[cityhantam]

https://www.regulationasia.com/hong-kong...uarantees/

Hong Kong FRC Probes Evergrande, PwC Over Loan Guarantees

The FRC is concerned about deposits held by Everygrande's property services unit that were pledged as security for third parties to obtain bank loans.

[cityhantam]

https://www.mingtiandi.com/real-estate/f...an-scheme/

EVERGRANDE, PWC INVESTIGATED OVER FAILURE TO REPORT $2B LOAN SCHEME

Hong Kong’s accounting watchdog has launched a probe into the property services arm of embattled developer China Evergrande and its erstwhile auditor PricewaterhouseCoopers, related to a RMB 13.4 billion ($2 billion) loan scheme that led to the developer firing its chief executive and chief financial officer last month.

The investigation is looking into the 2020 annual financial statements and the interim report for the first six months of 2021 for Evergrande Property Services Group Limited, as well as examining audit work carried out by PwC on the company’s 2020 annual accounts, according to a statement by Hong Kong’s Financial Reporting Council (FRC) on Monday.

The watchdog indicated in the statement that the new investigation is in addition to a probe initiated in October which examined the same records to determine if China Evergrande had truthfully reported its ability to continue as a going concern, as well as looking into PwC’s failure to note any material uncertainties regarding the developer’s going concern status in its audit of the 2020 accounts. That existing probe is now being expanded, the authority said.

......

By signing off on Evergrande’s 2020 accounts, without raising issues regarding going concern status, PwC had indicated that the developer had the resources to continue operating for at least 12 months.

By last September, however, Evergrande announced that it was at risk of defaulting on its debt amid plunging property sales, sending prices for its stock and bonds sharply lower. The developer started missing interest payments on its dollar bonds in November.

.....

PwC has served as Evergrande’s auditor since the developer listed on the Hong Kong exchange in 2009. After Evergrande’s troubles emerged, the accounting giant is said to have been gradually exiting its auditing work on behalf of private Chinese real estate groups as a liquidity crisis grips the property market.

A REDD report in March said PwC had resigned from its auditor role with several Chinese developers in advance of the release of their 2021 financial results, including Powerlong Real Estate, Ronshine China, and Hopson Development.

In late April, PwC resigned as the auditor of Guangzhou R&F Properties and ceased acting for Shimao Services Holdings, according to separate filings to the Hong Kong stock exchange.

....

[sgbuffett]

This means whenever cutsomers put in deposit the use for their own collaterally to get more loans.

When they cannot repay loan deposit seized and customers left hanging

Reminds me of the tour agencies that collapse. ..they use customer money to pay their staff and suppliers. When collapse, customers tour booking not fulfilled.