Responding to Accounting & Audit Investigations or Legal Actions by Financial Supervisory Authorities or Others

• Our Practice provides unparalleled, expert-level services throughout each stage of the accounting and audit investigation process, from guiding clients through investigations by the relevant financial supervisory authorities, to actively assisting them in responding to measures taken thereafter by the Accounting & Audit Committee or the SFC.

• Our Practice provides proactive solutions to prevent disciplinary regulatory actions, criminal proceedings, or civil claims from being brought against our clients or their officers and employees. 

• Our Practice has time and again achieved optimal outcomes for our clients through extensive know-how and experience in analyzing financial statements, public disclosures, press releases, and other internal and external materials, coupled with effective and efficient defense strategies and techniques across various stages of regulatory examinations, criminal investigations, and legal proceedings.  

Offering Regulatory Advice / Accounting-Related Counselling / Digital Forensics Service

• Many members of our Accounting & Audit Investigation Practice have hands-on experience working with various stakeholders relevant to accounting and audit-related issues.  Our Practice works closely with our firm’s other practices, including, the Corporate Compliance Practice, the Corporate Investigations & White Collar Defense Practice, and the Litigation Practice, to provide our clients with timely updates on relevant regulatory changes and proactive assistance in relation thereto.

• Using our broad experience and the expert knowledge we have accumulated from representing domestic and global companies and accounting firms in disputes involving, among others, the FSC, the FSS, Prosecutors’ Offices, and the courts, our Practice can offer a full scale one-stop service, pre-emptively assisting our clients in minimizing dispute-related risk exposure, as well as actively responding to any incoming disputes or investigations.

• Our Practice also has digital forensics capabilities, and is able to provide assistance in carrying out investigations or analyses with respect to potential violations of accounting standards or other misconducts pursuant to Article 22 of the Act on External Audit of Stock Companies.

Handling FSS, Korea Exchange (“KRX”) and Tax Investigations

Our Accounting and Audit Investigation Practice can assist in effectively responding to, among others, investigations brought forth by the FSS in connection with potential violations of disclosure/reporting-related obligations, tax-related investigations brought forth by the National Tax Service, and various other investigations brought forth by the KRX with respect to potential violations, which could result in the delisting of the client.

In particular, our Practice is uniquely positioned to provide a comprehensive legal solution based on our well-established capabilities to handle communications with the relevant authorities.

Handling KRX Delisting Procedures

Audit investigations may result in administrative sanctions and, with respect to listed companies, in potential delistings.  Considering the severity of the potential consequences, formulating a comprehensive response is necessary.  Our Practice is well equipped to provide such a response based on years of experience in successfully preventing the delisting of companies.

Handling Civil or Criminal Cases

With the increase in demand for accounting transparency, investigations on potential window dressing activities and fraudulent or illegal transactions are becoming more frequent, while sanctions imposed in relation thereto are becoming more severe.

Our Practice is able to provide assistance in handling civil and criminal cases, including the recently rising securities-related class action lawsuits, based on expert knowledge of complex accounting-related issues and accumulated know-how on criminal proceedings. 

In recent years, we successfully represented companies and accounting firms in most major accounting and audit investigations carried out by the relevant regulatory authorities.  Here are some examples of our successful representations:

• In a case involving potential audit-related violations, specifically the understatement of bad debt allowances by Company A, our Practice made persuasive arguments to the regulatory authorities using a large volume of documents and factual details.  We succeeded in substantially reducing the fine imposed on our client and avoiding criminal prosecution by proving our client’s lack of intent.

• In a case where the SFC suspended Accounting Firm B from carrying out audits for one year on the allegation that Accounting Firm B acquiesced to fraudulent accounting activities of its audit client Company C, our Practice argued successfully in the relevant administrative litigation that Accounting Firm B was not systematically involved in Company C’s window dressing activities.  We succeeded in revoking the suspension imposed on Accounting Firm B.

• In a case involving Company D’s assumption of the liabilities of Company E through a merger arising from Company E’s violation of accounting standards, our  Practice successfully argued against the SFC that the severity of violation should be measured from the perspective of Company D instead of that of Company E, resulting in our client only being subject to minor administrative penalties.

• In a case involving a conflict of opinions between the former and current external auditors of Company F with respect to the method of accounting to be used, our Practice provided effective and timely advice, prompting our client to revise its past financial statements and apply for a voluntary FSS audit, which mitigated the liabilities our client might have obtained from the relevant violation.

• In a case where the accounting treatment of construction-related revenues and account receivables recognized by Company G was mainly at issue, our Practice explained successfully to the FSS the unique nature of the construction industry’s revenue-recognition process, ultimately being able to exonerate our client.

• In response to the FSS’s request for information with respect to Accounting Firm H’s quality control measures, our Practice was able to persuade the FSS that Accounting Firm H duly fulfilled its obligations under the External Audit Act and the Audit Standards, and was ultimately able to have the case closed without any sanction imposed on our client.