Volvik, a KONEX-listed company and a golf equipment specialist, was found to have prepared and disclosed its financial statements in violation of accounting standards for years. In response, the Securities and Futures Commission under the Financial Services Commission resolved measures including a penalty surcharge and a complaint to prosecutors.
According to financial authorities on the 22nd, the previous day the Securities and Futures Commission (SFC), through investigation and audit review, confirmed that Volvik manipulated inventories in-and-out quantities from 2017 to 2021 to overstate the manufacturing cost per unit and, by doing so, inflated year-end inventories to prepare its financial statements.
Volvik's overstatement of inventories amounted to 6.59 billion won in 2017, 11.897 billion won in 2018, 1.4544 billion won in 2019, 17.751 billion won in 2020, and 15.556 billion won in 2021.
Volvik also was found to have submitted manipulated materials on the quantities in the subulbu (inventory in-and-out ledger) to the external auditor, obstructing normal audit procedures.
For these accounting frauds, the SFC resolved to impose a penalty surcharge on Volvik, designate an auditor for the next three years, recommend dismissal (removal) of the former CEO and the responsible executive, and file a complaint with prosecutors against the company and executives. Final measures, including the penalty surcharge, will be decided at a regular meeting of the Financial Services Commission.
Deloitte Anjin, the external auditor, also did not escape sanctions. The SFC determined that in audits for fiscal years 2017–2019 and 2021, Anjin neglected audit procedures related to inventories and failed to properly reflect Volvik's violations of accounting standards.
Accordingly, Deloitte Anjin was ordered to pay a penalty surcharge, make an additional 50% contribution to the joint fund for damages, and face a three-year restriction on audit work for Volvik.
Affiliated certified public accountants were also disciplined with restrictions on Volvik audit work for one to two years, a one-year restriction on audit work for listed companies, and six to eight hours of job training.