[Asia Economy Reporter Ji-hwan Park] The Financial Supervisory Service (FSS) announced on the 12th that it will hold an online briefing session on the 13th to inform companies subject to external audits for the first time this year about the procedures for appointing external auditors, in collaboration with KOTRA and the Korea Federation of SMEs.
This is due to the significant increase in newly audit-targeted companies caused by changes in the criteria for external audit targets of joint-stock companies and the inclusion of some limited liability companies under the new External Audit Act. The number of newly subject companies for external audits this year is 5,671, an increase of 511 from 5,160 last year.
In particular, the purpose is to prevent cases where small and medium-sized enterprises or limited liability companies, which lack understanding of the new accounting standards and have become newly subject to external audits, fail to appoint external auditors. Companies with a December fiscal year-end that are subject to external audits for the first time must appoint auditors by the end of this month.
Considering the COVID-19 situation, the FSS decided to proceed with the briefing session in the form of an online video distribution. The session will introduce the criteria for external audit targets, procedures and deadlines for appointing external auditors, and guidelines for electronic reporting of audit contracts.
Specifically, the FSS plans to provide detailed guidance on the criteria for determining companies subject to external audits and the procedures for appointing external auditors, including frequently asked questions (FAQ). The external auditor appointment procedure proceeds in the order of △establishing criteria for selecting external auditors △selecting external auditors △reporting the appointment of external auditors (within two weeks after signing the audit contract) △post-audit evaluation.
Instructions on how to use the external audit contract reporting system for online reporting of auditor appointments and detailed step-by-step electronic reporting procedures will also be provided.
The video can be viewed on the FSS Accounting Portal, KOTRA Foreign Investment Ombudsman website, Korea Federation of SMEs Information Plaza - SME News, and the Korean Institute of Certified Public Accountants. For inquiries, answers can be obtained through the FSS Accounting Portal - External Audit Q&A.
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