'Dexter Studio's Accounting Fraud... Securities and Futures Commission Designates Auditor'

Manipulation of Project Progress Rates and Omission of Derivatives Accounting
Obstruction of External Audits Also Detected

The financial authorities have resolved to designate an auditor and impose other sanctions on Dexter Studio for the violation of accounting standards in the preparation and disclosure of its financial statements.

The Securities and Futures Commission, under the Financial Services Commission, announced on July 22 at its 14th meeting that it had confirmed Dexter Studio's breach of accounting standards and approved measures such as the designation of an auditor.

According to the Securities and Futures Commission, from 2016 to 2019, Dexter Studio inflated its net profit and equity by manipulating the progress rates of projects that had either been canceled or had fictitiously increased contract amounts.

Additionally, in 2016 and 2017, the company omitted the accounting treatment of derivatives based on its stock price as the underlying asset, failing to reflect in the financial statements the promised earnings that were supposed to be paid to investors. This resulted in overstated net profit and equity.

The commission also uncovered evidence that Dexter Studio obstructed external audits by manipulating key financial data submitted to the auditor.

The Securities and Futures Commission decided to designate an auditor for Dexter Studio for three years and issued a recommendation equivalent to dismissal (removal) for two former CEOs and a former executive in charge. The two former CEOs were also reported to the prosecution.

The final decision on whether to impose fines on the company and parties involved will be made later by the Financial Services Commission.

Furthermore, Daiju Accounting Corporation, which was found to have neglected audit procedures, was subject to a two-year restriction on auditing Dexter Studio. Additional disciplinary measures restricting auditing work were also decided for Daiju Accounting Corporation and two affiliated certified public accountants who either participated or facilitated participation in the audit of a designated company despite previous restrictions.

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