SEC launches accounting probe of Deloitte audit client

SEC launches accounting probe of Deloitte audit client

Securities and Exchange Commission launches investigation into possible accounting irregularities at New Oriental Education & Technology Group

THE ACCOUNTS of US-listed Chinese private education company New Oriental Education & Technology Group are to be investigated by America’s regulatory watchdog.

Deloitte Touche Tohmatsu, which has audited the company since 2006, has yet to sign off on its accounts for the year ended 31 May.

The Beijing-based company said on 17 July that the Securities and Exchange Commission (SEC) had launched an investigation into possible accounting irregularities associated with its operating structure.

The SEC probe centres on whether there was “sufficient basis” for the consolidation of a variable interest entity – a structure that has helped Chinese companies list overseas – into the company’s financial statements.

A day after New Oriental said it was being investigated, research company Muddy Waters claimed it had lied to shareholders about its learning centre growth and financial performance. New Oriental has denied the allegations.

Deloitte has said it will cooperate with the SEC and consider the appropriate and necessary response to the Muddy Waters report, according to Reuters.

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