Last Year 72 Accounting Fraud Reports, 13% Increase YoY...Reward Money 410 Million Won, Record High

[Asia Economy Reporter Park Jihwan] The number of accounting fraud reports filed last year increased by nearly 13% compared to the previous year. During the same period, the amount of reward payments for reports increased more than threefold, reaching an all-time high.

The Financial Services Commission and the Financial Supervisory Service announced on the 7th that the number of accounting fraud reports last year was 72, an increase of 8 cases (12.5%) from 64 cases the previous year. Among these, 17 cases were anonymous reports, which is interpreted as the introduction of the anonymous accounting fraud reporting system in March last year having an impact on activating reporting.

Until now, to prevent abuse of reporting, only reports with real names were subject to audits. However, audits were conducted only when specific accounting fraud evidence was attached to prevent damage caused by false reports. The financial authorities explained, "About 20% of all reports submitted internal company data or objective evidence that can be used for accounting audit work."

Regarding the reported accounting fraud cases, a total of 5 cases were resolved last year. The Securities and Futures Commission regarded most of the company's illegal motives as 'intentional' (4 cases) and took measures such as prosecution referral and imposition of fines. The proportion of intentional findings among listed companies audited from 2018 to 2020 was about 13%, but last year, the proportion of intentional findings reached 80%.

Last year, a total of 408.4 million KRW was paid for 12 accounting fraud reports. Compared to 119.4 million KRW for 2 cases the previous year, this amount increased by 3.42 times. This is the largest amount ever paid in rewards for accounting fraud reports. This is due to the continuous expansion of the reward budget to activate internal whistleblowing on accounting fraud. This year’s budget for accounting fraud report rewards increased by 60 million KRW compared to last year, and last year it expanded by 360 million KRW compared to the previous year. The total amount of reward payments made between 2019 and 2020 was 494.1 million KRW, with an average payment per person of 54.9 million KRW.

The accounting fraud reporting reward system was introduced in 2006 to ensure accounting transparency. It pays rewards to whistleblowers who report fraudulent acts related to accounting information of companies subject to external audits. The maximum payment limit is 1 billion KRW.

A financial authority official said, "With the full revision of the External Audit Act in November 2018, the protection of internal whistleblowers has been strengthened," adding, "We are making efforts to protect whistleblowers by assigning dedicated personnel for whistleblower protection, so we ask that if you become aware of corporate accounting fraud, please actively report it."

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