Why did auditors sign off on Evergrande despite its massive financial warning signs?

Patrick Boyle examines the role of PricewaterhouseCoopers in the Evergrande collapse. The firm collected over forty million dollars in audit fees while consistently approving the company's accounts, raising serious questions about the oversight and due diligence performed by major auditing firms.

PricewaterhouseCoopers (PWC) faces scrutiny for its long-term audit of China Evergrande. Despite the company's eventual collapse, PWC signed off on management's financial presentations for years, earning more than forty million dollars in fees. Critics argue that the firm failed to adequately challenge accounting policies that might have exposed the company's precarious financial health much earlier.

This case is part of a broader trend of auditor negligence concerns. Similar issues have plagued other major firms, such as EY, which audited companies involved in scandals like NMC Health, Luckin Coffee, and Wirecard. These recurring failures, ranging from alleged money-laundering oversight to being 'duped' by client financial shenanigans, have severely damaged the credibility of global auditing practices.

Source: Evergrande Got a Clean Bill of Health From PWC Months Before Collapse