Second Ostem Implant 'Sudu-ruk'... 1 in 10 Companies with Internal Accounting Irregularities

[Asia Economy Reporter Ji Yeon-jin] It has been revealed that more than 10% of companies receiving adverse audit opinions on their internal accounting control systems had inadequate cash controls, similar to the Ostem Implant case, which involved the largest embezzlement incident in history.

According to the ‘Audit Committee Journal Issue 20’ published on the 21st by Samjong KPMG (Chairman Kim Gyo-tae), the proportion of adverse audit opinions on internal accounting control systems due to insufficient cash controls was 14.4% in 2019 and 12.4% in 2020. This is a significantly higher percentage compared to just one case (0.3%) reported in the United States in 2020.

This figure aligns with claims that the recent large-scale embezzlement incident at Ostem Implant occurred due to weak internal accounting controls, such as inadequate management of OTPs and public certificates required for cash withdrawals, and manipulation of supporting documents in daily cash reports.

Han Eun-seop, Head of the Audit Division at Samjong KPMG, emphasized, “Large-scale embezzlement and misappropriation cases like the recent one often occur because weak internal controls provide opportunities. These incidents can severely impact normal business operations, listing maintenance, credit ratings, debt extensions, reputation, and shareholder relations. Therefore, audit committees must verify whether management is effectively operating internal controls related to cash.”

The internal accounting control system is an internal control mechanism designed to ensure that companies prepare and disclose reliable financial statements. Protecting assets and preventing fraud are explicit objectives of this system.

Kim Yoo-kyung, Leader of the Audit Committee Support Center (ACI) at Samjong KPMG, suggested, “When audit committees oversee internal accounting control systems, they must thoroughly check whether control activities to manage the risk of cash embezzlement are being practically implemented.”

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