CONTENTS
- 1. How the Client Came to Seek an Accounting Attorney
- - The Circumstances of the Case as Understood by the Accounting Attorney
- 2. The Accounting Review, Explained by the Accounting Attorney
- - The Stages of the Accounting Review, Explained by the Accounting Attorney
- - The Procedure for a Substantive Review, Explained by the Accounting Attorney
- 3. The Accounting Attorney Provides Legal Advisory on Company A's Response to the Substantive Review
- 4. Company A Escapes the Risk of Delisting Through the Accounting Attorney's Advisory
1. How the Client Came to Seek an Accounting Attorney
The client who sought an accounting attorney was the president of Company A, and as a substantive review was conducted during the Financial Supervisory Service's 🔗accounting review, he wished to receive legal advisory to escape the risk of delisting.
The Circumstances of the Case as Understood by the Accounting Attorney
The client who sought an accounting attorney was the president of Company A, and as a substantive review came to be conducted during the accounting review, he wished to receive legal advisory.
Company A, a KOSDAQ-listed corporation, was drawing interest in other countries as well, and its sales were increasing.
Then, Company OO, which had a business relationship with Company A, made a report to the Financial Supervisory Service alleging that Company A had intentionally overstated its sales in the past.
Having received the report, the Financial Supervisory Service came to conduct a substantive review during the accounting review of Company A.
In order to escape the risk of delisting, the president of Company A requested legal advisory from Daeryun's accounting attorney, who has extensive experience in responding to accounting reviews.
2. The Accounting Review, Explained by the Accounting Attorney
■ The Accounting Review, Explained by the Accounting Attorney
An accounting review is conducted in accordance with the Act on External Audit of Stock Companies and the Regulations on External Audit and Accounting, etc.
An accounting review examines whether a particular company's financial statements and the auditor's audit report on them comply with accounting standards and auditing standards, following the methods prescribed by the relevant laws and regulations.
If a violation is found, its purpose is to identify where responsibility lies and to take certain sanctions, thereby enhancing the reliability of accounting information, and through this, contributing to the protection of interested parties and the sound development of enterprises.
Based on specialized knowledge of the relevant laws, the accounting attorney provided legal advisory suited to the purpose of the accounting review.
The Stages of the Accounting Review, Explained by the Accounting Attorney
The accounting attorney explained the review screening and the substantive review, which are the stages of an accounting review.
Review Screening
- The stage in which financial analysis and the like are conducted on disclosure materials and other documents, and whether accounting standards have been violated is examined, focusing on any unusual matters identified
- It is carried out through the voluntary cooperation of the company and others, and where an unusual matter is explained on reasonable grounds, the matter is closed without conducting a substantive review
Substantive Review
- The stage in which, where the reason for an unusual matter extracted from the review screening is not explained on reasonable grounds, whether accounting standards have been violated is investigated and confirmed
- The investigation is carried out by invoking the authority to request the submission of materials under the relevant laws and regulations and by receiving the relevant books and supporting documents
The Procedure for a Substantive Review, Explained by the Accounting Attorney
The accounting attorney provided information on the procedure for a substantive review, which is also called a detailed review.
1) Request for the submission of materials - A request for the inspection and submission of accounting books, related documents, audit working papers, and the like
2) Analysis of the submitted materials - Additional requests as necessary
3) Questioning and request for statements - A request for statements to confirm the facts and an opportunity to explain
4) Investigation of the company's financial condition - The method of actual inspection may be used as necessary
5) Request for materials from related agencies - As necessary, inquiries into financial transactions, inquiries to counterparties regarding claims and debts, and requests for the submission of materials from public institutions are possible
6) Where there is no suspicion of a violation - The matter is closed
7) Where a suspected violation is found, it is summarized and organized, and an inquiry letter is sent : Additional explanation is possible through a reply
8) The matters identified are finalized, and a prior disposition notice is sent : Prior notice of the anticipated findings and the type of measure, along with guidance on attendance at the Review Committee and written statements
9) Deliberation by the Review Committee : Statements may be made in writing or in person
10) Resolution by the Securities and Futures Commission
11) Resolution by the Financial Services Commission : Where the company is a listed company and the amount of the penalty surcharge exceeds 500 million won
12) Request for reconsideration : A request for reconsideration may be made within 30 days from the date the measure is notified
3. The Accounting Attorney Provides Legal Advisory on Company A's Response to the Substantive Review
In order to provide relief to Company A, which was facing the risk of delisting, the accounting attorney provided tailored legal advisory based on extensive experience in responding to accounting reviews.
The accounting attorney closely investigated Company A's situation, in which the substantive review came to be conducted, and was able to determine that the claims of Company OO, which had reported the overstatement to the Financial Supervisory Service, contained many exaggerations.
In addition, by analyzing the reasons for the accounting violation and the grounds for correction, the attorney confirmed that this was not intentional accounting fraud.
Daeryun's accounting attorney reviewed whether Company A had any risk factors and provided a response plan for the accounting review so that the company could prepare in advance for problems that could additionally arise.
4. Company A Escapes the Risk of Delisting Through the Accounting Attorney's Advisory
Through the legal advisory of the accounting attorney, Company A was able to be subject only to a sanction such as a penalty surcharge from the Securities and Futures Commission, without a notice of referral to the prosecution.
This was a result obtained because Daeryun's accounting attorneys, who have extensive experience in responding to accounting reviews, formed a team and provided legal advisory suited to Company A.
The president of Company A, who escaped the risk of delisting, repeatedly conveyed his thanks to Daeryun's accounting attorney for providing excellent advisory.
At Daeryun LLC, accountants who have performed accounting audit work for many years at large accounting firms, together with accounting attorneys who have handled numerous accounting fraud cases at the prosecution and the courts, resolve accounting reviews and the accompanying legal disputes together.
If you need litigation response and legal advisory related to an accounting review, please come at any time to 🔗the accounting attorney at Daeryun LLC.
This content is based on actual case studies of Daeryun Law LLC with some adaptations, and the copyright belongs to our firm.
Unauthorized reproduction, duplication, or distribution and other copyright infringements may result in legal action under applicable laws.
