The Securities and Futures Commission under the Financial Services Commission decided to impose sanctions on Dongsung Finetec and Well Biotec for violating accounting standards. Shinhan Accounting Corporation, which audited Well Biotec, was resolved to face a restriction on audit services.
The Securities and Futures Commission said it held its 19th meeting on the 29th and resolved measures including a complaint to prosecutors and the designation of an auditor for Dongsung Finetec and Well Biotec.
Well Biotec is suspected of violating accounting standards by failing to recognize losses from 2019 to 2022 after selling its convertible bonds at a low price. It also faces allegations of falsely recording meat-processing sales and cost of sales, and overstating sales generated by a subsidiary. Well Biotec is also accused of obstructing external audits by falsifying inventories to conceal these facts.
The Securities and Futures Commission decided to impose a three-year auditor designation on Well Biotec, recommend dismissal equivalent for the former CEO, and recommend dismissal equivalent for the former responsible executive. The company, the former CEO, and the responsible executive were referred to prosecutors. A penalty surcharge on the company and related parties will be additionally resolved later by the Financial Services Commission (FSC).
Shinhan Accounting Corporation, which had been Well Biotec's auditor, will receive a three-year restriction on audit services for inadequate auditing. Measures including restrictions on audit work for three certified public accountants were also taken.
Dongsung Finetec is suspected of violating financial statement standards by manipulating the progress rate of contracted construction or understating net income for the period when converting foreign currencies. The Securities and Futures Commission decided on a three-year auditor designation, a recommendation to dismiss the former responsible executive, and notification to prosecutors. As with Well Biotec, the penalty surcharge will be decided later by the Financial Services Commission (FSC).