FSS Announces Key Inspection Points for Business Reports... "Minimize Incomplete Disclosures"

A total of 16 inspection items, including 13 financial and 3 non-financial matters

The Financial Supervisory Service announced on the 18th that it will pre-announce key inspection items to encourage companies to faithfully prepare their 2024 business reports. The key items to be closely examined total 16, including 13 financial items and 3 non-financial items.

For financial items, compliance with the corporate disclosure form preparation standards for financial disclosure matters will be reviewed. Specifically, these include ▲summary (consolidated) financial information ▲reasons for restating financial statements ▲status of allowance for doubtful accounts ▲inventory status ▲status of order contracts, among others. Regarding the disclosure of internal control matters, the review covers ▲internal accounting management system operation report ▲results of effectiveness evaluation of the internal accounting management system and auditor’s opinion ▲operating organization, etc.

Additionally, for the disclosure of matters related to the accounting auditor, the review includes ▲audit opinion and key audit matters ▲audit fees and hours ▲discussions between internal audit organizations and auditors ▲matters related to discrepancies between previous and current financial statements ▲disclosure of changes in accounting auditors.

For non-financial items, in relation to shareholders and enhancing corporate value, the review looks into ▲status of treasury stock holdings and disposal plans ▲exercise of minority shareholder rights such as shareholder proposals. Also, regarding prevention of unfair trade and investor protection, the progress of disclosure on single sales and supply contracts will be examined.

The Financial Supervisory Service plans to individually notify companies of any insufficient entries found during the inspection by June this year and encourage voluntary correction. Furthermore, for companies with serious or repeated inadequate disclosures of important matters, the inspection results will be referenced in selecting targets for financial statement review, and the review of disclosure documents such as securities registration statements and major event reports will be strengthened.