HONG KONG, Oct. 15 Reuters - Hong Kong Audit Regulator said on Friday it was investigating China Evergrande Group's 2020 accounts and their audit by PwC because it had concerns about the adequacy of reporting about whether it could continue operating as a continuing concern or not?
Evergrande has been scrambling to remunerate some cash by using its reserves to divest some assets. With more than $300 billion in liabilities it has already missed three rounds of interest payments on its international bonds.
The Financial Reporting Council announced that it had launched an inquiry into Evergrande's accounts for the full year of 2020 and the first half of 2021, and an investigation into PwC's audit of Evergrande's 2020 accounts.
As of end 2020 the FRC said Evergrande reported cash and cash equivalents of 159 billion yuan ($24.73 billion) which did not cover its present liabilities of 1.5 trillion yuan and had further borrowings of $167 billion yuan maturing in 2022.
However, the accounts made no explicit statement about whether material going concern uncertainties existed before or after the effects of implementing plans Evergrande said it had to mitigate potential impacts on cash flow, it said.
PwC expressed an unmodified audit opinion in its auditor s report on the 2016 annual accounts, but made no reference to material uncertainties in whether Evergrande was a going concern, the FRC said.
Evergrande and PwC have not immediately responded to requests for comments.