Financial Supervisory Service Reviews 229 Suspicious Companies... 90% Found Violating Accounting Practices

[Asia Economy Reporter Ji Yeon-jin] The Financial Supervisory Service announced on the 13th that, as a result of conducting allegations review and audits on 229 companies, including 168 listed companies and 61 unlisted companies, 208 companies (90.8%) were found to have violated accounting standards.

The allegations review system examines companies based on complaints and reports regarding correction of accounting errors or violations of accounting standards, violations discovered during supervisory and inspection duties, and audits requested by central administrative agencies. Over the past five years, a total of 229 companies underwent allegations review, with 50.2% (115 companies) voluntarily correcting accounting errors, 18.4% (42 companies) identified during supervisory and inspection duties, 14.0% (32 companies) identified during review and audit, and 8.3% from complaints and reports.

The results of the allegations review showed that among the violations of accounting standards, 44 companies (21.1%) were intentional, 59 companies (28.4%) were due to gross negligence, and 105 companies (50.5%) were due to negligence. In cases of allegations review and audit based on complaints and reports, the rate of intentional violations was as high as 72.2%, whereas in cases of error correction, the rate of intentional violations was only 9.0%. Important violations that distorted current profit or loss or equity accounted for about 82.7% of the companies cited.

The Financial Supervisory Service took measures against 202 companies, including listed companies, where accounting violations were confirmed. It imposed fines totaling 33.29 billion KRW on 63 companies and imposed penalties amounting to 440 million KRW on 13 companies. Officials from 35 companies were reported to the prosecution, and dismissal was recommended for executives or CEOs of 45 companies. Responsibility for audit negligence was held against auditors of 134 companies, resulting in actions against 151 audit firms and 338 certified public accountants.

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