Financial Supervisory Service to Fully Revamp Financial Information Disclosure with International Standards Starting This Year

The Financial Supervisory Service (FSS) announced on the 30th that from this year, the financial information of listed and unlisted companies will be completely revamped based on the international standard (XBRL) data. XBRL stands for eXtensible Business Reporting Language, an international standard computer language for financial reporting created to facilitate the generation, reporting, and analysis of corporate financial information.

The FSS plans to sequentially apply the XBRL financial disclosure system to the main body of financial statements (this year's Q3 report) and notes (this year's business report), and will support education for disclosure submitters such as listed companies in cooperation with related organizations.

Through this, domestic and foreign information users will be able to analyze financial data of listed companies and major unlisted corporations using data analysis tools such as Excel. Foreign investors will be able to immediately check English financial statements and notes in English upon business report disclosure, rather than relying on trailing materials such as IR reports, which is expected to improve international credibility and resolve the Korea discount.

The FSS prepared a phased advancement plan for XBRL financial disclosure after discussions by the task force (TF) promoting the advancement of financial disclosure. First, the obligation to submit XBRL financial statements will be expanded to unlisted companies submitting business reports (applying International Financial Reporting Standards (IFRS)). However, considering the disclosure preparation burden on submitters, unlisted companies will only apply the XBRL disclosure system to the main body of financial statements.

Considering the difficulty of preparation and preparation period, the XBRL financial disclosure system will be applied sequentially to the main body of financial statements and then to the notes. For the main body of financial statements, from this year's Q3 report, the obligation to disclose XBRL financial statements will be enforced for listed companies and unlisted companies applying IFRS that submit business reports.

For notes, XBRL financial disclosure will be mandated for non-financial industry listed companies starting from this year's business report. Notes for financial industry listed companies are under review for implementation next year after improvements to the XBRL system. Additionally, considering the corporate disclosure burden, phased implementation will be based on total individual assets of 2 trillion KRW and 500 billion KRW in the previous fiscal year.

The FSS expects that the introduction of the system will improve information asymmetry and enable qualitative enhancement in financial soundness evaluation through analysis of financial statement notes data. Furthermore, it anticipates improved accuracy of financial information and the ability to quickly and accurately identify marginal companies and industry risks by combining and utilizing internal and external information.

An FSS official stated, "We will provide practical training on XBRL financial statement preparation to corporate disclosure and accounting practitioners and accounting firms in cooperation with related organizations and associations," adding, "Through continuous TF discussions, we will also prepare measures to reduce the burden of XBRL note preparation for small and medium-sized companies scheduled for the 2025 business report."