PricewaterhouseCoopers LLP resigned as auditor for defaulted real estate developer Country Garden Holdings Co., as both firms navigate challenges to keep operations afloat in China.
The real estate company said PwC is unable to fulfill the timetable requirements for the company's need to publish its overdue financial statements for 2023. PwC will be replaced by Hong Kong-based
PwC is facing a six-month ban as part of punishment over its role in auditing failed developer China Evergrande Group, a person familiar
PwC said in its resignation letter that it was waiting for Country Garden to provide outstanding documents, including the cash flow forecast, in order to assess the developer's liquidity position.
Resignation often happens when an auditor and its client have significant expectation gaps, said Pingyang Gao, an accounting and law professor at HKU Business School.
"The long overdue audited financial statements of country garden may eventually surprise the market in the big way, like China Evergrande," Gao said.
Among the Big Four accounting firms, PwC was one of the most commonly used by Chinese real estate firms listed in Hong Kong, according to data compiled by Bloomberg. More than 30 publicly listed firms based in mainland China, including state-owned giants Bank of China Ltd. and PetroChina Co., have dropped PwC as their auditor this year.