What happened? Evergrande parted ways with "old friends" on 14, and the three companies announced together.

All good things must come to an end. PricewaterhouseCoopers, one of the four accounting firms that have cooperated 14 years, is going to part ways with Evergrande.

On the evening of 65438+ 10/6, China Evergrande, Evergrande Real Estate and Evergrande Automobile all announced that they would change their auditors: PricewaterhouseCoopers (known as PricewaterhouseCoopers in Hong Kong) resigned as auditors, and 65438+ 10/kloc-0. At the same time, three listed companies of Evergrande hired Shang Cheng Certified Public Accountants as the new audit institution (audit institution).

It is worth mentioning that PricewaterhouseCoopers, one of the four international accounting firms, cooperated with Evergrande when it was listed in Hong Kong in 2009. PricewaterhouseCoopers issued an unqualified opinion on the annual audit report of China Evergrande.

However, in 20021year, China Evergrande gradually broke out in debt crisis, and 134 billion yuan of Evergrande real estate was misappropriated. PricewaterhouseCoopers, as an auditor, was also implicated, and was investigated by the Hong Kong Financial Reporting Bureau twice in 20021and August 2022.

Dismissed the audit institution that cooperated with 14 years.

On the night of June 65438+1October 65438+June 6, 2023, China Evergrande, Evergrande Real Estate and Evergrande Automobile announced at the same time that PricewaterhouseCoopers had resigned as the company's auditor (auditor) at the suggestion of the three companies, with immediate effect.

At the same time, three companies under Evergrande also announced the appointment of Shang Hui Baicheng Certified Public Accountants as the new auditor to fill the temporary vacancy after the resignation of PricewaterhouseCoopers until the end of the next annual general meeting of shareholders.

In fact, since China Evergrande went public in Hong Kong in 2009, the cooperation between PricewaterhouseCoopers and China Evergrande lasted for 14 years. Generally, listed companies will not easily change audit institutions. Why did China Evergrande change its audit institution?

China Evergrande said that the company's resumption of trading is being actively promoted, and it is particularly important and crucial to complete the audited financial statements of 202/KLOC-0. Because PricewaterhouseCoopers needs additional audit work and procedures based on the evaluation of the Group's going concern and related disclosure, asset impairment evaluation and contingencies, the two parties failed to reach an agreement on the scope and schedule of work. The board of directors believes that it is in the best interests of the company and its stakeholders to appoint another audit institution to complete the audit as soon as possible. Therefore, the Board of Directors suggested that PricewaterhouseCoopers resign as the company's auditor.

The reasons why Evergrande Real Estate and Evergrande Motor resigned from the audit institution of PricewaterhouseCoopers are similar to those stated by China Evergrande.

PricewaterhouseCoopers explained the problems left over from the unfinished audit.

As the audit institution of Evergrande for more than ten years, PricewaterhouseCoopers was involved in the Evergrande incident, which also affected its reputation to some extent.

China, a brokerage firm, learned that since the debt problem broke out in China Evergrande, PricewaterhouseCoopers, an auditor who had previously issued unqualified opinions, was also implicated, and was investigated by the Hong Kong Financial Reporting Bureau ("HKFRB") in 200210 and August 2022.

Taking August 15, 2022 as an example, the Finance Bureau of Hong Kong made an existing inquiry on the 2020 annual accounts of Evergrande Real Estate and the financial statements for the six months ended June 30, 20021year, and investigated the audit of PricewaterhouseCoopers on the 2020 annual accounts of Evergrande Real Estate.

In addition, the Hong Kong Finance Bureau has expanded the scope of inquiry and investigation, including the existing inquiry on the financial statements of China Evergrande in 2020 and the six months ending June 30, 20021,and the existing investigation on the audit of China Evergrande in 2020 by PricewaterhouseCoopers.

The Hong Kong Monetary Trading Authority said that if necessary, it will publish inquiries and investigations or expand the scope to protect the interests of shareholders and the investing public and maintain public confidence in the financial market and the supervision system of independent auditors.

It is worth mentioning that after being dismissed, PricewaterhouseCoopers also listed a series of nine unfinished audit problems of Evergrande in detail before leaving the company.

In the resignation letter of China Evergrande, PricewaterhouseCoopers pointed out that some audit materials were not obtained, including the following matters: PricewaterhouseCoopers asked China Evergrande Audit Committee and Evergrande Automobile Audit Committee to set up independent investigation committees respectively, and hired an independent third party to assist in the investigation of off-balance sheet liabilities and undisclosed deposit pledge arrangements that might exist in China Evergrande and Evergrande Automobile, and provided relevant investigation reports and materials. PricewaterhouseCoopers said that it is not clear about the progress of these independent investigations and has not received relevant investigation reports and materials.

At the same time, regarding the transfer of 65.438+0.34 billion yuan deposit pledge guarantee of Evergrande Real Estate by relevant banks, PricewaterhouseCoopers said that although China Evergrande has provided the preliminary independent investigation report on the pledge guarantee, it has not provided the final independent investigation report on the pledge guarantee issued by the independent investigation committee; The accounting impact assessment related to pledge guarantee and the lawyer's opinion of Evergrande Real Estate confirm the legal ownership of China Evergrande's non-trade receivables of 65.438+034 billion yuan.

PricewaterhouseCoopers also pointed out that China Evergrande failed to pay off some loans and other interest-bearing liabilities on the contract expiration date of 20021,and the management of China Evergrande needs to provide further information on the compliance of some loan contract terms of the Group (including but not limited to financial contracts, non-financial contracts, borrower's commitments and guarantees, borrower's obligations and cross-default clauses).

PricewaterhouseCoopers also requested to provide an assessment based on the establishment of China Evergrande 202 1 as a going concern and the related disclosure, including the cash flow forecast for no less than 1 2 months from June 65438+1in 2022, the plans and measures for future cash flow, and the relevant explanations or basis of key assumptions in the cash flow forecast.

In addition, the evaluation and supporting data of net realizable value, self-sustaining property, fixed assets and recoverable value of right-to-use assets of China Evergrande as of 202 1,1,3 1 have not been obtained; In addition, part of the land use right transfer contract owned by China Evergrande has been terminated, and it is required to return the land use right. The management of China Evergrande did not provide the supporting documents for the recoverability of the land use right transfer fee paid in this part of the contract.