PricewaterhouseCoopers’ troubles are now deepening in Hong Kong as the firm is wrestling with the consequences of its audits of China Evergrande Group.

Over the coming month, at least 10 partners in the city are poised to leave, adding to the 20 that have already exited the firm in the past six months, according to people familiar with the matter. On the Chinese mainland, some 77 partners have left their roles since December, according to filings with the unified supervision platform of the Chinese CPA profession. 

Some of the partners are being let go because of business reasons while others are leaving voluntarily for early retirement or to join other firms, the people said, asking not be discussing confidential matters.

PwC declined to comment. 

PwC China, locally known as Zhongtian, was fined 441 million yuan ($61.2 million) by Chinese regulators last year for its auditing work on Evergrande’s inflated financial reports from 2018 to 2020. The regulator also suspended the operations of PwC’s China arm for six months back in September.

PwC China’s revenue dropped about 11% to 6.3 billion yuan in 2024, according to its website.

The exits underscore that the firm is also feeling the pain in Hong Kong from its China woes. PwC Hong Kong and China are legally separate partnerships, but operate in collaboration and effectively share the profit and loss of the business together, the people said.

The firm has 220 mainland partners, according to the Chinese Institute of Certified Public Accountants as of June 2. It had 250 partners in Hong Kong as of Dec. 31, 2024, according to a person familiar with the matter.

Last year, PwC global sent Hemione Hudson, a senior partner from the UK, to head the region. The firm has over the past months conducted internal business reviews, aiming to streamline and consolidate, the people said. 

Losing clients

PwC has grappled with retaining key clients in China since the Evergrande-linked probe. AIA Group Ltd. and Li Ning Co Ltd joined a slew of Chinese clients to drop PwC even after the ban ended. 

Hong Kong’s market regulator, the Securities and Futures Commission, has switched its auditor from PwC to Deloitte, Hong Kong Economic Journal reported this week, citing unidentified sources.

Hong Kong’s audit regulator is still investigating PwC’s Hong Kong role in the Evergrande audit.

The firm also faces a lawsuit in Hong Kong filed by Evergrande’s liquidators as they try to recover investments in the failed developer. Evergrande defaulted in 2021 as China’s housing crisis began to spiral. The liquidators cited the accounting firm’s “negligence” and “misrepresentation” in the auditing work.

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This is my 600th weekly column being posted here. I am very grateful that I haven’t missed a week and that the ideas came, and the columns flowed. The first column was supposed to be one of about two dozen autobiographical experiences with takeaways for readers. I wanted to write what I’ve done with some sort of takeaway that would enable me to pay back my luck and success.

I wrote a dozen short columns and sent four or five to editors I knew with a memo of what they were about and how I wanted the written style to look like. I “developed” a particular writing style in a way that I thought would convey my feelings at the time of the event I wrote about. I gave this a lot of thought and even researched oddball writing styles to see if I was doing something totally off the wall. Specifically, I looked at William Faulkner and Gertrude Stein, but there were many others. With the confidence I was right, I sent them with a “demand” that I only wanted them published in that style. They all turned me down, and these were editors I knew and was writing for.

I was leaving an Accounting Today sponsored conference in 2013 with a few people when I was introduced to Michael Cohn, now the editor-in-chief of the web edition of Accounting Today. I gave him my spiel, and he said he would look at what I wrote. After I sent him what I wrote, he edited two of them into a more conventional style and sent me a draft of what he wanted to publish. Actually it read better with his changes so I gave the OK. 

Since then, I have collaborated with Michael on 599 other columns, requiring regular contact. He is easy to work with, smart and a good editor/writer, and we never had any conflicts. Of my original 24 columns, about a dozen were published, with the others pushed aside for more relevant or timely topics, and the ideas kept coming. I have an inventory of over 200 column ideas (on a spreadsheet of course) which all seemed great when I thought of them, but newer ideas kept coming up. My inventory has many great ideas, but the ideas I used were better. Occasionally Daniel Hood picked up some columns for the monthly print edition and also occasionally some went viral on LinkedIn. But I seem to have developed steady followers who also email me comments or ideas or who call me with specific practice management issues they have.

