The Securities and Futures Commission of the Financial Services Commission said on the 8th it voted to impose measures including a three-year designation of an auditor on Manho Rope & Wire, which prepared and disclosed financial statements in violation of accounting standards.
Manho Rope & Wire was found to have inflated sales and cost of sales for four years from fiscal year 2019 to fiscal year 2022. The conditions for the uncollected billing agreement were not met, and the point before transfer of control under the trade terms had not arrived, among other reasons it failed to meet the revenue recognition standards, yet it recognized revenue, which was the problem.
The SFC imposed a recommendation to dismiss (remove) all former responsible executives along with a three-year designation of an auditor for the company. The penalty surcharge on the company and related parties will be finally decided later by the Financial Services Commission (FSC).
Sanctions were also imposed on Shinhan Accounting Corporation, which had been Manho Rope & Wire's auditor. Shinhan Accounting Corporation neglected to review the transfer-of-control condition of the uncollected billing agreement and failed to reflect the company's violation of accounting standards in its audit opinion, and it was found to have violated the rotation requirement that the same director cannot take on audit work again after three consecutive fiscal years. Accordingly, measures were imposed including an additional 80% contribution to the joint compensation fund, a five-year restriction on auditing Manho Rope & Wire, and a penalty surcharge. Two affiliated certified public accountants were also given measures including restrictions on audit work and job training.