PwC is contemplating reducing its financial services auditing workforce in China by as much as half, according to a Reuters’ report citing sources. This move comes amid a regulatory inquiry and a significant departure of clients, which have cast a shadow over business prospects.
Following Chinese regulators’ investigation into PwC earlier this year regarding its auditing of troubled property behemoth China Evergrande Group, some clients decided to leave. The report indicated that PwC’s financial services auditing division in mainland China employs over 2,000 individuals, primarily based in Beijing and Shanghai. This division serves a client base that includes banks, insurers, and asset and wealth management firms.
According to its website, the firm had 781 partners and nearly 19,000 employees in mainland China as of last September. Sources added in the report that PwC is also considering reducing its workforce in other auditing teams and non-auditing business lines by about 20 per cent.
PwC’s operations in China encompass consulting, tax services, and auditing. The report reveals that PwC China began its staff reductions last week. The company aims to achieve its overall workforce reduction target over a period of time.
“In light of changes to the external environment, we are making some adjustments to better optimise our organisational structure to align with market demand,” a PwC spokesperson said in an emailed statement, as per the report.
Meanwhile, Chinese authorities have been investigating PwC’s involvement in Evergrande’s accounting practices following allegations by the securities regulator in March of a $78-billion fraud spanning two years through 2020. PwC had served as Evergrande’s auditor for nearly 14 years before resigning in early 2023.
In May, Bloomberg reported that PwC faces a potential record fine of at least 1 billion yuan ($138 million) and the suspension of operations at some of its offices in mainland China due to deficiencies in auditing Evergrande.
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