Before these 600 columns, I posted 250 weekly answers to questions colleagues asked me on www.CPAtrendlines.com that Rick Telberg edited, and 202 of these were made into two books Rick published. Also, my first 156 columns here were published in a book, also by CPA Trendlines, and about 100 of the columns here were included in my Memoirs of a CPA book that I self-published at amazon.com. I also used many of these 850 columns with practice management takeaways in my over 350 CPE and MAP programs for CPAs. Additionally, my Art of Accounting columns were awarded first place for a continuing series category by Folio Magazine in 2018, beating out PwC, which came in second. 

In addition to these 850 MAP columns, I have written and posted 1,175 blogs at www.withum.com/partners-network-blog. The focus of those blogs is to address issues my clients have. That blog is in its 13th year and during the first eight and a half years I posted twice a week and then switched to once a week. I haven’t missed a week there either. I also used that blog to write about nonprofessional interests I have, trying to share things I enjoy with the readers. I am also in my sixth year of writing a weekly Torah lesson that I email to over 550 friends. In addition to these weekly postings, I write a fair amount of technical and other articles and have been teaching a course at either Fairleigh Dickinson University or Baruch College continuously for the last 10 years. And I maintain some client responsibilities. I have been pretty busy.

I like writing and like having to come up with a topic each week, and I like how I examine and dissect everything I come across looking for something fresh to write about. However, things are changing for me and time is getting short, and I have other projects I want to pursue, including a series of two-minute videos for YouTube and Instagram that are easily accessible on mobile devices and new age media, a series of mini e-books, and some topics I want to research and write about. 

Posting a weekly column for 16 and a half years here and on CPA Trendlines provided a platform for me to be influential in the profession and to help move the careers forward of many starting their careers in public accounting. That was a personal honor I am very appreciative and proud of.

Something has to give and hitting No. 600 here seems like a good time to move on to some new things. I’ll still be around and, if something strikes me where I want to offer or inject my opinion, you will be able to read it here. But for now, I will take a halt to delve into some new projects.

I thank you for reading these columns and the many thousands that contacted me with whom I interacted one-on-one these 11 and a half years and five years before them when I wrote the Q&As. You can also search the AccountingToday.com database and as long as you put “Mendlowitz+topic” you should be able to find some columns I posted about that topic. Try to be as specific as possible and you should be able to get something that would help you. 

I am not going away. I am still at Withum and still at my laptop and will reply to everyone who emails me with a practice management concern they have. I will either email you something I posted or included in a speech handout, will call you, or will set up a short Zoom meeting to discuss your issue. I’ve been doing this my entire career and do not intend to stop now.

Thank you for reading these columns and being a part of my life the last 11 and a half years and a big thank you to Michael Cohn who has become a good friend.

All the best,

Ed

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The Internal Revenue Service, like other government agencies, is a target of thinning and deregulation under the Trump administration and the Department of Government Efficiency, formerly led by Elon Musk. With a new commissioner on the horizon, and everchanging guidelines, here are the latest moves from the IRS.

A campaign to grant Immigration and Customs Enforcement agents access to tax records gained some ground in May, as Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem permitted the IRS to share taxpayer information under very limited circumstances. 

In exchange for ICE’s provision of a person’s name, address and deportation order date, the IRS can release taxpayer data — but only for non-tax criminal matters.

Read more: IRS to lose billions if migrants stop filing taxes

The IRS has gone through a host of acting commissioners since Donald Trump took office and following the resignation of former Commissioner Danny Werfel. Douglas O’Donnell succeeded Werfel after his Jan. 20 resignation and retired just one month later.

After O’Donnell was Melanie Krause, who was chief operating officer of the IRS prior to being named acting commissioner in February. She held onto the top spot until her resignation in April, and was followed by Gary Shapley, a former special agent in the IRS’s Criminal Investigation division. 

Shapely held the role for two days, ceding it to present acting IRS Commissioner Michael Faulkender.

These moves, combined with mass layoffs, have created an air of uncertainty at the IRS.

According to a recent report from the Treasury Inspector General for Tax Administration, the agency is poised to become more earnest in its use of artificial intelligence during the auditing process in light of the dropped audits from its reduced headcount.

“There have been news reports about audits that are in process or that are even close to being wrapped up being canceled because members of that audit team were let go and they just didn’t have the staff to carry them on,” Anne Gibson, a senior legal analyst at Wolters Kluwer, told Accounting Today. “I imagine we’ll see more of that.”

