The online streaming platform ‘Forest’ (formerly African TV) was charged about 1.5 billion won for violation of accounting standards. The Financial Services Commission judged that the company had prepared financial statements in a way that inflated sales and profits more than it actually, and was disciplined to the company and former executives.
The Financial Services Commission said in the 17th meeting on October 1 that the ‘forest’ overcame the profit and cost by recognizing the game content advertising revenue between 2021 and 2022 as a total method rather than a net amount. Net recognition is a method that reflects only actual profits that subtract the relevant costs from advertising revenue. The forest calculates the cost and profit separately to make sales look larger than it is. As a result, the market and investors were concerned about overestimating the company’s management performance.
According to this measure, a total of 1.49 billion won was imposed in the forest, and a three -year audit was taken. Audit is a system that designates external auditors by the financial authorities to strengthen accounting supervision. Not only the company, but also the former CEO and former executives were charged a penalty of 27.1 million won.
Accounting fraud was not limited to the forest. Sejin, an auto parts manufacturer, inflated net profit by handling the amount as if it were borrowed from the outside, while leaving the booked receivables on the book. In response, the Financial Services Commission imposed a penalty of 180 million won to the company and a representative of the CEO and all accounting officers, and decided two years of audit.
Another example, ‘Shingi Tech’, which sells auto parts, was found to be more inflated by the actual amount of assets and capital by simply assuming assets that only act as a brokerage (coating) as practical loans and down payment. As a result, the company imposed 30 million won for the company and 3 million won for the CEO, and two years of audit.
Such a series of measures is interpreted as a signal that financial authorities will respond more strictly to accounting distortions that can overlook the company’s external growth. In particular, it is likely that the movement to strengthen accounting transparency, regardless of traditional industries such as digital platforms and manufacturing, is likely to lead to more extensive in the future. Investors’ protection and system maintenance are also expected to be carried out.
