FSS warns of harsh fines for accounting fraud

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FSS warns of harsh fines for accounting fraud

Korea will slap harsher fines for bookkeeping irregularities starting with the 2018 settlement of accounts, the Financial Supervisory Service (FSS) said Sunday.

The financial regulator said that both companies and auditors need to be extra mindful of changes to the External Accounting Act when they file their 2018 accounts. The new rules that went into effect last month deal more harshly with violators that cook books and engage in other types of fraud.

Under the revisions, if a company intentionally files fraudulent reports, fines equal to 20 percent of the total accounting fraud can be levied as penalties.

Corporate officials that handle the books, moreover, could be liable for 10 percent of what the company pays in penalties, with accountants running the risk of paying hefty fines worth five times what they earned from reviewing books.

The heads of companies found to have committed accounting fraud could be suspended from duties for less than six months. In addition, for listed companies with assets exceeding 2 trillion won ($1.8 billion), accountants are obliged to provide details of the corporate books that merit the most attention.

“It is imperative that clear and precise accounting takes place in the first year to prevent the situation from becoming more difficult to check down the line,” an FSS insider said.

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