[THE INVESTOR] South Korean companies committing accounting fraud will face much heavier fines in the future, the top financial regulator said on July 7.

The Financial Services Commission noted that related regulations have been changed to enable the authorities to levy much higher fines that the current 2 billion won (US$ 1.7 million). 

Until now, a company proven to have committed accounting fraud was fined once regardless of the duration of fraudulent activities.

Under the changes, a company found guilty of accounting fraud will be fined for every annual financial statement, and announcement of bond or stock issuance made during the period the company cooked its books.

As such, a company that has been found to have committed accounting fraud for five years, and posted five annual statements and issued bonds or stocks on five occasions could be fined 2 billion won for each of the 10 occasions, leading to a 20 billion won fine.

According to the FSC, when the new regulations were applied to past accounting fraud cases, there was a fourfold increase in the average amount of fines.

The new regulations will not be applied retroactively.

By Choi He-suk (cheesuk@heraldcorp.com)