Why Was One Defendant Convicted and the Other Acquitted? Taiwan Business Accounting Act Liability Explained

2026.10.06

1. What Happened in This Taiwan Business Accounting Act Case?

The case involved a manufacturing company and loans received from an overseas affiliated enterprise.

According to the case facts provided, the company borrowed NT$2,943,048 in 2022 and NT$9,419,408 in 2023 from the overseas affiliated enterprise, for a combined amount of NT$12,362,456. The funds were transferred into the manufacturing company’s bank account.

➠The criminal dispute arose because the relevant debt was allegedly not properly reflected in the company’s financial statements.

1.1 More Than NT$12 Million in Corporate Loans

Corporate borrowing is not itself illegal. The problem arises when a transaction that should be recorded or disclosed under applicable accounting requirements is intentionally omitted, causing the company’s financial statements to present an inaccurate financial picture.

According to the facts of this case, the relevant loans remained outstanding and should have been reflected in the company’s financial reporting. However, the financial statements allegedly failed to disclose the more than NT$12 million debt under the appropriate liability classification.

➠As a result, a person reviewing the financial statements could potentially receive an inaccurate impression of the company’s actual liabilities and financial condition.

1.2 Why the Financial Statements Became a Criminal Issue

An accounting error does not automatically become a criminal offense. The critical issue in this case was whether a person covered by Article 71 of the Business Accounting Act intentionally omitted an accounting transaction from the records and thereby caused the financial statements to become inaccurate. Prosecutors therefore pursued criminal charges against the company’s responsible person and another employee allegedly connected to the matter.

The court, however, reached different conclusions for the two defendants. The responsible person was convicted, while the other employee was acquitted. Understanding why requires examining both the statutory requirements and each defendant’s individual conduct.

2. What Does Article 71 of Taiwan’s Business Accounting Act Punish?

Article 71 of Taiwan’s Business Accounting Act addresses several forms of intentional accounting misconduct. Under the current statute, a commercial responsible person, principal accounting officer, accounting personnel handling accounting matters, or a person legally entrusted to handle accounting affairs for another may face imprisonment for up to five years, detention, or a fine of up to NT$600,000, or both imprisonment and a fine, when one of the statutory forms of misconduct is established.

One of those forms, Article 71, Subparagraph 4, concerns intentionally omitting an accounting transaction from the records and thereby causing a false result in the financial statements.

⚠️This is important because Article 71 is not a general rule making every person who knows about an accounting problem automatically guilty.

2.1 Who Can Be a Principal Offender Under Article 71?

The defendant’s legal status is one of the first issues that should be examined. Article 71 covers specified categories of persons, including commercial responsible persons, principal and handling accounting personnel, and persons legally entrusted to handle accounting affairs for others.

Whether a person falls within one of these categories depends on the person’s legal position and actual responsibilities, not simply on whether the person worked for the company. For example, a company responsible person with authority over corporate affairs may be treated differently from an employee who performs unrelated administrative work.

Similarly, an employee does not become “accounting personnel” merely because the person occasionally sees financial information. The actual nature of the person’s duties matters.

2.2 What Does “Intentionally Omitting an Accounting Transaction” Mean?

Article 71, Subparagraph 4 is not designed to criminalize every accounting mistake. The statute requires intentional omission.

Therefore, a criminal case may involve questions such as whether the defendant knew the accounting transaction existed, knew it should be recorded, had responsibility or authority over the relevant accounting process, and deliberately caused or allowed the transaction to be omitted in a manner that resulted in inaccurate financial statements.

An accidental bookkeeping error, misunderstanding, incomplete information, or ordinary negligence should not automatically be equated with intentional accounting falsification. The prosecution must establish the elements required by the offense based on evidence.

2.3 Can an Ordinary Employee Still Face Criminal Liability?

This point requires careful legal analysis. It would be too broad to say that an ordinary employee can never face liability simply because the employee is not independently within the categories expressly listed in Article 71.

Taiwan court practice recognizes that offenses under Article 71 are status-based offenses. A person who does not possess the required status is not ordinarily the direct statutory actor solely on that basis. However, where a person without the required status jointly commits, instigates, or assists the offense together with a person who does possess the required status, criminal liability may still need to be examined under Article 31 of Taiwan’s Criminal Code.

Therefore, the correct question is not simply:“Was this person an ordinary employee?”

