by Lee Changhwan
Published 26 Apr.2022 15:11(KST)
[Asia Economy Reporter Changhwan Lee] A certified public accountant (CPA) affiliated with Samdeok Accounting Corporation, who was accused of improperly evaluating the value of Kyobo Life Insurance's put option and copying a report received from a client to create a false evaluation report, has been found guilty.
On the 26th, Judge Hwanseung Yang of the Criminal Division 3 at Seoul Central District Court sentenced CPA A, who was indicted for violating the Certified Public Accountant Act, to four months in prison with a one-year probation.
The Criminal Division 3 stated, "The defendant accepted a request and disguised the value evaluation results provided by the principal as if it were work fairly performed by himself," adding, "Considering various factors such as the period and scope of work and data collection, it is reasonable to conclude that the defendant was not the author of the report and that there are false entries."
It further noted, "The seriousness of this case is very high," and criticized, "The defendant betrayed professional ethics, damaging the trust in CPAs and value evaluations, and despite anticipating the significant economic impact of the report, unlawfully intervened, which aggravates the nature of the crime."
A, working at Samdeok Accounting Corporation, was brought to trial on charges of receiving the Kyobo Life Insurance valuation report conducted by Anjin Accounting Corporation from Apalma Capital and fabricating it as if he had prepared it himself.
A strongly denied the allegations, arguing that value evaluation is not a task exclusively performed by CPAs and that the results were identical, but the first trial court found all charges guilty.
The Criminal Division 3 ruled, "It is correct to consider value evaluation as part of the duties," and added that value evaluation requires the expertise, independent, and objective judgment of a qualified CPA.
In particular, it stated, "The received results significantly deviate from the stock price trends of life insurance companies over the past 10 years and show a marked difference from the valuation results of other accounting firms."
It continued, "Considering these points comprehensively, it is reasonable to conclude that the defendant was aware of the falsity of the received valuation results but deliberately ignored them for the benefit of the principal."
However, the court explained the sentencing by taking into account that the defendant had no prior criminal record. Previously, the prosecution had requested a one-year prison sentence for A.
A Kyobo Life Insurance official stated, "We respect the first trial court's ruling," and added, "We hope that illegal acts by accounting firms that fail to maintain independence and fairness will be eradicated and that this will serve as a warning against inappropriate practices between private equity funds and accounting firms."
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