Lee Eogwon: "Excessive Competition for Low-Priced Audit Contracts Undermines Audit Quality... Supervision and Enforcement to Be Strengthened"

Lee Eogwon, Chairman of the Financial Services Commission, called on the accounting industry on October 31 to make active efforts to enhance audit quality for accounting transparency. The financial authorities also plan to strengthen supervision and enforcement to ensure that audit quality is prioritized.

Lee Eokwon, Chairman of the Financial Services Commission, is speaking at the Comprehensive Audit of the Financial Services Commission and the Financial Supervisory Service held by the Political Affairs Committee at the National Assembly in Yeouido, Seoul on October 27, 2025. Photo by Kim Hyunmin

Chairman Lee attended the 8th 'Accounting Day' ceremony held at the Federation of Korean Industries Hall in Yeouido, Seoul, and stated, "Excessive competition for low-priced audit contracts can lead to a reduction in audit personnel and time, which may undermine audit quality." He urged the industry to "work towards establishing a culture that prioritizes accounting quality."

He also emphasized to the business community, "Resources invested in accounting should be viewed not as costs, but as a form of long-term investment." He added, "Providing transparent and accurate financial information in accordance with accounting standards is the way to enhance corporate value and gain the trust of investors."

Separately from the Accounting Day ceremony, Chairman Lee met with the accounting industry to share the main directions for accounting policy initiatives.

First, the process for appointing and designating auditors will be improved with a focus on audit quality. To enhance audit quality, the appointment of auditors will be guided to be evaluated objectively and independently based on quality, rather than audit fees. The proportion of quality assessment results reflected in the designation process will be significantly increased.

In addition, supervision will be greatly strengthened, including considering the implementation of auditor inspections in cases where audit quality may be compromised. If there are concerns about accounting fraud, such as insufficient audit hours being allocated by accounting firms without reasonable grounds, measures such as 'Financial Supervisory Service financial statement reviews' and 'auditor designation' will be imposed after review.

The system to guarantee the right of defense for those subject to accounting supervision measures will also be improved. Procedures will be strengthened at each stage, such as the 'prior notice of sanctions' and the 'operation of the audit review committee,' to ensure the right of defense for the parties involved. Procedures for hearing opinions will also be supplemented in cases of differences in interpretation or perspectives on accounting standards between the company or auditor and the Financial Supervisory Service.

Choi Woonyeol, President of the Korean Institute of Certified Public Accountants, recently expressed concerns about an oversupply of personnel and requested, "Please carefully review the supply and demand policy for certified public accountants so that these professionals can fully perform their roles in the capital market."

The accounting industry highly appreciated the ongoing discussions on the 'audit quality competitiveness promotion plan,' which aims to break the so-called 'glass ceiling' for mid-sized accounting firms with excellent audit quality. The industry also requested continued efforts to foster second-tier accounting firms for the long-term development of the accounting sector.

Meanwhile, at the awards ceremony held in celebration of this year's Accounting Day, a total of 82 awards and commendations were presented, including the Hwangjo Order of Service Merit (to honorary professor Joo Inki of Yonsei University), the Industrial Medal (to Kim Woohyun, Vice President of SK Hynix), three Presidential Citations (including Choi Jongman, CEO of Shinhan Accounting Corporation), and four Prime Minister's Citations (including Kim Eunsun, Director at the Financial Supervisory Service).