The South Korea Financial Services Commission said its Securities and Futures Commission approved sanctions against Dexter Studios for preparing and disclosing financial statements in breach of accounting standards. The measures include a three-year auditor designation, a correction order, recommendations equivalent to dismissal for two former chief executive officers and a former executive, and a criminal complaint against the two former chief executive officers. A surcharge on the company and related persons is to be decided later by the Financial Services Commission. The findings against Dexter Studios covered overstated revenue in 2016 through 2019 and understated financial liabilities in 2016, which led to overstated net income and equity. The company was found to have recognized fictitious revenue by manipulating project completion rates for cancelled projects or projects with falsely increased contract values, omitted derivative accounting for a variable return obligation linked to its share price, and obstructed the external audit by altering key closing data submitted to the auditor. For Daejoo Accounting, which audited Dexter Studios in 2016 and 2017, the commission imposed a 20 percent additional contribution to the joint compensation fund and a two-year ban on auditing Dexter Studios after finding failures in key audit procedures, including external confirmations and alternative procedures for percentage-of-completion revenue and receivables. Separately, the commission sanctioned Daejoo Accounting and two certified public accountants for violating the External Audit Act by allowing a CPA already subject to a one-year audit restriction for designated companies to participate in such an audit and by failing to manage audit assignments properly. Daejoo Accounting received a 30 percent additional contribution to the joint compensation fund and a two-year audit restriction for the relevant company. One CPA was recommended for a six-month partial suspension, barred for three years from auditing the relevant company and for one year from auditing listed, designated and large unlisted companies, and ordered to complete 12 hours of training. The other CPA was barred for two years from auditing the relevant company, for one year from auditing listed and designated companies, and ordered to complete eight hours of training.
South Korea Financial Services Commission2026-07-23
South Korea Financial Services Commission sanctions Dexter Studios and Daejoo Accounting for accounting breaches and audit failures
South Korea's Financial Services Commission said the Securities and Futures Commission sanctioned Dexter Studios for accounting violations, including a three-year auditor designation, a correction order and criminal action against two former chief executive officers. The findings covered overstated revenue, understated financial liabilities and obstruction of the external audit. Daejoo Accounting and two CPAs were also sanctioned for negligent audit work and breaches of audit restriction rules.