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Photo courtesy of Yonhap News |
[Alpha Biz= Ellie Kim] orea Zinc and Young Poong have been sanctioned by financial authorities after being found to have violated accounting standards in preparing and disclosing their financial statements.
The Securities and Futures Commission, under the Financial Services Commission, said on June 10 that it approved disciplinary measures following an investigation into the companies’ business reports.
For Young Poong, the regulator imposed a surcharge, a three-year auditor designation, and recommended the dismissal of a former CEO. It also recommended dismissal or suspension of responsible executives, including a six-month suspension from duties, along with corrective orders.
The company was found to have omitted or significantly understated provisions for environmental cleanup costs related to soil, forest land, and groundwater contamination around its smelter in Bonghwa County. Despite clear legal obligations, Young Poong failed to properly recognize liabilities or used inappropriate estimation methods, such as reflecting only contract amounts rather than total expected costs.
The SFC also sanctioned the company’s auditors, including Ichon Accounting Corporation and Daejoo Accounting Corporation, imposing additional contributions to joint liability funds and restricting their audit services for Young Poong for up to three years.
For Korea Zinc, the regulator imposed similar measures, including a surcharge, a three-year auditor designation, and recommendations for executive dismissal and suspension, along with corrective orders.
Korea Zinc was found to have overstated the value of investment assets and subsidiaries. It understated investment losses related to a fund managed by One Asia Partners and failed to recognize impairment losses for overseas subsidiaries, including a U.S.-based electronic waste company, despite significant declines in recoverable value.
The commission also pointed to weaknesses in Korea Zinc’s internal accounting controls, noting that impairment reviews were conducted superficially. It further found indications that the company interfered with external audits by failing to provide key information related to convertible bonds issued by subsidiaries.
The final amount of surcharges for both companies and related individuals will be determined in a subsequent decision by the Financial Services Commission.
Alphabiz Ellie Kim 인턴기자(press@alphabiz.co.kr)
