The Securities and Futures Commission Reports Protek for Accounting Standards Violations to Prosecutors and Designates Auditor

[Asia Economy Reporter Lee Jung-yoon] The Securities and Futures Commission (SFC) under the Financial Services Commission held its 7th regular meeting on the 6th and announced that it resolved to notify the prosecution and designate auditors for Protek, which prepared and disclosed financial statements in violation of accounting standards. Additionally, it decided to impose securities issuance restrictions and designate auditors for SangSangIn Industry and EMW.

According to the SFC, Protek failed to disclose notes on related party transactions from 2013 to 2019. It was also found that the company did not include notes on guarantees provided to related parties from 2016 to 2018 and guarantees received from related parties from 2013 to 2019 in the financial statements. The SFC resolved to notify the prosecution regarding the company, its CEO, and responsible executives, and to impose fines on the company and related parties. It also decided on a two-year auditor designation and recommended dismissal of the responsible executives.

In the case of SangSangIn Industry, omissions of liabilities related to duplicate issuance of convertible bonds (CB) from 2017 to 2019 were pointed out. Overstatement of disposal losses on subsidiary stocks was also confirmed. Accordingly, the SFC imposed a 10-month securities issuance restriction, a three-year auditor designation, and corrective action requirements. The recommendation to dismiss the former CEO was replaced with notification of illegal acts to the retired individual, as the person had already left the company.

EMW was found to have unrecognized embezzlement losses and omitted disclosures of related parties from 2016 to 2018, as well as overstatements of equity investments in affiliates from 2017 to 2018. Additionally, overstatements of inventory assets, sales revenue, and cost of sales were identified. The SFC decided on a six-month securities issuance restriction and a two-year auditor designation for EMW. Since the responsible executives and auditors had already left, the dismissal recommendation was replaced with notification of illegal acts to the retired individuals.

The SFC also resolved to impose restrictions on audit work and other measures against accounting firms and certified public accountants who violated auditing standards while auditing the financial statements of these companies.