Auditor Designation Imposed on Ilyang Pharmaceutical and SK Ecoplant for Accounting Violations

The Securities and Futures Commission of the Financial Services Commission announced on September 10 that it held its 16th meeting and decided to impose penalties, designate auditors, and take other measures against Ilyang Pharmaceutical and SK Ecoplant for violating accounting standards in the preparation and disclosure of their financial statements.

Ilyang Pharmaceutical, a listed company, was found to have included a company that was not a consolidated subsidiary in its consolidated financial statements from the March 2015 fiscal year to the December 2023 fiscal year, thereby overstating its consolidated net income and consolidated equity. The company also disrupted the normal external audit process by submitting forged documents to its auditor.

Accordingly, the Securities and Futures Commission imposed a three-year mandatory auditor designation on Ilyang Pharmaceutical, and issued recommendations for dismissal and six-month suspension from duties for the two co-CEOs and the responsible executive. The commission also referred them to the prosecution. The final amount of penalties for the company and the three related individuals will be determined later by the Financial Services Commission.

SK Ecoplant, an unlisted company, was also found to have overstated the sales of its subsidiary by neglecting to properly review revenue recognition standards when preparing its consolidated financial statements, resulting in overstated consolidated net income and consolidated equity. The amount of overstatement was 150.6 billion won in 2022 and 464.7 billion won in 2023.

The Securities and Futures Commission decided to impose penalties, designate an auditor for two years, and recommend dismissal and suspension from duties for the responsible executive of SK Ecoplant.

In addition, Samjong KPMG, which served as the auditor for SK Ecoplant and was found to have neglected audit procedures, will be restricted from auditing the company for two years and required to make an additional 20% contribution to the joint compensation fund.