Samsung BioLogics Faces Special Audit for Alleged Accounting Fraud
The Financial Supervisory Service (FSS), S. Korea's financial watchdog, is set to carry out a special audit on Samsung BioLogics Co., the drug-making arm of Samsung Group over allegations that the company had committed accounting fraud to go public last year.
According to an FSS official, the FSS was tipped off by civic groups and political circles and has decided to conduct a special audit after detecting “something unclear" in an audit report filed by the Korean Institute of Certified Public Accountants (KICPA) on Samsung BioLogics.
Samsung BioLogics, which went public in November last year, suddenly posted a net profit of 1.9 trillion won in 2015 after making losses for four consecutive years since its foundation in 2011.
The new influx of profit had been created by a revaluation of its stake in its subsidiary Samsung Bioepis, whose market value was 5.27 trillion won. Samsung BioLogics had reflected Samsung Bioepis's rising market value rather than book value in its financial books.
The People’s Solidarity for Participatory Democracy, a progressive civic group, took issue with that kind of accounting method and raised the possibility of accounting fraud because the loss-making company suddenly turned a profit by rejigging its accounting method for Samsung Bioepis.