The Financial Supervisory Service announced on July 1 that, as a result of its focused inspection of 2024 business reports, it found cases of insufficient disclosure in both financial and non-financial items for many companies.
This inspection was conducted to improve the quality of corporate disclosures, focusing on 16 pre-announced items (13 financial and 3 non-financial). A total of 260 companies were included in the inspection.
Among the financial information items, many companies either omitted or inaccurately disclosed information such as the status of inventory assets, the criteria and details for setting allowance for bad debts, reasons for changing accounting auditors, and the operation of internal accounting management systems.
For example, some companies failed to disclose the status of inventory assets and physical inventory by business segment. There were also cases where disclosures related to allowance for bad debts were omitted, or where the amounts of receivables or allowance for bad debts did not match the notes in the audit report. Additionally, some companies failed to state the reasons for changing accounting auditors when a change had occurred, while others provided reasons for change in the footnotes even though no change had taken place.
Similar issues were found in non-financial items. Major problems included insufficient explanation of treasury stock holdings and disposal plans, missing information related to the exercise of shareholder proposal rights, and inadequate disclosure of the status of single sales or supply contracts.
Regarding treasury stock, issues included failure to attach reports, failure to confirm board approval, and insufficient disclosure of the purpose of holding and future plans. There were also many cases where the exercise of minority shareholder rights, such as shareholder proposals, did not meet disclosure standards. In the case of supply contracts, some companies did not clearly disclose the reasons for non-receipt of payments or future plans for the contracts.
The Financial Supervisory Service stated, "We plan to supplement the standards for preparing corporate disclosure forms so that information necessary for investors’ investment decisions can be adequately disclosed," adding, "Based on the inspection results, we will continue to review improvements to the related disclosure system."
Meanwhile, on July 11, the Financial Supervisory Service will share the inspection results and hold a disclosure briefing session for corporate disclosure officers at the main auditorium on the second floor of its headquarters in Yeouido, Seoul. In addition to introducing key points and exemplary cases for disclosure, the briefing will provide guidance on major accounting issues for the 2025 financial statement review and improvements to the disclosure system.
The Financial Supervisory Service emphasized, "Based on the results of this inspection, we will encourage companies to make voluntary corrections and will continue to review improvements to the disclosure forms and related systems," adding, "We will support the strengthening of corporate disclosure capabilities to ensure that investors are provided with accurate and sufficient information."
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