(Adds detail, lawyer and analyst comments)

Feb 11 (Reuters) - Boeing Co shares plunged as much as 11 percent on Thursday, hit by a report that regulators are probing the company’s accounting and by mounting concerns about slowing sales and production.

The U.S. Securities and Exchange Commission is investigating whether Boeing properly accounted for the costs and expected sales of two of its biggest jetliners, the 747 and 787, Bloomberg reported on Thursday, citing people with knowledge of the matter.

The SEC, under Chair Mary Jo White, has stepped up scrutiny of corporate accounting practices.

The company declined to comment on the Bloomberg report. “We typically do not comment on media inquiries of this nature,” a spokesman said.

On Wednesday, Boeing said that competitive pressures from rival Airbus were prompting it to cut middle-management and executive ranks at its commercial airplane unit to reduce costs. It also warned that it might face about $9.7 billion in charges for the 787 and 747 programs if it cannot sell more of both aircraft.

The issues, at a time when Boeing’s jetliner order book is bursting with $432 billion in orders, show the deep financial hole that the 787 has dug for the world’s biggest plane maker.

The high-tech jet has racked up more than $30 billion in deferred production and tooling costs that Boeing has not yet charged against its income statement.

“It is perhaps the eye-watering size of this 787 deferred balance that has drawn the SEC’s interest,” RBC analyst Robert Stallard wrote in a research note on Thursday.

Boeing’s shares ended down 6.8 percent at $108.44 on Thursday, after falling earlier as low as $102.10 and erasing about $7.8 billion of the company’s market value. Volume was about 33.7 million shares, the busiest day since July 2013. The decline comes on top of an 18 percent fall in the share price so far this year.

The report of an SEC investigation comes after Boeing took an $885 million pre-tax charge in the fourth quarter to write off some of the deferred costs of the 747 because of slowing sales of that model.

While the 787 continues to log new orders, and output of that plane is rising, the 747 has garnered only two net sales in the last two years, and Boeing is cutting production sharply.

Boeing has long used an unusual accounting method, known as program accounting, to defer the costs of producing jetliners and spread them over a large block of airplanes. For the 787, Boeing has delivered just over a quarter of the 1,142 planes it has sold.

“(It) seems way too early to make a judgment call” on whether Boeing’s estimates for manufacturing costs are wrong, said Peter Arment, an analyst at Sterne Agee, who recommended buying the stock on Thursday. “It’s too early to book a charge.”

Boeing has been accused of leaning on auditors in the past. The company dismissed two audit employees in 2007 for leaking information about problems with the company’s compliance with Sarbanes-Oxley rules on computer security.

CONCERNS ABOUT PROGRAM ACCOUNTING

At the same time, the accuracy of program accounting is a longstanding concern within Boeing, said John Tollefsen, a lawyer in Lynnwood, Washington.

He said he is not involved in the whistleblower complaint that appears to have sparked the SEC investigation. But he said at least four Boeing employees had gone to him in the past with similar complaints though he declined to say what if anything came of the complaints.

The SEC probe, if confirmed, would compound what is already a tough year for Boeing as it cuts output to bring out a new 737 model, Stallard said. “A big adjustment to Boeing’s accounting would probably not have a cash impact,” he added, “but we think it would not be positive for investors’ sentiment.”

Boeing appears to be alone in using program accounting. Accountants said they were not aware of other U.S. companies that employ it, and defense contracts are not handled that way because they have a different structure than airplane sales.

The 747 is seen by many as a dying program, eclipsed in sales by newer two-engine planes that burn less fuel than the four-engine 747.

But Boeing has insisted that about 200 freight versions of the 747 will be needed starting in 2019 to replace older versions of the plane that are due to retire. (Reporting by Alwyn Scott in Seattle, David Ingram in New York, Sarah Lynch in Washington, D.C., and Radhika Rukmangadhan in Bengaluru; Editing by Dan Grebler and Cynthia Osterman)