South Korean financial regulators have imposed sanctions including a three-year auditor designation on Haitai Confectionery and Foods for preparing and disclosing financial statements in violation of accounting standards.
The Securities and Futures Commission, an arm of the Financial Services Commission, said on Sept. 16 that it approved the measures at its 16th meeting.
According to the commission's investigation, Haitai Confectionery and Foods overstated revenue and cost of sales from 2016 to 2019 by issuing false tax invoices and omitting accounting for sales discounts and sales incentives. The overstatements totaled 13.678 billion won in 2016, 15.317 billion won in 2017, 11.256 billion won in 2018 and 12.777 billion won in 2019.
The commission also found violations in securities registration statements and obstruction of the external audit. It said Haitai presented false transaction records to its auditor and asked business partners to send false replies to accounts-receivable confirmation requests, obstructing the normal conduct of the external audit.
The measures include a three-year auditor designation, a recommendation to dismiss the head of the finance division along with a six-month suspension from duties, an action equivalent to a dismissal recommendation against the former auditor, and fines. The head of the finance division and the former auditor were referred to prosecutors. A commission official said the amount of fines against the company and the individuals involved will be finalized by the Financial Services Commission.
