Prosecutors said Tuesday they have indicted a local accounting firm and its employees on charges of writing false reports for cash-strapped Daewoo Shipbuilding & Marine Engineering Co. (DSME).

The prosecution said three employees at Deloitte Anjin LLC are suspected of providing favorable reports for the ailing shipyard in 2013 and 2014 while being aware that the company was cooking its books.

Another former employee at the firm was indicted last month over similar allegations.

Prosecutors said the firm should also be held liable for failing to properly manage its employees.

Later in the day, Deloitte Anjin issued a statement saying it did not violate any laws.

“Anjin did the right thing under very challenging circumstances; it required DSME to restate its financials despite strong pressure from both the company and other stakeholders,” it said. “We are confident that Anjin’s audits of DSME did not violate any laws.”

Daewoo Shipbuilding is one of the country‘s three largest shipyards that has been implementing drastic self-rescue programs, including asset sales and workforce reduction, in order to cope with a protracted, industry-wide slump.

Earlier this year, the shipyard said it had much larger losses in 2013 and 2014 than earlier reported, citing accounting mishaps. (Yonhap)