HONG KONG (AP) — The recently acquired film unit of Chinese e-commerce giant Alibaba said Friday that a review has uncovered possible accounting irregularities.
The disclosure by Alibaba Pictures Group comes as its parent company readies for what's expected to be a mammoth initial public offering in New York next month.
Alibaba Pictures said in a statement to the Hong Kong stock exchange that a new management team found "certain possibly non-compliant treatment of financial information" in the company's accounts. As a result, it is delaying the release of its first-half earnings.
The company said the accounting irregularities date to before Alibaba's purchase of the company in June.
Alibaba has made a slew of other recent acquisitions, including the purchase of a 50 percent stake in China's most popular soccer team, Guangzhou Evergrande.
The film business said the discrepancies mean it's likely that there has been "insufficient provision for impairment of certain assets" in the January-June period. That could mean the company has valued assets at more than they are worth.
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