FSC Fines Kumyang 7.6 Billion Won for 'Violating Accounting Standards'

Kumyang and individuals associated with the company were fined billions of won for preparing and disclosing financial statements in violation of accounting standards.

At its 17th meeting on October 7, the Financial Services Commission (FSC) decided to designate an auditor for Kumyang for three years and impose a fine of 7.633 billion won for preparing and disclosing financial statements in violation of accounting standards. The CEO and five current and former executives were fined a total of 1.5219 billion won and were either referred to prosecutors or reported to them. Five of the six also received recommendations for dismissal and suspension from duty, or measures equivalent to recommendations for dismissal.

According to the FSC, Kumyang falsely recognized revenue in 2022 by making it appear that it had sold inventory. During the external audit, it conspired with business partners to present false transaction documents and obstructed the audit by having auditors inspect inventory transferred to a warehouse company as if it were still the company’s inventory. In 2023 and 2024, despite jointly controlling a Mongolian entity under a shareholder agreement with its second-largest shareholder, Kumyang overstated its equity by consolidating the entity’s financial statements. It also inflated its equity by failing to recognize impairment losses incurred by the Mongolian entity.

ASENDIO, which failed to recognize impairment losses in 2019 related to investments in shares of a subsidiary, was ordered to have an auditor designated for three years and fined 733.7 million won. The FSC also decided to fine three former joint administrators of ASENDIO a total of 157.9 million won and issue a recommendation equivalent to dismissal to its former chief financial officer.

Taeyul Accounting Corporation, which neglected audit procedures for ASENDIO, was fined 80 million won and ordered to make an additional contribution equal to 50% of its joint compensation fund, among other measures. One certified public accountant at Taeyul Accounting Corporation was barred from auditing ASENDIO for four years and from auditing listed companies, designated companies, and large unlisted companies for one year, and was ordered to complete 16 hours of professional training.

Seonjin Accounting Corporation, which also carried out inadequate audit procedures, was fined 22.5 million won, ordered to make an additional contribution equal to 20% of its joint compensation fund, and barred from auditing companies it had audited for two years. One certified public accountant at Seonjin Accounting Corporation was barred from auditing listed companies, excluding those listed on KOSDAQ and KONEX, and designated companies for one year, and was ordered to complete six hours of professional training. Another certified public accountant was barred from auditing designated companies for one year and was ordered to complete two hours of professional training.

Seonjin Accounting Corporation and two of its certified public accountants reportedly inadequately performed control and substantive tests related to revenue and cost of sales during the audit of the financial statements for fiscal year 24.

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