Financial Authorities to Establish Coordination Body for Auditor 'Opinion Discrepancies'

[Asia Economy Reporter Park Jihwan] Financial authorities are set to establish a consultative body to mediate when there is a conflict between the current auditor and the previous auditor. This is because, with the full implementation of the periodic auditor designation system starting this year, the likelihood of conflicts arising from prior period error correction cases is expected to increase significantly.

The Financial Services Commission and the Financial Supervisory Service announced on the 9th that they reported measures to alleviate issues arising from disagreements between current and previous auditors to the 1st Securities and Futures Commission meeting held the day before.

The periodic auditor designation system is a system where, after a company has freely appointed an auditor for six years, the financial authorities designate the auditor for the following three years.

The financial authorities plan to require that, in cases of disagreement between current and previous auditors, a prior period error correction consultative body chaired by a third party be convened. They explained that even if accounting supervision measures occur in the future, such mediation will be fully taken into account.

The consultative body will consist of one member from the Korean Institute of Certified Public Accountants and two accounting experts. However, the mediation procedure between the previous and current auditors will be prioritized and is only applicable if either the previous or current auditor is the designated auditor and if the company requests it.

An official from the Financial Supervisory Service stated, "By involving a third-party expert in the opinion coordination process due to disagreements between previous and current auditors, cases of prior period error corrections are expected to decrease."

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