© Reuters. FILE PHOTO: China Evergrande Group’s Evergrande Center is seen amid other buildings in Shanghai, China, September 24, 2021. REUTERS/Aly Song
(Reuters) – Beleaguered property developer China Evergrande said on Monday that its auditor, PricewaterhouseCoopers (PwC), had resigned amid disagreements over matters related to the audit of its 2021 accounts.
Topics included the schedule and scope of work involved in the going concern assessment, as well as the additional work and audit procedures required for the asset impairment assessment, Evergrande said in a statement.
Once China’s best-selling developer, Evergrande now finds itself at the center of the country’s housing crisis. Its $22.7 billion of foreign debt, including private loans and bonds, is considered to be in default after it missed payments late last year.
More than a dozen auditors of Hong Kong-listed Chinese property firms parted ways last year, raising governance concerns over indebted developers, several of whom have yet to release long-pending financial results.
Changing auditors now could mean more challenges for Evergrande to publish its 2021 annual results and complete an investigation into its real estate services unit by September 20 this year.
Those are the stock exchange’s requirements for it to resume trading after being suspended in March 2022. Otherwise, you could face a delisting.
Evergrande, which has struggled to raise funds to pay off its creditors, is in the midst of a debt restructuring process with stakeholders awaiting the completion of its 2021 audited financial statement.
In its resignation letter, PwC said it had not received information on certain material matters relating to the group’s 2021 consolidated financial statements.
PwC also noted that the group had failed to settle certain interest-bearing liabilities that were due on their contractual due dates in 2021, adding that PwC was not provided relevant details about the investigation by an independent committee.
Certain cash flow projections for not less than 12 months from January 2022, including the net realizable value of properties under development and completed properties for sale as of December 31, 2021, have not been disclosed, PwC said.
Evergrande said it would appoint Prism Hong Kong and Shanghai Ltd as the new auditor, taking into account the recommendation of the company’s audit committee.
Evergrande and PwC have been under investigation by Hong Kong’s audit regulator since 2021 over the developer’s 2020 accounts.
Reuters reported last week, citing sources, that the developer will hold a meeting with dollar bondholders to discuss its debt restructuring proposals.
