사원횡령과 내부통제 그리고 외부감사인의 책임- H캐피탈 사례

The embezzlement of 47.3 billion won in H Capital Company held the spotlight in 2004 in that the person involved was the fund team manager as well as an executive of the company and that the amount embezzled was as much as 47.3 billion won. Mr. Chung, the executive of H Capital secretly transferred the company's money market funds to the company's securities accounts and invested in stocks, futures, and options for his personal gain. The internal audit team of H Capital verified the balances of all deposit accounts of the company every month by acquiring bank confirmations. However, it was Chung, the executive of H Capital who submitted the forged bank confirmations of the money market funds account to the internal audit team because he insisted on managing the account personally as the fund team manager. Chung also prevented the external auditor from collecting bank confirmations by submitting to the auditor the wrong address of the securities company in which the company had its money market funds account, intercepting the bank confirmations sent by the auditor, and sending back the forged bank confirmations to the auditor. H Capital argued that negligence in the audit process of requesting bank confirmations caused continuous embezzlement in the subsequent periods and filed a damages claim against its external auditor for failing to detect the embezzlement scandal. The Supreme Court dismissed H Capital's damages claim against its auditor, ruling that although there existed partial negligence in checking the mail addresses of the financial institutions to which bank confirmations would be sent, there is no causation between the auditor's negligence and the subsequent embezzlement of the executive of the company. This verdict indicates that it is the management and the internal audit team that have the direct responsibility of employee fraud and that outside auditors do not have active responsibilities of detecting all fraud and corruption in the auditee as long as the auditor exercises due care and the proper level of professional skepticism because of the inherent limitations of external audit. Management's realizing the importance of an internal control system is a top priority for the prevention of employee fraud and corruption. Recognizing that the internal control system is not merely nominal but indispensable for the reduction of operation risk, management should share with employees its determined will to prevent internal fraud and corruption, provide sufficient investment to establish a sound internal control system, and implement the system rigorously. Auditors who face higher litigation risk after the adoption of securities class action suit in 2005 should fulfill the evaluation of prospective clients strictly and all the audit processes including bank confirmations throughly. Finally, the authorities need to further the plan to require more financial institutions to establish the account balance checking system in which internal audit teams and outside auditors can verify the balances of various deposit accounts in order to prevent employee fraud and forged documents.