HONG KONG, Aug 22 (Reuters) - Chinese regulators will

likely order business suspension for a big part of

PricewaterhouseCoopers' auditing unit in mainland China for six

months, as part of punishment for its work on troubled property

developer Evergrande, five sources said.

The business ban is expected to be imposed on PwC Zhong Tian

LLP, the registered accounting entity and the main onshore arm

of PwC in China, said the sources, who have knowledge of the

matter but declined to be named as the information was private.

The six-month ban is expected to focus on PwC Zhong Tian's

securities-related business - which would affect the firm's work

for clients including listed firms, IPO-bound companies, and

investment funds on the mainland, said the sources.

It will be accompanied by a fine which is expected to be at

least 400 million yuan ($56 million), three of the people said.

Combined with the business suspension, it would be the toughest

ever penalty received by a Big Four accounting firm in China,

the three people added.

The PwC penalties, which are being mainly handled by

China's Ministry of Finance (MOF), the primary regulator of

accounting firms in the country, are yet to be finalised, said

one of the sources.

"Given this is an ongoing regulatory matter, it would not be

appropriate to comment," a PwC spokesperson said in statement.

The MOF did not immediately respond to requests for comment.

PwC has been under regulatory scrutiny for its role in

auditing China Evergrande Group ( EGRNF ) since the troubled

property developer was accused in March of a $78-billion fraud.

PwC audited Evergrande for almost 14 years until early 2023.

Chinese regulators are expected to announce PwC's penalties

in the coming weeks, three of the people said.

The Financial Times first reported on Thursday that PwC

China expected a six-month business ban by Chinese authorities

as early as September.

Bloomberg in May reported that the firm faces a record

fine of at least 1 billion yuan ($140 million).

The looming PwC penalties have led to an exodus of clientele

and prompted cost cuts and layoffs at the firm in recent months,

sources have said, clouding the firm's prospects in the world's

second-largest economy.

As part of the penalties, PwC would be barred from signing

off on certain key documents for clients in mainland China such

as results and IPO applications as well as from carrying out

other securities-related services, the sources said.

The business suspension could also affect PwC Zhong Tian, as

a whole, from taking on new state-owned or listed clients in the

next three years, as per Chinese regulations.

Last year, domestic regulators reiterated state-owned firms

and listed companies should be "extremely cautious" about hiring

auditors that have received regulatory fines or other penalties

in the past three years.

Deloitte's Beijing branch in March last year was fined 211.9

million yuan by Chinese authorities and the branch's operations

were suspended for three months after serious deficiencies were

found in its audit of China Huarong Asset Management.

($1 = 7.1322 Chinese yuan renminbi)

(Reporting by Xie Yu, Julie Zhu and Beijing newsroom;

Additional reporting by Engen Tham; Editing by Sumeet Chatterjee

and Lincoln Feast.)