In the future, a fine of up to 1 billion won may be imposed even if there were no unjust gains from accounting fraud or if they cannot be estimated.
On the 13th, the National Assembly held a plenary session to deliberate and vote on the revision of the "External Audit Act for Stock Companies" that contains this content.
The existing external audit law stipulates that if a representative director or accounting staff falsifies financial statements, or if an auditor or affiliated certified public accountant prepares a false audit report, a prison sentence of up to 10 years or a fine of between 2 to 5 times the profit obtained from the violation or the loss avoided (unjust gains) shall be imposed.
However, there was no regulation on the maximum fine for cases where there were no unjust gains through accounting fraud or where the amount could not be estimated. As a result, it was inevitable to impose prison sentences when there were no unjust gains or when it was difficult to estimate. The Constitutional Court viewed this as a violation of the "principle of proportionality between responsibility and punishment" and issued a decision of constitutional nonconformity in July of last year.
Subsequently, several bills were introduced in the National Assembly to set the maximum fine at 200 million to 1 billion won. The Policy Committee determined the highest maximum fine at 1 billion won through a combined review. This is in line with the opinion that accounting fraud, which undermines capital market order, should be strictly punished to protect investors and enhance trust in the capital market.
The amendment approved during the deliberation and voting on this day is scheduled to be promulgated and implemented after going through procedures such as government transmission and deliberation by the State Council.