FSS: 214 Companies Disciplined for Accounting Fraud Over Past 3 Years

It has been revealed that 214 companies committed accounting fraud over the past three years. The total fines imposed on these companies amounted to 77.2 billion KRW.

On May 27, the Financial Supervisory Service announced that, as a result of its review and inspection of the financial statements of 458 companies between 2022 and 2024, 214 companies were subjected to disciplinary measures. Among them, 52 companies were fined a total of 77.2 billion KRW. In addition, 22 companies were reported or referred to the prosecution. The amount of fines more than doubled compared to the 35.6 billion KRW imposed between 2019 and 2021.

Over the three-year period, 22 companies preparing for initial public offerings (IPOs) were selected for review. Of these, all three companies that received major disciplinary actions from the Securities and Futures Commission had their listings postponed. In addition, companies found to have committed accounting fraud immediately after their IPOs had their trading suspended.

Furthermore, 31 financially distressed companies and 12 companies that caused public controversy and were highly likely to be involved in accounting fraud were selected for review and inspection. Of the 36 cases for which the review and inspection were completed, 17 companies were subject to disciplinary action. Among these, 7 cases involved major disciplinary measures.

In addition, the Financial Supervisory Service will disclose 14 companies as case examples among those that were sanctioned. Since 2011, the Financial Supervisory Service has published case examples of review and inspection findings. Starting last year, the disclosure cycle was shortened from once a year to twice a year. To date, a total of 182 company cases have been disclosed.

The cases disclosed this time mainly focus on accounting violations and disciplinary actions involving companies with high incentives for accounting fraud, which have been the focus of regulatory efforts over the past three years. The disclosure also includes review cases such as thematic inspections that aim to prevent accounting errors and encourage timely corrections of financial statements by companies.

The Financial Supervisory Service explained, "The cases disclosed this time include various findings such as inflated sales by companies preparing for IPOs, errors in calculating construction progress rates, and omissions in accounting for derivatives. We expect these examples to be useful in accounting practice."

The Financial Supervisory Service plans to distribute key findings of reviews and inspections to companies and auditors through related organizations, in order to help prevent recurrence of similar cases and support investor decision-making. It also plans to regularly disclose major case examples each year to continuously build a comprehensive database.

This content was produced with the assistance of AI translation services.