Violation of Accounting Standards and Related Issues
The Securities and Futures Commission (SFC) under the Financial Services Commission announced on the 17th that it has resolved to refer the chemical product manufacturer Ssiyat, its CEO, and former accounting team leader to the prosecution for preparing financial statements in violation of accounting standards.
According to the SFC, Ssiyat overstated net income and equity by recognizing sales prematurely or recognizing processing sales. Additionally, it failed to disclose transactions with related parties in the notes to the financial statements, did not account for litigation provisions related to a lost lawsuit, and recorded the related court deposits as current assets instead of non-current assets.
Furthermore, it did not properly account for employee embezzlement of company funds as illegal act receivables, manipulated transaction documents, and falsified inquiry reports, thereby obstructing external audits.
The SFC resolved to refer the KOSDAQ-listed company Ssiyat, its CEO, and former accounting team leader to the prosecution, along with recommending the dismissal of the CEO, a six-month suspension of duties, fines, and a three-year designation of an auditor. The imposition of fines will be finalized after approval by the Financial Services Commission.
Additionally, the SFC notified Samwon Accounting Corporation, which neglected its audit procedures for Ssiyat, of fines, an additional 30% contribution to the joint damage compensation fund, and a two-year restriction related to Ssiyat.
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