On the 15th, the Korean Institute of Certified Public Accountants and the Korean Securities Association held a policy symposium on the theme of "Introduction of Financial Institutions' Responsibility Structure and Internal Control System" at the Bulls Hall on the 3rd floor of the Korea Financial Investment Association in Yeouido, Seoul.
Following the congratulatory remarks by Lee Hyung-joo, Standing Commissioner of the Financial Services Commission, the event proceeded in the order of keynote presentation, thematic presentations, and expert panel discussion. In his opening remarks, Choi Un-yeol, President of the Korean Institute of Certified Public Accountants, evaluated that "the introduction of the financial institution responsibility structure can elevate the internal control of our financial companies to a higher level based on autonomy and responsibility," and mentioned that "since the introduction of such a responsibility structure will bring fundamental changes throughout the organization of financial companies, from organizational culture to detailed work processes, a deep understanding of the changes and thorough preparation are necessary for the successful introduction and establishment of the responsibility structure."
Lee Jun-seo, President of the Korean Securities Association, said in his congratulatory speech, "With the introduction of the responsibility structure, the inspection and evaluation of the internal control obligations of CEOs and executives of financial companies will become more detailed and specific, fundamentally changing the internal control behavior in the financial sector," and added, "I hope that through strengthening internal control following the introduction of the responsibility structure, the responsibility of financial institutions in compliance, consumer protection, and soundness management will be enhanced, providing an opportunity for the financial industry to regain trust."
Kim Si-mok, a lawyer at Yulchon LLC, who gave the first thematic presentation on the desirable direction for introducing the responsibility structure, introduced legal issues arising from the interpretation of the amended governance law, the relationship with frequently occurring recent financial accidents, and related legal provisions. In particular, Lawyer Kim emphasized that while the efforts and roles of financial companies in introducing the responsibility structure and preventing financial accidents are important, it is even more crucial that financial authorities should not perceive or utilize the responsibility structure solely as a sanctioning tool for internal control violations or financial accidents.
Professor Jung Joon-hyuk of Seoul National University Law School, who gave the second thematic presentation, mentioned that the core of the internal control system lies in prevention rather than sanctions. Therefore, the goal of sanction and mitigation systems should be to provide incentives for executives to establish and operate the best internal control system to prevent legal violations. He analyzed that if executives bear responsibility merely because the consequences of legal violations are severe, they have no incentive to make efforts. Ultimately, he emphasized that the focus of mitigation should be on accurately measuring executives' efforts related to internal control, not on outcome responsibility.
Park Hyun-chul, a partner at PwC Consulting, who gave the third thematic presentation, introduced cases of establishing responsibility structures and strengthening internal controls at major domestic securities firms. He emphasized the importance of specific methods for preparing responsibility statements without duplication, omission, or bias, and management measures according to management obligations for each executive, including the CEO, to fulfill their duty of care. He also stressed that the responsibility structure system should be viewed from the perspective of various performance and change management, proactive prevention of financial accidents through new technology integration, and a major transformation of internal control.
Following the thematic presentations, a panel discussion was held with experts from government, academia, related organizations, and industry, moderated by Professor Kim Hong-gi of Yonsei University Law School.
Kim Young-gyu, Head of the Self-Regulation Planning Department at the Korea Financial Investment Association, evaluated that the introduction of the responsibility structure was a significant achievement as it led financial companies to renew their internal control systems comprehensively and made individual business executives take responsibility for internal control. However, to further promote voluntary internal control improvement, he raised the need to specify and share the criteria for exemption conditions as much as possible and to efficiently operate the responsibility structure submission process in response to organizational changes to effectively cope with rapidly changing market environments.
Professor Kim Woo-chan of Korea University recalled that personal sanctions on internal control systems could be nullified if the sanctioned executives file administrative lawsuits. He pointed out that for a more effective internal control system, monetary sanctions should be added, but the high shareholding requirements for filing shareholder derivative suits and multiple derivative suits make this difficult. He argued that lowering the shareholding requirements to enable monetary sanctions and compensating for losses to companies and shareholders caused by financial accidents are necessary.
Kim Sun-ho, a partner at Anjin Accounting Corporation, argued that compliance with internal control is not a mere cost but a strategic asset that guarantees corporate sustainability, and suggested the need to review measures to enhance the execution power of the responsibility structure from an organizational perspective. He also noted that since changes in responsibility require board approval, internal control could hinder organizational flexibility and innovation, so it is important to maintain an optimal balance between safety and flexibility in control levels. He added that complying with laws and ethics is the right path for companies and is the most valuable way to gain deep trust from customers and partners.
Moon Cheol-ho, Executive Director at Samjong Accounting Corporation, stated that the core of introducing the responsibility structure is the shift of the internal control system of financial institutions from being centered on internal control departments to being centered on executives. He mentioned that overseas cases also show a complex arrangement with executives at the center, along with internal control officers in business divisions and regional headquarters. He emphasized that to effectively and practically implement and operate an executive-centered internal control system in the future, systematic placement and operation of internal control officers must be applied, and various best practices among financial institutions should be shared.
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