The better questions are:

What was the employee’s actual role?
Did the employee participate in the accounting process?
Did the employee intentionally assist the concealment?
Was there coordination with a company responsible person or accounting personnel?
Did the employee have authority over the relevant records?
What does the evidence show about the employee’s intent?

➠These distinctions help explain why two defendants in the same case can receive different outcomes.

3. Why Was the Company’s Responsible Person Convicted?

According to the case facts provided, the company’s current responsible person assumed that position on December 9, 2021.

The court found that he knew about the company’s loans from the overseas affiliated enterprise and knew that the relevant financial information should be reflected in the company’s accounting and financial reporting. The key problem was not simply that the financial statements were inaccurate. The court focused on the responsible person’s knowledge and conduct.

3.1 Knowledge of the Corporate Loans

The responsible person acknowledged knowing that the company had borrowed money from the overseas affiliated enterprise. This was significant because the prosecution was not attempting to attribute an unknown accounting transaction to someone who had no awareness of it. The relevant question then became what the responsible person did after knowing about the loans.

⚠️Knowledge alone, however, should still be distinguished from criminal intent. The prosecution needed evidence supporting the conclusion that the omission was intentional rather than accidental.

3.2 Intentional Failure to Provide Accounting Information

According to the case facts, the responsible person intentionally failed to provide information and supporting documentation concerning the loans to the accounting firm engaged by the company. Because the accounting firm did not receive the relevant information, the loans were not properly reflected in the financial statements. This connection was central to the court’s reasoning.

The case therefore involved more than a situation where an external accountant simply made an independent mistake. The finding was that the company responsible person knew about information relevant to the financial statements but intentionally withheld it, resulting in inaccurate financial reporting.

➠That conduct supported the court’s finding of criminal intent.

3.3 Delegating Accounting Work Does Not Automatically Eliminate Responsibility

Companies frequently retain accountants or accounting firms to prepare, review, or audit financial information. Professional assistance is important, but retaining an accountant does not automatically protect a company responsible person from criminal liability when material information is intentionally withheld from the professional.

An accountant can only evaluate the information and documentation reasonably available within the scope of the engagement and applicable professional procedures. If management intentionally conceals a material transaction, the existence of an outside accounting professional does not necessarily eliminate the responsibility of the person who caused the information to be withheld.

According to the case facts provided, the court convicted the responsible person and sentenced him to six months’ imprisonment, convertible to a fine at NT$1,000 per day. The different result for the second defendant shows why the analysis must then move from the financial statement itself to the individual defendant’s status, duties, intent, and participation.

4. Why Was the Other Employee Acquitted?

The second defendant was an employee of the company and had worked there since 2016.

According to the case facts, the employee had heard the current responsible person explain that the difference involving foreign-currency receipts from the overseas enterprise represented loans to the company. The employee believed that the responsible person would provide the relevant information to the accounting firm.

When the employee later noticed that export declarations and incoming payment amounts did not correspond, the former responsible person allegedly told the employee that the matter was outside the employee’s responsibilities and did not need to be handled by the employee. The employee did not pursue the issue further. The court ultimately acquitted this defendant.

4.1 Employment Alone Does Not Establish Article 71 Status

The fact that someone works for a company does not automatically make that person a principal accounting officer, accounting personnel handling accounting matters, or a commercial responsible person under the Business Accounting Act. The court therefore had to examine what responsibilities this employee actually performed.

According to the case facts provided, the evidence did not establish that the employee occupied the statutory role necessary to treat the employee as the direct actor responsible for the accounting omission. This distinction is important for Taiwan corporate criminal cases.

💡Job titles, employment relationships, access to documents, and general knowledge about company affairs should not automatically be treated as equivalent to legal responsibility for preparing or ensuring the accuracy of financial statements.

4.2 Knowledge Is Different From Intentional Participation

The employee had some knowledge concerning the loans.

But knowing that a loan exists is not necessarily the same as intentionally causing it to be omitted from the accounting records. According to the case facts, the employee believed that the responsible person would provide the information to the accounting firm. When the employee noticed a discrepancy, the employee was told by a superior that the matter did not fall within the employee’s duties.

The court therefore distinguished awareness of the underlying transaction from intentional participation in falsifying the financial statements. This distinction is central to many white-collar criminal cases.

