Financial Services Commission Reports Winia Dimchae and SecuB to Prosecutors for Accounting Standards Violations

[Asia Economy Reporter Ji Yeon-jin] The Financial Services Commission announced on the 18th that at its 3rd meeting, it decided to impose fines on Winia Dimchae and Secube for preparing and disclosing financial statements in violation of accounting standards, and to notify the prosecution for false statements of important matters in their business reports.

Winia Dimchae was investigated to have overstated sales and cost of sales by directly managing inventory held by specialty stores from 2015 to the third quarter of 2018, arbitrarily adjusting returned or exchanged products in the company's computer system, and failing to reverse already recognized sales or improperly reversing part of the overstated sales after exempting the specialty stores from the obligation to repay product purchase payments.

In addition, the Financial Services Commission revealed that Winia Dimchae used financial statements prepared in violation of accounting standards when submitting the securities registration statement in June 2016. The Commission imposed a fine of 906 million KRW on Winia Dimchae and a fine of 10 million KRW on the former CEO, along with notifying the prosecution. The responsible executive was recommended for dismissal, and an auditor will be appointed for two years.

Secube was also investigated to have recorded fictitious sales and cost of sales by intervening in confirmed sales and purchase transactions between clients from 2015 to last year, and to have reduced liabilities by not recording the margin generated from fictitious sales transactions as accounts payable. The Financial Services Commission imposed a fine of 811.4 million KRW on Secube, and fines of 17.1 million KRW each on the former CEO and the accounting staff. The former CEO was recommended for dismissal and the prosecution was notified.

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