Luckin Coffee has announced the appointment of independent accounting firm Marcum Bernstein & Pinchuk LLP as the independent auditor, effective September 17, 2020.
The appointment has been approved by Luckin Coffee's Audit Committee and Board of Directors.
Marcum replaces Ernst & Young Hua Ming LLP, which was previously Luckin Coffee's independent auditor.
In April this year, Luckin Coffee's own disclosures of financial fraud came under widespread scrutiny.
Investigations conducted in China revealed that Luckin Coffee's domestic operating entities and related management personnel, as well as related third-party companies, had engaged in large-scale fictitious transactions, inflated revenues, costs and expenses, and false advertising, in violation of China's Accounting Law and the Anti-Unfair Competition Law.
Luckin Coffee's financial fraud has sparked a crisis of confidence among international investors in Chinese companies. In his presentation late in August, leading Chinese entrepreneur Yu Minhong slammed Luckin Coffee.
Luckin Coffee is a classic example of a company with financial fraud that is a disgrace to the Chinese people," Yu, chairman of the US-listed New Oriental Education Technology Group, said.
The company has recently shown signs of life as single-store cash flow has turned positive, with over 4,000 stores returning to normal operations.
Excluding the stores that are not yet open for business, Luckin Coffee, which is embroiled in the financial fraud controversy, has seen cash flow turn positive in stores that have resumed normal operations, the Securities Daily said, citing sources close to the company.
Affected by the outbreak, Luckin Coffee still has more than 300 university stores that are temporarily out of business. As of December 31, 2019, the number of Luckin Coffee's directly operated stores is 4,507. This may mean that over 4,000 Luckin Coffee stores have resumed normal operations.
