[Asia Economy Reporter Jang Hyowon] A-Root clarified on the 23rd that regarding the 'adverse' opinion received last year on its internal accounting control system, "It was not due to an actual internal control problem, but rather because some criteria set by the auditor at the end of last year were partially unmet," and added, "Since the strengthened internal control system was already established through external consulting earlier this year, the related risks have been resolved."
A-Root's external auditor expressed an adverse opinion last year concerning the operation status of the internal accounting control system, stating that the business processes related to investment and financing need to be operated through sufficient and appropriate internal controls.
An A-Root official said, "Since the current management acquired the company in July 2019, they have continuously improved the internal control standards and have met the internal control levels required by auditors every year, thus consistently receiving a clean opinion. However, amid the ongoing COVID-19 situation, it seems that some internal control criteria required by the external auditor were unmet during the process of making new business investments to secure future growth engines last year."
He continued, "This internal accounting control system issue is not related to internal control risks associated with the possibility of fraud such as embezzlement or breach of trust by insiders, but rather focuses on preparing supplementary measures aimed at strengthening investment-related processes. The company has already commissioned KPMG (Samjong Accounting Corporation) to complete the establishment of an advanced internal control system and believes that the related risks have been resolved," he emphasized.
The performance outlook for A-Root this year is positive. By February this year, product shipments such as POS printers increased by approximately 58% compared to the previous year, continuing remarkable growth in the core business. Overseas shipments, which account for more than 70% of total shipments, increased by about 49% year-on-year.
This is because the number of Omicron cases has been declining overseas, including in Europe and the United States, and reopening (economic resumption) has been fully underway, leading to increased demand for POS printers and other equipment for store operations.
An A-Root official said, "As the performance improvement trend continues and the company's fundamentals are further strengthened, there will be no risks related to the audit report. The company's management views this incident as an opportunity to upgrade the internal control system to the next level and will focus on managing the related risks."
He added, "Although the first quarter is usually an off-season for the company's core business, this year, overseas orders are flooding in, with a surge in purchase requests for POS, mobile, and label printers. Demand will further increase not only overseas, where COVID-19 is becoming endemic, but also domestically as quarantine easing policies are fully implemented."
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