The Securities and Futures Commission Reports CMS Edu to Prosecutors and Imposes Fines for 'Accounting Standards Violations'

[Asia Economy Reporter Park Ji-hwan] The Securities and Futures Commission under the Financial Services Commission held a regular meeting on the 1st and announced that it resolved to take measures such as referring CMS Edu to the prosecution for violating accounting standards.

According to the Securities and Futures Commission, the educational content company CMS Edu fabricated sales slips for fictitious sales despite no actual tuition fee income or textbook sales occurring from 2016 to 2018, thereby falsely recording sales. During the same period, to reduce expenses, the company arbitrarily excluded certain subjects from the retirement benefit provisions and applied a retirement allowance estimation method that calculated lower retirement benefits, resulting in an understatement of retirement benefit liabilities.

The Securities and Futures Commission decided on a fine of 179.4 million KRW for CMS Edu, a two-year designation of an auditor, and referral of the company and former responsible executives to the prosecution.

Shinhan Accounting Corporation, which audited the company's financial statements and violated auditing standards, was imposed additional measures including a 20% increase in the joint compensation fund and a two-year restriction on auditing CMS Edu. For the affiliated certified public accountants, a one-year restriction on auditing duties was decided.

The Securities and Futures Commission also imposed a fine of 181.2 million KRW and a one-year auditor designation on Cheongdam Learning, which reflected the financial statements of its subsidiary that violated accounting standards in its consolidated financial statements without verification.

For L&K Biomed, a medical device manufacturer that overstated sales, the commission decided on a fine of 302.6 million KRW and a two-year auditor designation, among other measures.

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