[Alpha Biz= Kim Jisun] On December 12, the Securities and Futures Commission (SFC) announced at its 20th meeting that it has decided to impose sanctions on Sports Seoul Co., Ltd. for violating accounting standards in its financial statements, including restrictions on securities issuance and the designation of auditors.
The investigation revealed that Sports Seoul failed to appropriately reflect embezzlement of funds in its financial statements, resulting in an overstatement of its equity. The discrepancies were identified in the separate financial statements, with amounts of 2.127 billion KRW for 2017, 17.695 billion KRW for 2018, and 20.672 billion KRW for the first quarter of 2019.Furthermore, the company inaccurately understated its equity due to inconsistent accounting policies between the company and its affiliates during equity method evaluations.
In relation to convertible bonds, it also failed to adequately reflect option conditions in fair value measurements, leading to an understatement of liabilities and an overstatement of equity.As a result, the SFC has imposed a 12-month restriction on securities issuance and a three-year designation of auditors for Sports Seoul. Additionally, the SFC has recommended substantial measures for the dismissal of the former CEO, former vice president, and former responsible executives, and has requested corrections.
The imposition of fines on four company officials will be finalized by the Financial Services Commission in the future.In tandem with these actions, the SFC has also decided to impose a two-year restriction on audit responsibilities for Anse Accounting Corporation and its affiliated certified public accountants for neglecting their audit procedures as auditors of Sports Seoul.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
