Korea Aerospace Industries (KAI) fined 7.89 billion won for violation of accounting standards

Input 2021.03.17 18:03

The Korean Aerospace Industries (KAI) was penalized for violating accounting standards, such as overstating sales.

The Financial Services Commission and the Securities and Futures Commission held a regular meeting on the 17th and took measures such as a penalty of KRW 7.89 billion and a two-year approval of audit for KAI for preparing and disclosing financial statements in violation of accounting standards for fiscal year 2011-2017. Decided. In addition, the CEO, executives in charge, and audit committee members at that time were recommended to be dismissed. They have all left the company.

According to the Financial Services Commission, even though KAI must recognize revenue according to the construction progress rate, it overestimated sales by calculating the construction progress rate by considering the advance payment paid by a partner company as the incurred cost (material cost) regardless of whether or not the construction was performed. In addition, by replacing the cost of a specific project with the cost of another project or by randomly dispatching deliveries to increase the construction progress rate, the sales amount related to a specific project was overestimated.
It was also revealed that sales and cost of sales were overestimated in relation to a specific business by recognizing expenses by dividing them into several fiscal periods rather than immediately disposing of the expected loss as an expense.