Advance Notice to Company and External Auditors
506 Companies under Periodic Designation and 728 Companies under Ex Officio Designation
The Financial Supervisory Service (FSS) announced on the 17th that it has provided advance notice of auditor appointments, including periodic designations, to companies and external auditors.
This year, a total of 1,234 corporations received advance notice, which is 27 companies (2.1%) fewer compared to last year's 10th advance notice (1,261 companies). Among them, 506 companies were designated periodically, and 728 companies were designated by authority.
The auditor designation system is a system where, instead of companies freely appointing auditors, the Securities and Futures Commission (delegated to the FSS) designates auditors to ensure auditor independence and improve audit quality.
Periodic designation applies to listed companies that have freely appointed external auditors for six consecutive business years and large unlisted companies with separated ownership and management, designating external auditors for the next three business years. Newly designated under periodic designation were 178 listed companies and 6 large unlisted companies with separated ownership and management.
Designation by authority occurs when, due to audit results or other reasons requiring fair audits to protect investors, such as management issues, external auditors are designated. Newly included in the designated companies by authority were 238 companies scheduled to be listed, 53 companies meeting financial criteria such as three consecutive years of operating losses, and 14 companies under management status.
Companies must review the advance notice details, including the reasons for designation, and determine whether they qualify for a re-designation request, then submit their opinions to the FSS within two weeks from the date of receiving the advance notice. Designated auditors must verify whether there are any restrictions on duties under the Certified Public Accountant Act or any independence impairment under ethical regulations concerning the designated companies.
The FSS will review opinions submitted by companies and auditors during the two weeks following the advance notice and plans to issue the official notification on November 12.
Meanwhile, starting from this advance notice, the FSS has added a query function to the external audit contract reporting system, allowing companies to directly check the designation details and whether they are subject to carryover under periodic designation due to dispersed designation.
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