All appeals are dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. As to the grounds of appeal Nos. 1 and 2, the lower court determined as follows: (a) the Plaintiffs’ claim for damages against the Defendant under Article 170(1) of the former Financial Investment Services and Capital Markets Act (amended by Act No. 12383, Jan. 28, 2014; hereinafter “former Financial Investment Services and Capital Markets Act”); and (b) Article 17(2) of the former External Audit of Stock Companies Act (amended by Act No. 12148, Dec. 30, 2013; hereinafter “former External Audit Act”); (b) determined that the Plaintiffs under the proviso to Article 17(5) of the former External Audit Act should prove that they were negligent in performing their duties; and (c) comprehensively taking account of the facts stated in its reasoning, the Defendant failed to collect sufficient and adequate evidence to verify and confirm the duties of external audits at the time of performing the duties of external audit; and (d) failed to discover the facts of Category A’s audit report as an adequate financial statement.

In light of the relevant legal principles and records, the lower court did not err by misapprehending the legal doctrine regarding the standard of determining whether an auditor neglected his/her audit duties and the burden of proof, or by misapprehending the facts contrary to logical and empirical rules.

2. As to the third ground for appeal

A. The liability of an auditor for damages under Article 170(1) of the former Capital Markets Act and Article 17(2) of the former External Audit Act is recognized not only where an auditor intentionally fails to enter important matters or makes a false statement in an audit report, but also where an auditor fails to enter important matters by negligence or makes a false statement in an audit report.

B. On the grounds indicated in its reasoning, the lower court erred by the Defendant’s negligence to set up KRW A 9 and KRW 10.