92 Accounting Fraud Reports Last Year, Up 28% YoY... 228.6 Million KRW in Rewards Paid

Source=Financial Supervisory Service

[Asia Economy Reporter Lee Jung-yoon] The number of accounting fraud reports submitted to the Financial Supervisory Service (FSS) last year increased by approximately 28% compared to the previous year.

According to the FSS on the 17th, the number of accounting fraud reports last year was 92, marking a 27.8% increase from the previous year. Among these, 14 reports were made anonymously, which appears to have contributed to the activation of reporting following the introduction of the anonymous reporting system in March 2020.

From 2017 to last year, a total of 22 companies underwent accounting reviews and audits based on accounting fraud reports, of which 13 companies have completed measures following the audit results. The remaining 9 companies are currently under review or audit. The Financial Services Commission’s Securities and Futures Commission regarded most of the companies' illegal acts as intentional and took strict measures such as imposing fines and referring cases to the prosecution. Major violations included 10 cases of overstated sales, 2 cases of overstated assets, and 1 case of omitted liability recognition.

Last year, the Financial Services Commission paid rewards totaling 228.6 million KRW to five whistleblowers who reported accounting fraud. The total amount of rewards paid decreased by 44% compared to the previous year. However, the average amount paid per person was 45.72 million KRW, an increase of 11.69 million KRW (34.3%) from 34.03 million KRW the previous year. Since the reward payment limit was raised from 100 million KRW to 1 billion KRW in November 2017, a total of 715 million KRW has been paid to 13 whistleblowers from 2019 to last year, with an average of 53.96 million KRW per person.

The FSS is making efforts to enhance the quality of accounting fraud reporting. Since January 24 of this year, reports of accounting fraud by listed companies and others can also be submitted via mobile devices. Additionally, following the full revision of the External Audit Act, rewards are paid not only for reports on listed companies but also for accounting fraud reports on all companies subject to external audits. Reports of accounting fraud by listed companies are received and reviewed by the FSS, while reports concerning unlisted companies are handled by the Korean Institute of Certified Public Accountants. Furthermore, the FSS operates systems such as the anonymous reporting system and dedicated personnel for protecting the identity of internal whistleblowers to strengthen protection measures.

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