RISE Education Cayman Ltd Announces Resignation of Independent Registered Public Accounting Firm

Rhea-AI Summary

RISE Education Cayman Ltd (NASDAQ: REDU) announced the resignation of Ernst & Young Hua Ming LLP as its independent registered public accounting firm, effective November 19, 2021. EY's audit for the year ending December 31, 2020, did not contain adverse opinions, but issues arose during the audit for 2021 concerning new regulatory requirements from the Chinese government regarding not-for-profit registration for academic institutions. RISE has not provided EY with the necessary information to resolve these issues, leading to the inability to progress further with the audit.

Positive

• No adverse opinion from EY on past audit reports.
• No disagreements between RISE and EY on accounting practices.

Negative

• Inability to resolve regulatory issues with EY leading to stalled audit progress.
• Potential impact of new Chinese regulations on the company's operations.

BEIJING, Nov. 22, 2021 /PRNewswire/ -- RISE Education Cayman Ltd (the "Company") (NASDAQ: REDU) today announced that Ernst & Young Hua Ming LLP ("EY") had resigned as the independent registered public accounting firm of the Company, effective November 19, 2021.

EY's audit report on the Company's consolidated financial statements as of and for the year ended December 31, 2020 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the audit for year ended December 31, 2020, there was no disagreements, as defined in Item 16F (a)(1)(iv) of Form 20-F and the related instructions, between the Company and EY on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of EY would have caused them to make reference thereto in their report on the consolidated financial statements for such year.

EY identified certain regulatory requirements during the audit of the Company's consolidated financial statements for the year ended December 31, 2021 that require further assessment with respect to the impact of these regulatory requirements on the Company's operations: "Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education Stage" (the "Opinion"), and the circular published by the Chinese Ministry of Education and two other government authorities on its website to implement the Opinion, which requires all academic after-school tutoring institutions to complete registration as not-for-profit organization by the end of December 31, 2021. As of the date of EY's resignation, the Company has not been able to provide additional information to EY to resolve the above-mentioned matter to their satisfaction. Accordingly, EY were unable to progress their audit or render their audit report on our consolidated financial statements for the year ended December 31, 2021.

The Company intends to engage a new audit firm in due course.

Safe Harbor Statement

This current report contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "believes," "anticipates," "intends," "estimates" and similar statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about RISE and the industry. All information provided in this current report is as of the date hereof, and RISE undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although RISE believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

For investor and media inquiries, please contact:
Luna Xing
RISE Education
Email: riseir@rdchina.net
Tel: +86 (10) 8559-9191

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SOURCE RISE Education Cayman Ltd

FAQ

What prompted the resignation of Ernst & Young from RISE Education?

Ernst & Young resigned due to unresolved regulatory compliance issues related to new requirements for not-for-profit registration in China.

What are the implications of the new regulatory requirements for RISE Education?

The new Chinese regulations may affect RISE's operational structure and require adjustments to comply with the not-for-profit status by the end of 2021.

What has been the impact of EY's resignation on RISE Education's auditing process?

As a result of EY's resignation, RISE Education is currently unable to progress with its audit for the year ended December 31, 2021.

When did EY's resignation become effective?

Ernst & Young's resignation became effective on November 19, 2021.