A person may know that a transaction occurred without knowing that it was omitted from formal accounting records, without having authority to determine how it should be recorded, or without sharing another person’s intent to conceal it.

4.3 Actual Authority and Job Responsibilities Matter

Authority can be particularly important when evaluating criminal responsibility inside a company.

Who could provide documents to the accounting firm?
Who was responsible for accounting information?
Who could instruct the accounting personnel?
Who had authority to decide what corporate information would be disclosed?
Who actually participated in withholding the information?

➠These questions help distinguish a decision-maker from an employee who merely became aware of part of the underlying transaction.

According to the facts provided, the evidence was insufficient to establish that the employee possessed the necessary status and intentional participation required for the charged offense. The court therefore acquitted the employee.

💡The broader lesson is not that “ordinary employees are always immune from the Business Accounting Act.” Instead, the lesson is that criminal liability requires individualized proof of the defendant’s legal status, actual participation, and mental state.

5. When Does an Inaccurate Financial Statement Become Criminally Significant?

Financial statements are intended to communicate a company’s financial position, operating performance, cash flows, and other information relevant to users of financial information. An inaccurate financial statement can affect investors, lenders, creditors, shareholders, regulators, counterparties, and other stakeholders.

However, not every discrepancy carries the same significance. The nature and impact of the omitted or inaccurate information must be considered together with the statutory elements of the alleged offense.

5.1 Quantitative Materiality

One way to evaluate the significance of an accounting misstatement is through its quantitative impact. A false entry or omission may affect revenue, profit, liabilities, assets, equity, debt ratios, or other important financial indicators. For example, omitting a substantial liability may make a company appear less leveraged and financially stronger than it actually is. Similarly, overstating revenue or understating expenses can distort operating performance and profitability.

In this case, the undisclosed loans allegedly totaled NT$12,362,456.

Whether an amount is material should generally be evaluated in the context of the company and its financial statements rather than solely from the absolute number. Nevertheless, a liability of this size may be highly relevant where it materially changes the presentation of the company’s financial position or debt structure.

5.2 Qualitative Materiality

Materiality is not always determined by amount alone. The nature of the information can also matter. An omission may affect a lender’s assessment of creditworthiness, an investor’s understanding of financial stability, the company’s apparent ability to repay debt, or the reliability of representations made to stakeholders.

A transaction may therefore be important because of what it reveals about the company, even when a purely numerical comparison does not tell the entire story.

⚠️For criminal liability under Article 71, however, materiality analysis should not replace the statutory requirements. The prosecution must still prove the conduct, status, intent, and false financial-statement result required by the offense.

5.3 Why Undisclosed Debt Can Affect Financial Decisions

Debt is a fundamental component of a company’s financial condition. A person deciding whether to lend money, invest, extend credit, acquire a company, or enter into a significant commercial relationship may evaluate the company’s existing liabilities before making a decision.

If substantial borrowing is omitted, the financial statements may present a materially different picture of the company’s leverage and repayment capacity.

➠This helps explain why intentionally omitted liabilities can create serious accounting and criminal-law concerns.

6. What Evidence Matters in a Taiwan False Financial Statement Case?

Business Accounting Act cases often turn on documents.

The financial statements themselves are important, but they are rarely the only relevant evidence. Investigators and defense lawyers may need to reconstruct who knew about the transaction, who was responsible for recording it, who communicated with the accountant, what documents existed, and why the transaction was ultimately omitted.

6.1 Corporate Roles and Accounting Responsibilities

Corporate registration records, internal organizational charts, employment agreements, job descriptions, board resolutions, authorization documents, internal accounting policies, and approval procedures can help establish who was responsible for particular decisions. This can be especially important when prosecutors charge multiple people within the same company.

A person’s formal title should be compared with the person’s actual duties. Someone formally described as an employee may exercise substantial authority, while another person with access to financial documents may have no authority over financial reporting decisions.

➠The evidence should determine the result rather than assumptions based solely on titles.

6.2 Emails, Instructions, Accounting Records, and Auditor Communications

Emails, LINE messages, internal communications, accounting vouchers, general ledgers, bank records, loan agreements, remittance records, financial statements, auditor requests, accounting-firm communications, and document-transmission records may reveal how the omission occurred.

These records may answer important questions:

Did the accountant request the relevant information?
Did management receive the request?
Who had possession of the loan documents?
Were the documents intentionally withheld?
Did an employee attempt to raise the issue internally?
Did someone instruct the employee not to take further action?
Was the accounting treatment discussed before the financial statements were completed?

