A former employee at a local accounting firm has been indicted on charges of writing false reports for cash-strapped Daewoo Shipbuilding & Marine Engineering Co., prosecutors said Tuesday.

The Seoul Central District Prosecutors' Office said it indicted the former accountant at Deloitte Anjin LLC, surnamed Bae, on charges of violating the Certified Public Accountant Act and the Act on External Audit of Stock Companies.

Bae, who served as the manager in charge of Daewoo Shipbuilding's external audits from 2010 to 2015, allegedly provided favorable reports in 2013 and 2014 for the ailing shipyard while aware that it was cooking the books.

He is also accused of helping the shipyard fabricate false accounting books, prosecutors said.

"We have detected such irregularities based on objective evidence, including a massive amount of emails, internal reports and official documents, as well as testimonies from employees at Anjin and Daeoo Shipbuilding," the prosecution said, adding it will continue investigating the accounting firm.

Daewoo Shipbuilding is one of the country's big three shipyards that has been implementing drastic self-rescue programs, including asset sales and workforce reduction, in order to tide over a protracted slump and cut costs.

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

The Board of Audit and Inspection, the country's state audit agency, has said the shipyard is suspected of rigging its books to hide up to 1.5 trillion won in losses during the cited period. (Yonhap)