Accounting Attorney Legal Advisory | Accounting Attorney Provides Legal Advisory on the Accounting Review of Company A, Facing Delisting, and Achieves Relief

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.

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 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