If accounting fraud problems occur during financial statement preparation, will management also be punished?

Accounting fraud refers to cases of preparing/disclosing false financial statements in violation of accounting standards or making false statements/omissions in audit reports.

Such acts are subject to severe sanctions under the "Act on External Audit of Stock Companies, etc."

According to Article 39 of the External Audit Act, preparation of financial statements in violation of accounting standards or preparation of false audit reports is subject to criminal punishment.

Specifically, imprisonment of up to 10 years or a fine of 2 to 5 times the profit gained or loss avoided through the violation may be combined.

However, if there is no profit gained or loss avoided through the violation, or if calculating it is difficult, or if the amount equivalent to 5 times is 1 billion won or less, the upper limit of the fine is limited to 1 billion won.

In particular, those falling under "business execution directors" under commercial law may bear responsibility even if not formally directors.

If they substantially directed or decided on accounting processing, the same legal responsibility as directors is recognized.

Therefore, whether something constitutes accounting fraud must be judged comprehensively considering intent, internal instruction structure, and degree of accounting standards violation.

From the early stages, it is important to inspect legal risks and prepare response strategies through consultation with an accounting specialist attorney.