A detailed documentary timeline can be essential to distinguishing intentional concealment from mistake, misunderstanding, or lack of authority.

6.3 Evidence of Intentional Concealment

Because Article 71, Subparagraph 4 concerns intentional omission, evidence of the defendant’s state of mind is particularly important.

Prosecutors may rely on communications, repeated instructions, concealment of documents, inconsistent explanations, internal warnings, or other circumstantial evidence to argue that the omission was deliberate. The defense may respond with evidence showing that the defendant lacked responsibility for the records, believed another person was handling the matter, provided the relevant information, relied on professional advice in good faith, misunderstood the nature of the transaction, or otherwise lacked the required criminal intent.

🧑🏻‍⚖️The issue should be decided from the complete evidentiary record, not merely from the fact that the final financial statement was inaccurate.

7. What Should Company Directors, Accounting Personnel, and Employees Learn From This Case?

This case provides different lessons depending on a person’s role inside a company. The central message is that corporate responsibility is not identical for everyone. At the same time, employees should not assume that having a lower-level title automatically eliminates every possible form of criminal liability.

7.1 Lessons for Company Responsible Persons

Company responsible persons should understand that delegating bookkeeping, accounting, or financial-statement preparation does not authorize management to conceal material information from accounting professionals.

If a company has loans, related-party transactions, significant liabilities, unusual transfers, or other material accounting matters, responsible persons should ensure that accurate and complete information is provided to the personnel or professionals handling the accounting process.

Where management intentionally withholds material accounting information and false financial statements result, retaining an outside accountant may not provide a defense.

7.2 Lessons for Accounting Personnel

Accounting personnel should seek complete documentation for material transactions and maintain clear records of information requested and received.

When inconsistencies appear between bank records, invoices, export documentation, loan agreements, remittances, or other accounting evidence, the issue should be clarified through appropriate internal and professional procedures. Accounting personnel should also document significant questions and responses where appropriate. In a later criminal investigation, contemporaneous records may help establish what information was available and who made the relevant decisions.

7.3 Lessons for Ordinary Employees

Ordinary employees do not automatically bear the same statutory responsibility as company responsible persons or accounting personnel.

However, employees should also avoid assuming that “I was only following instructions” will always eliminate criminal risk. If an employee knowingly assists a person with the required legal status in intentionally falsifying accounting records or financial statements, accomplice liability may still need to be examined under Taiwan criminal law.

🚨Employees who notice serious irregularities should therefore preserve relevant records and use appropriate internal reporting or compliance procedures where available.

The legal analysis ultimately depends on the employee’s actual role, conduct, knowledge, intent, and relationship to the person responsible for the accounting misconduct.

8. How Can a Taiwan Business Accounting Act Lawyer Assist?

Business Accounting Act cases often combine accounting rules, corporate governance, financial evidence, and criminal law. The central defense questions may be very different from those in an ordinary criminal case.

The first task is often to determine precisely what the defendant was responsible for and how the alleged accounting irregularity occurred.

8.1 Determining Whether Article 71 Applies to the Defendant

A defense lawyer should first examine whether the defendant falls within a category covered by Article 71 or whether prosecutors are alleging accomplice liability based on participation with another person who possesses the required status.

This may require reviewing corporate registration documents, employment records, accounting duties, authorization structures, actual decision-making authority, and the defendant’s relationship with external accountants. The difference between a company responsible person, accounting officer, accounting employee, outside accounting professional, manager, and ordinary employee can materially affect the legal analysis.

8.2 Challenging Evidence of Criminal Intent

The fact that a financial statement is inaccurate does not automatically prove intentional criminal conduct. The defense should identify how the error occurred and whether the prosecution can prove that the defendant deliberately omitted the accounting transaction.

Relevant evidence may include communications with accountants, records showing that information was disclosed, internal requests for clarification, reliance on professional advice, lack of accounting authority, job responsibilities, and evidence showing that another person controlled the reporting process.

➠A detailed reconstruction of the accounting process may therefore be more important than a general denial.

9. Frequently Asked Questions About Taiwan’s Business Accounting Act

Q1: Does every inaccurate financial statement violate Taiwan’s Business Accounting Act?