Read more: DOGE downsizing, IRS commissioner switch complicate tax season

Below are noteworthy changes from the IRS and what accountants need to know.

IRS lead nominee Billy Long grilled by Senate Finance panel

Billy Long, the Trump nominee for IRS commissioner, faced probing questions from the Senate Finance Committee on monetary sums earned from promoting tribal tax credits and a failed 2022 Senate campaign, his plans for the agency if confirmed and more.

The former Republican congressman’s December nomination came during then-commissioner Danny Werfel’s term, which was set to conclude in November 2027 but ended when Werfel resigned on Jan. 20. Thus began the revolving door at the head of the IRS and the comings and goings of four acting commissioners.

“I am eager to implement the necessary changes to maximize our effectiveness while also remaining transparent with both Congress and taxpayers,” Long said in his opening statement. “It is important to also recognize the dedicated professionals currently at the IRS whose hard work too often goes unnoticed.”

Read more: Senate panel grills IRS commissioner nominee Billy Long

Samuel Corum/Bloomberg

DOGE cuts oust roughly one-third of IRS auditors

Between layoffs and deferred resignations under the Department of Government Efficiency, the IRS has parted ways with roughly 31% of its auditors.

This announcement follows in the wake of the more than 11,400 employees that were laid off earlier this year as part of the same push from DOGE to curtail perceived overspending from government agencies. 

Findings from the Treasury Inspector General for Tax Administration’s recent report concluded that these firings disproportionately impacted various divisions across the IRS, with divisions such as Tax Exempt & Government Entities, Large Business & International and Small Business & Self-Employed all recording double-digit headcount reductions as of March 2025.

Read more: IRS lost 31% of auditors in DOGE downsizing

IRS falls short of improper payment rate benchmark

A report released in May by the Treasury Inspector General for Tax Administration determined that the IRS still has work to do in achieving the goal of the Payment Integrity Information Act.

The 2019 act’s goal directs the IRA to reduce improper payment rates to less than 10% for four refundable tax credits — the Additional Child Tax Credit, the American Opportunity Tax Credit, the Earned Income Tax Credit and the Net Premium Tax Credit. For the 2024 fiscal year, improper payments for the four credits amounted to roughly $21.4 billion.

The rates for each were 29% for the Net Premium Tax Credit, 28% for the AOTC, 27% for the EITC and 11% for the ACTC.

Read more: Improper payment rate still too high at IRS

IRS to slightly raise HSA limits for 2026

IRS executives said the agency will raise inflation-adjusted amounts for health savings accounts in 2026, but only slightly.

Individuals with self-only coverage tied to a high-deductible health plan have an annual limitation of $4,400 for the 2026 calendar year, which is a $100 bump from 2025’s limit.

Other noteworthy increases include the $8,750 annual limitation for individuals with family coverage under a high-deductible health plan and the limits for what defines a high-deductible health plan, which have deductibles not less than $1,700 for self-only coverage (up $50 from 2025) or $3,400 for family coverage (from $3,300 in 2025), and for which annual out-of-pocket expenses (but not premiums) are less than $8,500 for self-only coverage (up $100 from this year) or $17,000 for family coverage (up from this year’s $16,600).

Read more: HSA limits to get a modest bump

Stefani Reynolds/Bloomberg

IRS crackdown on high-income non-filers needs improvement

Officials with the Treasury Inspector General for Tax Administration found that IRS “sweeps” that uncovered instances of high-income people not filing taxes were more productive than their non-sweep counterparts, both in terms of closure rate and dollars collected.

The TIGTA report said that revenue officers were able to bring in between 30% to 68% more on average per HINF sweep case than non-sweep case for tax years 2014 through 2020.

“When people don’t file a tax return they’re required to, it’s not fair to those hardworking taxpayers who responsibly do their civic duty under the laws of our nation,” Danny Werfel, former IRS commissioner, said during a press call last year. “When people don’t file their taxes, they need to know there’s a consequence, [and] this is why I was particularly troubled to learn when I became commissioner that the IRS had to back off our core compliance work on non-filers.”

Read more: IRS faces issues in crackdown on high-income non-filers