A. In order to raise funds outside the country, the Defendants recognized that the Defendants calculated the sales cost of Defendant D Co., Ltd. (hereinafter “D”) “D” more excessively than the actual sales cost. However, all of the extra funds created therefrom was used for Defendant D’s business costs. Ultimately, Defendant D’s “net net loss (or net profit)” does not have any influence.

Therefore, it does not constitute a violation of Articles 20(1) and 13 of the former Act on External Audit of Stock Companies (wholly amended by Act No. 15022, Oct. 31, 2017; hereinafter “former External Audit Act”).

B. The lower court’s punishment against the illegal Defendants (i.e., one year and two months of imprisonment; (ii) one year and six months of imprisonment; and (iii) one year and six months of imprisonment; and (iv) Defendant C: one year of imprisonment; and (v) Defendant D: fine of KRW 50 million is too unreasonable.

2. Determination

A. Determination as to the assertion of misapprehension of legal principles 1) Article 20(1) of the former External Audit Act provides that a representative director or a person in charge of accounting affairs of a company shall be punished for preparing and publicly announcing false financial statements in violation of the accounting standards under Article 13, and Article 13 of the former External Audit Act and Article 7-2(1)1 of the former Enforcement Decree of the External Audit Act (wholly amended by Presidential Decree No. 29269, Oct. 30, 2018) provides that a stock-listed corporation shall prepare financial statements based on the accounting standards of the Korea International Accounting Standards (K-IFR) adopted by the stock-listed corporation (hereinafter “instant provisions”). The purpose of the Korea International Accounting Standards (K-IFS) is to provide information on the financial status, performance and performance of a company’s wide scope of information disclosure, and information on the financial status of the user.

“..” and “......”