Selvas Healthcare and Daewoo Industrial Development designated as auditors for 'accounting violation'

(Seoul = Yonhap News) Reporter Kim Ji-yeon = The Securities and Futures Commission under the Financial Services Commission announced on the 11th that it had decided to take action, including designating auditors, for Selvas Healthcare [208370] and Daewoo Industrial Development for preparing and disclosing financial statements in violation of accounting standards.

Selvas Healthcare was found to have overestimated goodwill by overestimating future cash flows without any basis when assessing goodwill impairment.

In addition, development costs and subsidiary investment stocks were overstated while inventory valuation allowances were understated, resulting in fines and 2-year auditor designation.

Daewoo Industrial Development used methods such as adjusting the sales price and the number of unsold units to make construction-related receivables appear collectible and understated the allowance for loan losses.

In addition, it was pointed out that the embezzlement of the former chairman and former CEO was not properly reflected in the financial statements, resulting in overstatement of net profit and equity capital.

Accordingly, measures were taken, including a December restriction on securities issuance, fines (for company officials), three-year auditor designation, and a recommendation for dismissal (dismissal) of former chairman, CEO, and executives in charge.

The final decision on imposing fines will be made by the Financial Services Commission in the future.

As an auditor for Daewoo Industrial Development, we decided to take measures against Daeju Accounting Corporation and its certified public accountants who neglected audit procedures, including restricting the company's audit work.