Financial Services Commission Grants Approval Authority to Accounting System Team Leader... Tasked with Issues Including Designated Audit System

Normalization of the 'Accounting System Team' through Organizational Revision
Team Leader Directly Decides Current Issues

The Financial Services Commission (FSC) will grant full decision-making authority to the team leader of the accounting system team, which has been formalized as a regular position. This is expected to enable faster decision-making on major issues related to the accounting system, such as the periodic auditor designation system.

According to the FSC on the 27th, the newly established Fair Market and Accounting System Team leader will have full decision-making authority and handle related tasks starting this year due to the organizational revision.

The FSC had previously operated the accounting system team under the Fair Market Division, but disbanded it earlier this year following a recommendation from the Board of Audit and Inspection. However, due to the increasing importance of accounting with the new External Audit Act and the Certified Public Accountant Act, and the many pending issues, the team was reinstated. In this process, the organization was regularized and decision-making authority was granted.

The biggest pending issue is the designated auditor system. Previously, the FSC mentioned exemption from the designated auditor system as one of the incentive measures to support value-up. The designated auditor system is a system where the financial authorities designate an accounting firm (auditor) for companies. For six years, companies select their own auditors, but for the following three years, they must contract with auditors designated by the financial authorities. One of the FSC’s plans is to exempt companies that have improved their governance from the designated auditor system.

Currently, the FSC’s accounting system team is coordinating detailed plans for 'auditor exemption.' Previously, policies were decided through the Fair Market Division, but going forward, the accounting team leader at the secretary level will directly review and decide on related issues.

Recently, the issue of the designated auditor system has resurfaced following the election of Choi Un-yeol, a former Democratic Party lawmaker, as president of the Korean Institute of Certified Public Accountants. President Choi was the proposer of the new External Audit Act. Immediately after his election, he clearly expressed opposition to the 'designated auditor system exemption.' The FSC plans to coordinate opinions between the accounting industry and listed companies and decide on the value-up incentive measures as early as next month.