Financial Services Commission imposes fines and audit designation sanctions on Nature Republic for 'Accounting Standards Violations'

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[Asia Economy Reporter Lee Seon-ae] The Securities and Futures Commission under the Financial Services Commission announced on the 14th that it has decided to sanction Nature Republic for violating accounting standards.

The Securities and Futures Commission explained, "At the 22nd meeting held on this day, it was decided to impose a fine of 90 million KRW on Nature Republic for preparing and disclosing financial statements in violation of accounting standards, and to designate an auditor restriction for one year."

According to the Securities and Futures Commission, Nature Republic understated sales and selling and administrative expenses from 2015 to 2018. Since the company directly bears the risks and rewards of products sold through consignment franchisees, it should recognize sales and related costs at the point of final consumer sale. However, it recognized sales at the time of delivery to consignment franchisees, omitting related costs.

Sanctions were also decided against Jinsung Accounting Corporation and its affiliated certified public accountant for violating the "Act on External Audit of Stock Companies, etc.," including restrictions on auditor qualifications. Jinsung Accounting Corporation was pointed out for failing to comply with the obligation that prohibits the same director from performing audit duties for six consecutive business years of the company. The Korean Institute of Certified Public Accountants (Commissioned Supervisory Committee) decided on measures such as audit work restrictions against Jinsung Accounting Corporation and one affiliated certified public accountant.

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