The Big Four Accounting Firms in China: How Big Are They?
Chinese regulators have imposed a record fine of $62 million on PwC's auditing unit in mainland China over its audit of troubled property developer China Evergrande Group.
Big Four Accounting FirmsChinaPwcDeloitteEyKpmgAuditFinancial InstitutionsReal EstateSep 14, 2024
The business suspension and fines are the toughest ever penalty received by a Big Four accounting firm in China. The regulators' action puts the spotlight on the Big Four's activities in the country and on how big a role they play in auditing major Chinese companies.
The Big Four accounting firms - PwC, EY, Deloitte, and KPMG - were the top four auditors, ranked by revenue in China in 2022, based on a report by the Chinese Institute of Certified Public Accountants, an industry association.
The four firms audit 18 of China's 20 biggest state-owned companies by assets, or 95.1% of the total assets as of 2023, research published in July showed. Their research also found the Big Four audited the majority of China's biggest banks, insurers and brokerages in 2023, with their audited assets making up 63.2% of the total 461 trillion yuan worth of total assets of China's financial institutions.
In total, the Big Four audited 12% of the companies listed on Shanghai Stock Exchange and 5% of companies on Shenzhen bourse by this March, PwC said on its official website.
The Big Four firm's strong market position in China is similar to the level they enjoy in the U.S., Jackson Johnson, president and founder of Johnson Global Advisory said. Johnson Global Advisory is an audit quality advisory firm based in Washington, D.C., with clients globally, including in Greater China.
Frequently Asked Questions
What is the penalty imposed on PwC's auditing unit in mainland China?
A six-month business suspension and a record fine of 441 million yuan ($62 million)
What is the market share of the Big Four accounting firms in China?
The Big Four audited 18 of China's 20 biggest state-owned companies by assets, or 95.1% of the total assets as of 2023
Why do major Chinese companies hire the Big Four as their auditors?
Hiring the Big Four as auditors for financial statements can bring down financing costs
What is the previous regulatory action taken against the Big Four in China?
China fined auditing firm Deloitte 211.9 million yuan ($30 million) in March 2023 for failing to perform its duty in assessing the asset quality of China Huarong Asset Management Co Ltd
What is the total assets of China's financial institutions audited by the Big Four?
63.2% of the total 461 trillion yuan worth of total assets of China's financial institutions
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