No. An inaccurate financial statement does not automatically establish criminal liability under Article 71. The prosecution must establish the statutory elements of the particular offense, including the defendant’s legally relevant status, conduct, and required intent.

Q2: Who can be punished under Article 71 of the Business Accounting Act?

Article 71 applies to specified persons, including commercial responsible persons, principal and handling accounting personnel, and persons legally entrusted to handle accounting affairs for others. Depending on the circumstances, a person without the required status may still face accomplice liability if the requirements of Taiwan’s Criminal Code are established.

Q3: Can an ordinary employee be convicted under the Business Accounting Act?

An ordinary employee is not automatically a principal offender under Article 71 merely because of employment status or knowledge of a transaction. However, if the employee intentionally participates in, instigates, or assists an offense together with a person who has the required legal status, accomplice liability may need to be considered.

Q4: Is knowing about an undisclosed loan enough to establish criminal liability?

Not necessarily. Knowledge that a loan exists is different from intentionally causing or assisting its omission from accounting records. The defendant’s responsibilities, authority, actions, communications, and intent must be examined.

Q5: Can a company responsible person avoid liability by hiring an accountant?

Not automatically. Hiring an accountant or accounting firm does not excuse intentional concealment of material information. If management deliberately withholds relevant information and false financial statements result, delegation alone may not eliminate criminal responsibility.

Q6: What evidence is important in a false financial statement investigation?

Important evidence may include financial statements, bank records, loan agreements, accounting vouchers, general ledgers, emails, LINE messages, internal instructions, communications with accountants, corporate registration records, job descriptions, approval procedures, and records showing who possessed or withheld relevant information.

Q7: Does the amount of an accounting omission determine whether a crime occurred?

Amount can be important when evaluating the significance of a misstatement, but criminal liability is not determined solely by a numerical threshold. The nature of the information, its effect on the financial statements, the statutory elements, and the defendant’s conduct and intent must also be considered.

Q8: What should I do if my company is investigated for false accounting records?

Preserve accounting records, emails, messages, financial statements, contracts, bank records, internal instructions, and communications with accountants. Do not delete, alter, recreate, or backdate records. Consider obtaining legal advice before detailed questioning so that the corporate structure, accounting responsibilities, and evidence can be reviewed.

Q9: Can two defendants in the same accounting case receive different judgments?

Yes. Criminal responsibility is individualized. Two defendants may know about the same transaction but have different legal statuses, duties, authority, conduct, and intent. Those differences can lead to different outcomes, including conviction for one defendant and acquittal for another.

Q10: When should I consult a Taiwan Business Accounting Act lawyer?

Legal advice may be useful as soon as a company or individual receives a police notice, Investigation Bureau inquiry, prosecutor summons, search notice, or other indication that accounting records or financial statements are under criminal investigation. Early review can help preserve evidence and clarify each person’s actual responsibilities before important statements are made.

10. Conclusion: The Same Financial Statement Does Not Mean the Same Criminal Liability

The most important lesson from this case is simple: two defendants connected to the same company, the same loans, and the same financial statements do not necessarily bear the same criminal responsibility.

Taiwan’s Business Accounting Act requires careful analysis of who the defendant is, what responsibilities the defendant actually performed, what the defendant knew, whether the defendant had authority over the accounting process, and whether the defendant intentionally participated in causing inaccurate financial reporting.

For a company responsible person, intentionally withholding material accounting information may create substantial criminal risk even when an outside accounting firm prepares the financial statements. For an employee, awareness of an underlying transaction does not automatically prove intentional participation in accounting falsification. But an employee who knowingly participates with a person possessing the required statutory status cannot assume that an ordinary job title automatically eliminates all criminal exposure.

This is why Business Accounting Act cases should not be analyzed solely from the final financial statement. The investigation should reconstruct the entire process: who knew about the transaction, who possessed the supporting documents, who was responsible for accounting, who communicated with the accountant, who made the disclosure decisions, and whether the omission was intentional.

In the case discussed here, those individual differences ultimately explain why one defendant was convicted while the other was acquitted.

🧑🏻‍⚖️Chien Sheng International Law Firm provides criminal defense assistance in corporate, financial, fraud, money laundering, and other white-collar criminal cases. Where a dispute involves false financial statements or accounting records, the defense should be built from the actual accounting process and evidence rather than assumptions based only on job titles or the fact that a financial statement was inaccurate.

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