The Securities and Futures Commission, an arm of the Financial Services Commission, has ordered the designation of an outside auditor for Hanju ART after the company prepared and disclosed financial statements in violation of accounting standards.
The commission said it approved the sanctions, which include auditor designation and a fine, at its 18th meeting on the 14th.
Hanju ART was found to have overstated revenue and cost of sales from 2021 to 2023 by receiving and issuing false tax invoices for transactions that had no commercial substance. The company also obstructed its auditor's normal external audit by submitting forged accounting books and transaction records as audit evidence and by passing off inventory held by another company as its own during a physical inventory count, according to the investigation.
The commission approved a fine, a three-year auditor designation, a recommendation equivalent to the dismissal of the former chief executive and two others, and a referral to prosecutors. The size of the fine will be finalized later by the Financial Services Commission.
The commission also imposed sanctions on Hanju ART's auditor, Jungjin Serim Accounting Corp., and the accountants involved, including a two-year restriction on audit work, citing negligence in audit procedures.