Beleaguered property developer Country Garden dropped PricewaterhouseCoopers (PwC) as its auditor, in another setback for the firm that has lost more than 50 clients this year due to its link with the collapse of China Evergrande.

Country Garden said in a Thursday filing to the Hong Kong stock exchange that it recommended PwC consider resigning as its auditor due to the firm's failure to publish its financial results on time. PwC has agreed to step down; the resignation is effective Tuesday.

Country Garden, which is based in Foshan, has hired Hong Kong-based Zhonghui Anda CPA as its new auditor, which is effective from Thursday. Zhonghui Anda will be its auditor until the developer concludes its next annual general meeting.

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In its resignation letter, PwC said it is waiting for Country Garden to provide a finalised consolidation scope and consolidated financial statements for last year. It also said it needs related work papers and supporting documents, as well as a cash flow forecast, among other things, to assess the company's liquidity position.

The news came as Country Garden's financial woes worsen, with contracted sales plunging 57 per cent year from a year earlier to 3.43 billion yuan (US$483.8 million) in August, following a 72 per cent decline in July.

In a statement on Wednesday, the developer told bondholders it would postpone coupon and principal instalment payments on nine notes for six months, citing insufficient funds due to plummeting home sales and restrictions on allocations of funds.

Country Garden is also struggling to fight a liquidation petition from a unit of Hong Kong-listed Kingboard Holdings for the non-payment of a US$205 million loan. A court in the city adjourned a hearing on the matter in July and gave the developer a reprieve of nearly six months to come up with a plan for its debt.

PwC, meanwhile, is bracing for the biggest-ever penalty to be imposed on a global accounting firm for its involvement in the China Evergrande scandal. The now-liquidated developer inflated its sales by US$78 billion in the years leading up to its collapse in 2021.

The punishment could include a fine of up to 500 million yuan for PwC's mainland branch, PwC Zhong Tian, as well as a six-month nationwide ban preventing the firm from acquiring new clients and approving accounts for mainland-based companies, the Post reported previously.



A host of major Chinese firms have ended their contracts with PwC Zhong Tian so far this year, including Bank of China - the country's third-largest lender - China Merchants Group, and China Railway Group.

Developers across China face challenges as the country's property sector shows little sign of recovery despite official measures to shore up confidence. New home sales by the nation's top 100 home builders fell by about 26.8 per cent from a year earlier in August to 251 billion yuan, a decline more substantial than the 19.7 per cent fall in July, according to China Real Estate Information Corp.

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