'Accounting Violation Allegations': Haitai Confectionery’s Key Individuals Reported to Prosecutors

[Financial News] Haitai Confectionery and Foods Co., Ltd. disclosed on the 17th that it had taken measures including referring key individuals to prosecutors after preparing and disclosing financial statements in violation of accounting standards. At its 16th meeting held on the 16th, the Securities and Futures Commission (SFC) under the Financial Services Commission (FSC) resolved to impose measures, including designating an auditor, on Haitai Confectionery and Foods Co., Ltd. for preparing and disclosing financial statements in violation of accounting standards. The SFC’s investigation found that Haitai Confectionery and Foods Co., Ltd. overstated sales and cost of sales by issuing false tax invoices and omitting accounting entries for sales discounts and sales incentives.
The company was also found to have used financial statements prepared in violation of accounting standards in a securities registration statement. In particular, it was confirmed that the company obstructed the external audit by presenting false transaction documents to the external auditor and asking business partners to falsely respond to requests for confirmation of receivables.
Accordingly, the SFC resolved to impose measures including a three-year auditor designation and a fine on Haitai Confectionery and Foods Co., Ltd. It also decided to recommend the dismissal of the head of the finance department and suspend the official from duty for six months. For the former auditor, it decided on a measure equivalent to a recommendation for dismissal.
Haitai Confectionery notified prosecutors of the head of its finance department and the former auditor. It imposed disciplinary measures consisting of a recommendation for dismissal and a six-month suspension for the head of the finance department, and a measure equivalent to a recommendation for dismissal for the former auditor. Haitai Confectionery will be subject to a three-year auditor designation. The amount of the fine will be finalized by the Financial Services Commission in the future.
Meanwhile, the Korea Exchange (KRX) suspended trading in Haitai Confectionery and Foods Co., Ltd.’s shares at 6:09 p.m. on the 16th. The reason for the suspension was an inquiry disclosure concerning reports that the company had been notified to prosecutors for violating accounting standards. The timing for lifting the trading suspension had not been determined when the disclosure was made.
[email protected] Han Young-jun Reporter