Deloitte Anjin, one of S. Korea’s leading accounting firms, has been ordered not to conduct new audits for one year for turning a blind eye to Daewoo Shipbuilding & Marine Engineering (DSME)’s accounting fraud worth 5 trillion won.
On Mar. 24, the Securities and Futures Commission (SFC) under the Financial Services Commission ordered Deloitte Anjin LLC to suspend conducting new audits for 12 months for aiding and abetting DSME’s fraudulent accounting practices.
Until April 4, Deloitte Anjin will be banned from offering new accounting service to listed firms, unlisted financial companies and companies whose auditors are designated by the SFC.
In addition to the business suspension, the SFC also decided to impose a 1.6 billion won fine on the accounting firm for falsifying securities reports, a 20 million won fine for submitting a cooked audit report in 2014 and a five-year ban from auditing DSME. In addition, Deloitte Anjin was ordered to double its deposit in the Joint Compensation Fund.
The SFC said, “Deloitte Anjin has been auditing DSME for the past 6 years. However, Deloitte Anjin has abandoned its primary reasonability as an auditor by aiding or condoning DSME's accounting fraud.
The SFC’s decision has dealt a severe blow to the credibility and corporate image of one of the country’s four biggest accounting firms. This is the strongest punitive action for a large accounting firm since now-defunct KPMG San Tong got a one-year suspension for accounting fraud at Daewoo Group in 2001.