Clean Books, No Penalty

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Clean Books, No Penalty

The Financial Supervisory Service announced Tuesday that it would not punish companies and accounting firms for any past rigging of account books if corrections are reported in their fiscal year 2000 financial statements.

In its report on measures to eradicate accounting deception, the nation's financial regulator said that it is encouraging companies that closed their books in December 2000 and those that will settle their accounts in June or November to disclose past manipulations.

"This means that no censure or criminal action will be taken as long as firms admit their past wrongdoing and reflect them fully in last year's financial statements," said a senior official at the regulatory agency, Hwang In-tae. "But criminal actions like embezzlement will be treated separately."

The agency assured firms that have signed agreements with creditor banks to improve their financial standing that the disclosures would not hurt their ability to borrow.

Financial firms will be ordered by the agency to refrain from raising lending rates for companies whose credit ratings were downgraded or whose debt-equity ratios swelled because they corrected accounting inaccuracies.

As part of its efforts to promote transparent financial environments, the regulatory agency also said that firms that get "qualified" opinions from independent auditors on their financial statements will be barred from being listed on the Korea Stock Exchange and the Kosdaq. A qualified statement means that the auditor was unable to attest to the fairness or reliability of the statements because of some limitation on the audit, such as an inability to gather important information.

The supervisory agency also said that any person who provides false information in order to obstruct outside auditors from conducting a proper and comprehensive review would face up to three years in prison and 30 million won ($22,300) in fines.



by Lee Sang-ryeul

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