The Securities and Futures Commission Imposes Fines on Three Companies for Negligence in Managing Embezzlement by Subsidiaries

[Asia Economy Reporter Ji Yeon-jin] G2R, listed on the KOSPI market, will be fined by financial authorities due to negligence in managing embezzlement by its subsidiary.

The Securities and Futures Commission held its 4th meeting on the 23rd and approved sanctions against three companies that prepared and disclosed financial statements in violation of accounting standards.

First, G2R's subsidiary had understated accounts payable equivalent to the embezzled amount in the financial statements from 2012 to the first quarter of 2019. Reflecting this as is, the consolidated equity was overstated, resulting in a fine. An auditor will be appointed for two years. The final decision on fines for the company and related parties will be made by the Financial Services Commission.

Additionally, Samjong Accounting Corporation, the external auditor of the company, was fined and required to contribute an additional 30% to the joint compensation fund. G2R will also face a two-year restriction on audit services. One certified public accountant (CPA) from this accounting firm was sanctioned with a two-year audit restriction on G2R and a one-year audit restriction on KOSPI-listed and designated companies. Three other CPAs received a one-year audit restriction on G2R and a one-year audit restriction on listed and designated companies.

The Securities and Futures Commission also reported Hwaseung TNC (formerly Hwaseung Gongjo), an unlisted company, and its former executive to the prosecution for manipulating accounting records by falsely recording current expenses as tangible assets and omitting liabilities such as unpaid accounts to conceal net losses. Securities issuance will be restricted for eight months. An auditor will be appointed for two years, and Woori Accounting Corporation was ordered to contribute an additional 20% to the joint compensation fund and face a two-year audit restriction on Hwaseung TNC.

Unlisted company HS Ad had an embezzlement of 50.3 billion KRW by a finance officer over seven years from 2012 to 2018, resulting in understated accounts payable and an overstated equity. Due to failure to detect this, a fine was imposed along with a one-year auditor appointment restriction.

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