What disadvantages arise if a request to submit materials is refused during an accounting audit?

Where a company fails to cooperate with an accounting audit without justifiable grounds, legal liability may arise under the 「Act on External Audit of Stock Companies, etc.」

In addition, refusing, obstructing, or evading a request by an auditor, a controlling company, the Financial Supervisory Service, or the Securities and Futures Commission to inspect books and documents, submit materials, or undergo an investigation is likewise subject to punishment.

Even without explicitly expressing an intention to refuse, delaying the submission of materials, selectively providing only some materials, and repeatedly failing to comply with the investigation schedule can also be assessed as substantive obstruction of the audit.

If such violations are recognized, not only the company but also the officers and employees in charge of accounting, persons involved in audit-related work, and individual members of management can become subject to punishment, and imprisonment for not more than three years or a fine of not more than 30 million won may be imposed.

In addition, the fact of refusing an accounting audit is highly likely to lead to a review and further investigation by the financial authorities, which can have a negative effect on administrative sanctions, a decline in corporate credibility, and future financing and business activities as a whole.

Therefore, if you receive a request for an accounting audit or for the submission of materials, it is important to accurately review the scope of your legal obligations and responsibility and then establish a systematic response strategy.