The Securities and Futures Commission Imposes Fines on SJ K for Inflating Sales and Equity Capital

[Asia Economy Reporter Park Jihwan] The Securities and Futures Commission under the Financial Services Commission announced on the 12th that at its 3rd meeting, it resolved to take measures such as appointing an auditor, imposing fines, and levying penalties against SJKE for preparing and disclosing financial statements in violation of accounting standards.

According to the Securities and Futures Commission, SJKE, a KOSDAQ-listed company, was found to have overstated its equity capital by omitting deferred corporate tax liabilities arising from the revaluation of factory land and buildings from the end of December 2013 to the end of December 2014 in its financial statements.

Additionally, despite the requirement to account for related party transactions on a net basis, SJKE recognized them on a gross basis, resulting in overstated sales, cost of sales, accounts receivable, and accounts payable for 2013 and 2014. Furthermore, it was pointed out that research and development expenditures that did not meet the criteria for capitalization were recognized as development costs, leading to an overstatement of equity capital and net income for the period.

Accordingly, the Securities and Futures Commission imposed fines of 23.6 million KRW, penalties of 25 million KRW, and a one-year auditor appointment. For auditors and certified public accountants who violated auditing standards while auditing the company’s financial statements, measures such as restrictions on audit work were also resolved.

Hanul Accounting Corporation and Shinhan Accounting Corporation, which violated obligations such as the replacement of the same director, were subjected to two years of audit work restrictions and an additional 30% contribution to the joint damage compensation fund.

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