FSC Imposes ₩3.6B Fine on Kyongnam Bank for Accounting Violations

 

 

 

 

The Financial Services Commission (FSC) has decided to impose strong sanctions on BNK Kyongnam Bank, Orient Bio, and Arc Solutions for violating accounting standards.

At the 23rd regular meeting held on the 19th, the FSC confirmed that BNK Kyongnam Bank had overstated its capital by approximately 100 billion won in 2021 by failing to properly account for an employee's embezzlement of funds. As a result, the FSC decided to impose a one-year auditor designation and a fine of 3.61 billion won.

Additionally, four executives, including the CEO at the time, were fined a total of 790 million won.

BNK Kyongnam Bank was also found to have used financial statements that violated accounting standards in securities registration statements and other documents.

Orient Bio, a listed company on the KOSPI market, was found to have improperly inflated and understated sales figures between 2018 and 2019 and underreported allowances for doubtful accounts.

Consequently, the FSC decided to impose a fine of 110 million won on Orient Bio, designate an auditor for three years, and issue a dismissal recommendation and a six-month suspension for the responsible executive. The CEO and two other executives were fined a total of 25.5 million won.

Daeyoung Accounting Firm and the certified public accountant involved in the audit were also held accountable for their deficient audit practices, facing a fine of 820 million won and restrictions on audit work.

Arc Solutions (formerly Prostemics), a KOSDAQ-listed company, was found to have falsely recorded 1.6 billion won in product sales and cost of sales in 2020.

Furthermore, to conceal these irregularities, the company temporarily borrowed inventory assets from suppliers to match the stock inspection schedule, thereby obstructing the external audit process.

As a result, the FSC imposed a fine of 460 million won and a three-year auditor designation on Arc Solutions. Additionally, the company and three former executives were reported to the prosecution.

The three former executives were also fined a total of 14.4 million won.

An FSC official stated, "We will continue to impose strong sanctions on actions that undermine accounting transparency. To protect investors and restore market trust, we will further strengthen accounting oversight."

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FSC Imposes ₩3.6B Fine on Kyongnam Bank for Accounting Violations