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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] Young Poong has been found to have understated environmental remediation provisions by more than 100 billion won annually from 2021 to 2024, in violation of accounting standards, prompting financial authorities to impose sanctions including an auditor designation and fines.
According to financial authorities on June 12, the Securities and Futures Commission under the Financial Services Commission on June 10 imposed a three-year auditor designation on Young Poong. Additional measures include fines against the company and related individuals, a recommendation to dismiss a former CEO, recommendations to dismiss and suspend current and former executives for six months, and corrective orders.
The company’s annual understatement of provisions amounted to approximately 142.7 billion won in 2021 and 2022, and about 233.2 billion won in 2023 and 2024. Provisions refer to liabilities recognized in advance for probable future expenses.
According to the findings, Young Poong failed to recognize provisions in 2021–2022 despite clear legal obligations to remediate contaminated soil surrounding its smelter facilities. In 2023–2024, it calculated provisions using remediation methods not permitted under regulations, resulting in further understatement.
The company also did not recognize provisions related to obligations to clean contaminated forest land near its smelter and soil beneath buildings at its first and second plants. In addition, provisions related to groundwater remediation were found to be understated.
Authorities further determined that Young Poong understated impairment losses during 2022–2024 when conducting impairment assessments related to potential suspension of smelter operations.
The commission also sanctioned audit firms, including Ichon Accounting Corporation and Daejoo Accounting Corporation, restricting their audit activities for the company due to insufficient audit procedures.
While Young Poong said it respects the commission’s decision, it maintains that its accounting treatment complied with international standards. The company added that differences in interpretation regarding soil remediation could exist and indicated plans to pursue legal action.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
