

As the audit unit of Enron, Arthur Andersen, one of the world's five largest accounting firms, also went bankrupt due to implication. Since then, only the "Big Four" of the world's top five accounting firms remain. By analogy, PwC is highly similar to Arthur Andersen, regardless of whether it cooperated with Evergrande's financial fraud, PwC has serious negligence, that is, the loss of reputation.

What are the core selling points of third-party independent auditors? It's not your auditing skills, it's credibility. How can an untrusted auditor guarantee the authenticity of its financial reports? Evergrande, which has inflated its revenue by 560 billion yuan, PwC can't find out, what else can we expect it to find? How credible can the audit report it publish? What kind of company would hire such a tainted auditor?

This is like a female star who takes the pure route and is sought after by thousands of licking dogs. But people were surprised to find that she had actually gone to the sea to make films a long time ago, who still believed that she was a pure goddess? For auditors, reputation is life. If you lose your reputation, you should lose the market and leave A-shares completely.

Now, the public is questioning whether PwC cooperated with Evergrande to commit fraud. In addition to Evergrande, has PwC cooperated with other listed companies to commit fraud? If even PwC is so dirty, can other auditors still be trustworthy? Is this an isolated phenomenon, or is it a general phenomenon? These questions need to be explained.

Is it necessary to bear joint and several liability for a serious failure of an audit institution such as PricewaterhouseCoopers? Who will compensate investors for their losses? If this time it is gently passed, how will the confidence of the people be restored? Will PwC become the second Arthur Andersen?

In the captain's view, if you want to make A-shares bigger and stronger, you can't let go of PricewaterhouseCoopers, and you must expose real rats to the sun!

View original image 85K

• 

• 

• 

• 

• 

• 

Take the network and carefully screen