The Financial Services Commission's Securities and Futures Commission (SFC) held a regular meeting on the 18th and decided on measures such as appointing auditors for Irem and Woo Yang H&C, which violated accounting standards in preparing and disclosing financial statements.
According to the SFC, Irem overestimated recoverable amounts based on an unreasonably prepared business plan while evaluating related corporations' investment stocks. The overstatement was about 15.978 billion won in 2019 and 10.038 billion won in 2020.
Irem also understated bad debt provisions by about 75.6 million won in its 2018 financial statement by not adequately assessing the recoverability of loans. It was also pointed out that it used a 2019 financial statement that violated accounting standards in April 2020 small public offering disclosure documents.
The SFC imposed a three-year auditor appointment, significant dismissal recommendation for the former responsible executive, and fines of 36 million won on Irem.
Woo Yang H&C did not consider the potential exercise of extension options and the restoration of underlying assets while handling lease accounting in 2021. Accordingly, it understated related assets and liabilities by 20.489 billion won.
Woo Yang H&C also overestimated revenue and cost of goods sold by 13.57 billion won by recognizing some order contracts without a claim for payment as revenue in the same year.
The SFC imposed a one-year auditor appointment on Woo Yang H&C.
The SFC also decided on restricting audit operations regarding Shinhan Accounting Corporation, which audited Irem, and Dasan Accounting Corporation, which handled Woo Yang H&C's audit.
Separately, the Financial Services Commission will make the final decision on whether to impose penalty surcharges on Irem, Woo Yang H&C, their officials, and auditors.