Securities and Futures Commission Imposes Three-Year Auditor Designation on Manho Steel Wire for Accounting Standards Violation

Financial authorities have imposed a sanction of three years of designated auditors on Manho Steel Wire, which prepared and disclosed its financial statements in violation of accounting standards.

The Securities and Futures Commission of the Financial Services Commission announced on July 8 during its 13th meeting that it had resolved to designate auditors for Manho Steel Wire, a company listed on the Korea Exchange, for three years, and to recommend the dismissal (removal) of the former executive in charge.

Manho Steel Wire, a steel wire manufacturing company, was found to have overstated both sales and cost of goods sold despite not meeting revenue recognition standards for the fiscal years 2019 to 2022. The amount of overstatement was KRW 7,353 million in 2019, KRW 11,196 million in 2020, and KRW 10,152 million in 2021 on both consolidated and separate financial statements. For 2022, the overstatement was KRW 27,035 million on a separate basis.

The imposition of fines on the company and its related parties will be finally decided by the Financial Services Commission in the future.

In addition, the Securities and Futures Commission decided to impose a measure on Shinhan Accounting Corporation and its certified public accountants, who were negligent in their audit procedures, requiring an additional 80% contribution to the joint compensation fund and restricting them from auditing Manho Steel Wire for five years. The imposition of fines on the auditors will also be determined by the Financial Services Commission at a later date. The Commission also resolved to restrict two responsible certified public accountants from auditing Manho Steel Wire and to require them to undergo professional training.

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