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Seegene, a representative company of corona diagnostic kit(180,100 +0.78%)He was punished by the financial authorities for overstating sales. Biocompanies’ opaque accounting practices are expected to hit the cutting board again, causing a wave in the stock market.
The Financial Services Commission held the Securities and Futures Committee on the 8th and concluded that Seegen, a listed company on the KOSDAQ market, had prepared and disclosed its financial statements in violation of accounting standards, and recommended the appointment of an auditor for 3 years, dismissal of the officer in charge and suspension of duties for 6 months, and improvement of internal control. It was announced that it had decided on measures such as. Seegene is the fifth largest company in the KOSDAQ with a market capitalization of 4,724.7 billion won based on the closing price of the day. The amount of the penalty is expected to be over 500 million won, and the specific amount will be decided by the Financial Services Commission later.
According to the Jeungsun Committee, Seegene carried out products in excess of the actual order volume from 2011 to 2019 to the agency and over or understated as sales. In addition, convertible bonds subject to the condition of claiming for early redemption within one year should be classified as current liabilities, but classified as non-current liabilities, and expenditures related to R&D, such as diagnostic reagents that did not meet the asset recognition requirements (technical feasibility), are used as development costs. It was even counted.
Regarding the decision of the augmentation committee, Seegene admitted that it was “a deficiencies caused by a shortage of experts and systems in the past management sector,” and explained that “in the third quarter of 2019, the financial statements were revised to reflect all accounting related matters related to this disposition decision.” did.
Captain of the diagnostic kit hit with’withdrawal’
There are growing concerns that the financial authorities’ severe punishment against Seegene on the 8th for overstating sales will have a significant impact on other bio companies. In 2018, the Financial Supervisory Service initiated supervision on the issue of Celltrion Healthcare’s passing over its domestic drug sales rights to its parent company Celltrion. Celltrion is responsible for the production and development of biopharmaceuticals, and Celltrion Healthcare, an affiliate, is in charge of sales. Inside and outside the industry, it is known that the financial authorities have been conducting an investigation into Celltrion for three years to see if there was any accounting fraud.
The financial authorities pointed out that Seegene over-accounted for sales, cost of sales, and related assets by recognizing the entire product delivered to domestic and overseas agencies in 2011-2019 as sales. Over-accounted sales during this period amounted to 71.7 billion won. It was also pointed out that R&D-related expenditures, such as diagnostic reagents that did not meet the asset recognition requirements (technological feasibility), were recorded as development expenses. An official from the Financial Supervisory Service pointed out, “The industry is saying that it is a practice, but it should be noted that the Jeungsun Committee decided that this type of accounting was inappropriate.”
On this day, the Jeung-Seon Committee pointed out that Kosun Bio (formerly Hyunsung Vital) was underestimated or excessively accounted for, such as provisions for bad debts for accounts receivable for 2017-2019, underestimated or overstated, such as subsidiary investment stocks (goodwill, etc.), and falsely entered the disclosure documents for small public offerings. They decided to take measures such as a 10-month limit on issuance of securities, a fine of 36 million won, and a three-year auditor appointment.
In addition, the Jeungseon Committee decided to take measures of 8 months for the issuance of securities and two years for the appointment of an auditor against Apol, an unlisted corporation, for under- or over-accounting the allowance for bad debts of accounts receivable from 2017 to 2019. In the new era, an accounting firm that neglected the audit procedures for Kosun Bio and Apol, an additional 80% for damages compensation joint fund was accumulated, and a four-year restriction on audit work for Kosun Bio and an additional 50% for damage compensation joint fund was accumulated. A three-year limit was imposed on the audit work.
In 2016-2017, S-Mark pointed out false accounting of financial assets such as available-for-sale securities and excessive accounting such as subsidiary investment stocks, and took a prosecution against them. Seorin Accounting Firm, which neglected the audit, decided a fine of 140 million won.
Reporter Lee Hyun-il/ Ji-hyun Lee [email protected]