Financial Services Commission Imposes Fines on Hanchang and The Technology for Accounting Standards Violations
The Financial Services Commission announced on the 17th that it has decided to impose fines on Hanchang Co., Ltd. and The Technology Co., Ltd. (formerly Hanchang Biotech Co., Ltd.) for violations of accounting standards.
The confirmed fines are as follows: KRW 815.8 million for Hanchang Co., Ltd.; KRW 103 million for two individuals, including the former CEO of Hanchang Co., Ltd.; KRW 289.8 million for The Technology Co., Ltd.; and KRW 21.8 million for two individuals, including the former CEO of The Technology Co., Ltd.
Hanchang Co., Ltd. was found to have used financial statements that violated accounting standards by overstating sales and cost of goods sold in its steel product distribution transactions in 2021 and 2022, despite not having control over the goods. In addition, the company failed to disclose in the notes the amount of payment guarantee provided by the company for debts that a partner company was obligated to pay to an affiliated company.
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The Technology Co., Ltd. was found to have created the appearance of normal sales to partner companies and falsely recorded sales and cost of goods sold in its financial statements. Furthermore, in order to conceal false sales from product distribution, the company interfered with the auditor’s regular external audit by failing to submit a payment guarantee letter and by disguising the appearance of accounts receivable collection.
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