Over 30 Major Listed Companies' 'Free Mandate' Boom... Accounting Industry Burning the Year-End

Competition for Voluntary Audit Engagements in Fiscal Year 2025 under the New External Audit Act
Over 30 Companies with Assets Exceeding 2 Trillion Won Enter the Market
Major Players Like Kia, NAVER, and Samsung C&T Compete Fiercely

The accounting industry is heating up with the 'free engagement' competition among large listed companies for the 2025 fiscal year. Unlike the relatively quiet last year, the number of 'big fish' in the market has exploded. There are even remarks that it is a scale that could change the industry landscape.

According to the accounting industry on the 22nd, there are about 30 companies subject to free engagement with assets exceeding 2 trillion won. These include Korea Electric Power Corporation, the largest public enterprise in Korea, as well as Kia, NAVER, Samsung C&T, Hyundai Mobis, and Hana Financial Group, all ranked within the top 20 by market capitalization among listed companies. In addition, leading companies in various industries such as Amorepacific and SK Telecom, as well as Samsung Securities and Hyundai Steel, have also entered the free audit engagement market. These companies have begun the auditor selection process and must appoint new auditors by February next year.

Fierce Competition for Audit Contracts

The companies newly released into the audit market are those that were mandatorily assigned auditors for the 2022 fiscal year under the new External Audit Act. This is due to the periodic auditor designation system. Companies that have been assigned auditors by financial authorities for three years can freely appoint auditors for the next six years. While the number of large companies with assets over 2 trillion won entering the free engagement market last year was in the single digits, this year it has more than tripled.

The Big 4 (Samil, Samjong, Anjin, and Hanyoung) are competing more fiercely than ever over the increased workload. An industry insider said, "These days, corporations' attention is entirely focused on free engagement," adding, "The atmosphere is reminiscent of the audit season due to preparations for presentations." The audit season in the accounting industry typically refers to January through March. It is a period when work intensity peaks, with overtime work continuing until March 15, when audit reports are disclosed.

Each firm’s situation varies slightly. EY Hanyoung, the existing auditor for NAVER, SK Telecom, Samsung C&T, Korea Electric Power Corporation, Amorepacific, and Hyundai Mobis, is in a position to maintain its existing contract scale. Samjong KPMG, the auditor for Kia and Samsung Securities, is in a similar situation. On the other hand, Samil PwC and Deloitte Anjin, which lost a significant volume during the forced designation by financial authorities three years ago, are fiercely competing for new contracts. A battle of taking and retaking audit contracts is underway.

"Could Change the Industry Landscape"

Accounting firms generally operate business divisions such as audit, tax, and management consulting. Except for Samjong KPMG among the Big 4, all operate consulting as a separate corporation, dividing their business into four categories. When looking only at accounting firms, the audit segment accounts for between 29.62% (Anjin) and 45.98% (Hanyoung) of total revenue. This indicates that audit plays an important role in the 'scale' of accounting firms. For the 2023 fiscal year, Samil PwC recorded the highest revenue at 360 billion won, followed by Samjong KPMG (289.3 billion won), EY Hanyoung (220.9 billion won), and Deloitte Anjin (152.5 billion won).

Based on the cycle of the periodic designation system, it is expected that by the 2026 fiscal year, the number of companies with assets over 2 trillion won subject to free engagement will increase to over 100. Because of this, there is analysis that the industry rankings could change starting with this free engagement competition. The recent solidification of Samjong KPMG as the industry's second place was largely influenced by winning the audit contract for Samsung Electronics, which was released for free engagement two years ago. Before the introduction of the new External Audit Act, Samil PwC had virtually monopolized the accounting audits of Samsung Group, including Samsung Electronics. This was one of the reasons Samil had been the industry leader for a long time.