The Securities and Futures Commission imposes a fine on Doosan Enerbility for "overstating sales"

Understatement of Construction Loss Provisions Also Pointed Out
Representative Fine... Auditor Designated for 3 Years

Doosan Enerbility and Samjong Accounting Corporation, which was responsible for auditing Doosan Enerbility's business report, were fined for violating accounting standards, including overstating sales.

The Financial Services Commission's Securities and Futures Commission announced on the 7th at its 3rd meeting that it had decided to take measures such as designating auditors for four companies, including Doosan Enerbility, which prepared and disclosed financial statements in violation of accounting standards.

Regarding Samjong Accounting Corporation and its certified public accountants who violated audit standards while auditing the company's financial statements, measures such as restrictions on audit work were decided.

Upon reviewing Doosan Enerbility's financial statements for the three years from 2017 to 2019, the Securities and Futures Commission detected issues such as overstated sales, understated construction loss provisions, understated impairment losses, refusal to submit data, and violations in the securities registration statement.

First, the Commission judged that sales were overstated or construction loss provisions were understated by underestimating the total estimated construction cost for some projects, including overseas construction projects.

It also judged that impairment losses on investments in subsidiaries and other stocks were understated. The amounts were 134.8 billion KRW in 2017, 96.6 billion KRW in 2018, and 253.2 billion KRW in 2019 on a separate basis.

The failure to submit some requested materials without justifiable reasons was also seen as problematic. The use of financial statements prepared in violation of accounting standards in securities registration statements submitted from March 2018 to February 2022 was also considered a violation of securities registration statement requirements.

Accordingly, the Commission imposed fines of 20 million KRW and 12 million KRW on two CEOs respectively. The fines on the company and one former CEO will be finally decided by the Financial Services Commission in the future. Additionally, measures such as a three-year auditor designation, a dismissal recommendation for one former CEO, referral to prosecution for the company and one CEO, and corrective demands were taken.

Samjong Accounting Corporation, which audited Doosan Enerbility, was also fined for negligence in audit procedures related to this matter. The final decision on the fine for the auditor will be made by the Financial Services Commission in the future. Samjong Accounting Corporation was ordered to additionally contribute 10% to the joint damage compensation fund and was restricted from auditing Doosan Enerbility for one year.

Furthermore, three certified public accountants responsible for this case were ordered to have a one-year restriction on auditing Doosan Enerbility, a one-year restriction on auditing designated companies, and six hours of job training.

Meanwhile, on the same day, the Securities and Futures Commission also decided to impose fines on KONEX-listed company Aha, unlisted company Pantech C&I Engineering, and unlisted company SKN Pulse, among others.

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