2006Do918 Violation of the Act on External Audit of Stock Companies

1. Defendant 1 (00000 - 00000) and certified public accountants;

Housing, Sung-nam-si, Subdivision-si, and Gu-Si

Reference domicile/Eup/Myeon 821

2. Defendant 2 (00000 - 00000) and certified public accountants

Gangnam-gu Seoul Metropolitan Government Substitute Dong

Jung-gu Seoul Central District Court Decision 3 82

3. Defendant 3

Gangnam-gu Seoul Metropolitan Government Gyeongdong

Representative Liquidator Kim So-young

Defendants

Attorney Lee Dong-soo, Han-soo, Trade Name, Day in Korea, Jeon Ho-ho, Kim Jong-young, and Kim

Seoul High Court Decision 2005No460 Decided January 13, 2006

June 26, 2008

All appeals are dismissed.

The grounds of appeal are examined.

1. The former Act on External Audit of Stock Companies (Law No. 5522, Feb. 24, 1998 and Jan. 2, 2000

12. Article 20(1)2 of the former Act on External Audit and Inspection (amended by Act No. 6108; hereinafter “former Act”) provides that “When an auditor, a certified public accountant belonging to him/her, or a person related to audit and inspection fails to enter matters to be entered in an audit report or makes a false entry, it shall be deemed that the crime is a summary.”

The term "when a false entry is made" in the latter part of the above provision means "when a false entry is made in an audit report," or "when a false entry is made" means "when a false entry is made in an audit report in light of the purport of the provision that guarantees the authenticity of an audit report as a legal interest protected by law" (see Constitutional Court Order 2002HunGa20, 21, Jan. 29, 2004). This means when an auditor who is a actor knows that his recognition and judgment are inconsistent with the contents of the audit report while he knows that his recognition and judgment are not consistent with those of the audit report (see Supreme Court Decision 2007Hun-Ga20, Jan. 29, 2004).

8. The latter part of this case cannot be deemed to violate the principle of clarity required by the principle of no punishment without law, since it can be sufficiently recognized as a general person with sound common sense and ordinary legal sentiment.

In the same purport, even though the Defendants were subject to restrictions on the scope of audit, such as failure to submit properly audit data in the audit process of Daewoo Heavy Industries Co., Ltd. or the company subject to audit, when entering the audit results in the audit report on each of the above companies subject to audit, the lower court’s determination that it constitutes “when it was confirmed that the financial statements of each company subject to audit have been prepared appropriately in accordance with the corporate accounting standards” is justifiable because they did not be subject to restrictions on the scope of audit.

The court below did not err in the misapprehension of legal principle as alleged in the grounds of appeal.

2. Article 20(1)2 of the former Act on External Audit of Stock Companies provides that "any person who commits a crime by false entry in an audit report, who is an auditor, a certified public accountant belonging to such auditor, or a person related to audit business." Thus, a crime of violating the Act on External Audit of Stock Companies following false entry in an audit report is the subject of the crime, who actually conducts accounting audit to determine the audit opinion as a certified public accountant belonging to an accounting corporation that is an auditor, and the director of an accounting corporation under the Act on External Audit of Stock Companies

In such a legal doctrine, the judgment of the court below convicting Defendant 1 and Defendant 2 on the ground that Defendant 1 and Defendant 2 were processed by falsely making an audit report on the 197 fiscal year and 1998 fiscal year and the 1998 fiscal year and the 1998 fiscal year and the 1998 fiscal year and the 198 fiscal year and the 197 fiscal year and the 1998 fiscal year and the 198 fiscal year, which are the so-called general accounting company of Defendant 3 accounting corporation, as the director and partner of Defendant 3 accounting corporation.

The court below did not err in the misapprehension of legal principle as alleged in the grounds of appeal.

3. Examining the evidence duly admitted by the lower court in light of the record, the lower court did not err in misapprehending the legal doctrine as to the falsity of audit report, and the Defendants’ remainder of the grounds of appeal is merely an error in the selection of evidence and fact-finding which belong to the lower court’s full power as a fact-finding court, and thus does not constitute a legitimate

4. Conclusion

Therefore, all appeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Cha Han-sung

Justices Cho Go-chul

Justices Kim Ji-hyung of the State

Justices Lee Jae-chul