Financial Supervisory Service Holds Auditor Briefing Session for Listed Companies

The Financial Supervisory Service (FSS) provided guidance on major violation cases related to the systems introduced under the new External Audit Act. This comes as key measures against auditors have been actively enforced since last year, highlighting the need for heightened vigilance.

On the 25th, the FSS announced that it held the "2024 Auditor Briefing for Listed Companies" targeting heads of auditor quality control departments of listed companies. The briefing included updates on recent progress in accounting system improvements and key accounting issues for focused review in financial statements, to assist in audit work.

During the session, the FSS explained major cases such as violations of the integrated management system established through auditor inspections, breaches of critical audit procedures, and failures to submit periodic reports. The integrated management system refers to the overall management framework within accounting firms that ensures the effectiveness and consistency of quality control, covering personnel, cash management of income and expenses, accounting treatment, internal controls, audit engagement, and quality management. Among the major violations, it was pointed out that payments made by affiliated employees to related parties or clients were done without verifying or approving the appropriateness of the payment reasons and amounts.

For the key accounting issues to be focused on in the 2024 financial statements, the FSS presented △ revenue recognition accounting △ valuation of non-marketable assets △ related party transactions △ accounting for virtual assets, and provided guidance on the main points and precautions.

The FSS also explained the progress of the accounting system improvement measures announced last June and future tasks. Amendments completed include a five-year deferral of the introduction of consolidated internal accounting audits for small and medium-sized listed companies (under 2 trillion KRW) and the exclusion of investment caution stocks from designation reasons. Measures currently underway include reducing internal accounting audit burdens for newly listed companies, abolishing financial criteria among designation reasons, and converting fines for minor procedural violations into penalties.