Last Year’s Accounting Fraud Whistleblower Rewards Total 119.4 Million Won... Highest Amount Ever

[Asia Economy Reporter Park Jihwan] Park, a sales business employee who worked at Company A for over 20 years and recently retired, discovered that the company fabricated sales records by falsely reporting products as sold despite no actual sales, due to poor overseas business performance and deteriorating sales results. Although there was no movement of goods in the warehouse, the company fabricated the process as if shipments and actual sales had occurred. Park reported the accounting methods related to sales and cost of sales to the Financial Supervisory Service (FSS). Following an investigation, the FSS confirmed accounting fraud at Company A, and Park received a reward.

The Financial Services Commission and the Financial Supervisory Service announced on the 8th that they paid a total of 119.4 million KRW in whistleblower rewards for accounting fraud reports last year. This is the highest amount ever paid for accounting fraud whistleblower rewards, increasing by a staggering 36.18 times compared to 3.3 million KRW in 2018. The number of accounting fraud cases rewarded last year increased from one case the previous year to two cases.

The accounting fraud whistleblower reward system was introduced in 2006 to ensure accounting transparency. It provides rewards to whistleblowers who report fraudulent activities related to accounting information of companies subject to external audits. The maximum reward amount is 1 billion KRW.

An FSS official stated, "According to the reward regulations, the amount of the reward is determined based on how effectively the reported information contributes to sanctions," adding, "Both cases last year included specific supporting evidence, which significantly increased the reward amounts."

The number of accounting fraud reports received by the FSS last year decreased by more than 30% compared to the previous year. Last year, there were a total of 64 reports, down 31.2% (29 reports) from 93 reports the year before. Although the number of reports decreased, the financial authorities explained that there has been an increase in reports including specific supporting evidence such as internal documents, rather than just analyzing and presenting simple disclosure content as in the past.

The financial authorities plan to increase the whistleblower reward budget by 36 million KRW compared to the previous year to encourage internal reporting of accounting fraud. To this end, they plan to push for amendments to the External Audit Act in the first half of this year to allow anonymous reporting.

This content was produced with the assistance of AI translation services.