Securities and Futures Commission Imposes 54.2 Million Won Fine on Kukbo for Violating Accounting Standards

Kukbo, which violated accounting standards, has been fined approximately 50 million won.

The Financial Services Commission's Securities and Futures Commission, at its 6th regular meeting on April 1, decided to impose a fine of 54.2 million won on Kukbo for violating accounting standards. In addition, a total of 10.8 million won in fines was imposed on two individuals, including the former CEO of Kukbo.

According to the Securities and Futures Commission, in 2019, Kukbo overstated bad debt expenses related to loans to its subsidiaries. The company recorded promissory notes provided as collateral to its subsidiaries as both loans and accounts payable, and set up an allowance for doubtful accounts without assessing the recoverability of the loans.

When issuing convertible bonds (CB) and bonds with warrants (BW), Kukbo also recorded the difference between fair value and transaction price as prepaid expenses, thereby inflating its equity capital. Furthermore, it used 2019 financial statements that violated accounting standards in its small public offering disclosure documents.

Shinwoo Accounting Corporation, which was responsible for auditing Kukbo, was sanctioned with measures including an additional 20% contribution to the joint compensation fund, due to negligence in audit procedures.

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