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| Han Young accounting firm's headquarters building in Yeoido, southwestern Seoul. |
By Choi Kyong-ae
Korea's financial regulators have taken disciplinary measures against Han Young accounting firm for violations in auditing Kyeryong Construction, the Financial Services Commission (FSC) said Thursday.
The Securities & Futures Commission, an organization under the wing of the FSC, ordered Han Young to pay 30 percent of the total auditing fees it was supposed to receive to a compensation fund set up by the Korean Institute of Certified Public Accountants.
Han Young was also barred from doing any more auditing for the construction company for two years as part of its penalty, the FSC said.
"Han Young's audit of the balance sheet of Kyeryong Construction was flawed," an FSC official said. "It failed to make a thorough analysis on cash flow, capability to repay debt and delayed payments for the builder's construction projects."
One accountant who participated in the audit of Kyeryong was barred from auditing the company for three years and ordered to take a 12-hour job training class. Another was given an audit ban of one year and a six-hour class, the official said.
A spokesman for the accounting firm said the company will make efforts to prevent a recurrence.
Kyeryong Construction was fined 19.5 million won ($16,000) and its chief executive was recommended to step down to take responsibility for the flawed audit. For two years from January 2016 to December 2017, the FSC will send a designated auditor to the construction company.
"Kyeryong Construction underreported the amount of delayed payments from its clients in its bottom line from 2010 to 2013," the official said. "Moreover, the company failed to make an exact analysis of its business partners' payment capabilities."
Kyeryong Construction posted a net loss of 7.96 billion won in the third quarter ending Sept. 30, 2013, shifting from a net profit of 1 billion won in the first quarter of the same year, according to the FSC.
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