Samjong KPMG: "34 Companies in KOSPI 200 Lack Adequate Internal Reporting System Regulations"

[Asia Economy Reporter Park Jihwan] It has been pointed out that improvements are needed as 34 companies among KOSPI 200 firms do not include an internal reporting system in their internal accounting management regulations.

According to the ‘Audit Committee Journal Issue 13’ published by Samjong KPMG on the 20th, a survey on the status of internal accounting management regulations was conducted on 199 companies among KOSPI 200 (excluding Woori Financial Group newly established in January 2019), and 162 companies included an internal reporting system in their internal accounting management regulations.

On the other hand, 34 companies were found not to include it. Additionally, 3 companies either did not disclose their internal accounting management regulations or omitted the internal reporting system section.

According to the new External Audit Act, companies obligated to operate internal accounting management systems, including listed companies, must newly include matters related to the operation of the internal reporting system within their internal accounting management regulations. Failure to comply with the new regulations and deficiencies in internal accounting management may result in fines of up to 30 million KRW.

Among the 34 companies that did not include the internal reporting system in their internal accounting management regulations, 8 companies revised their regulations according to the new External Audit Act but had insufficient internal reporting system sections. The remaining 26 companies did not revise their internal accounting management regulations in response to the new External Audit Act.

Kim Yukyung, leader of the Audit Committee Support Center at Samjong KPMG, emphasized, "The audit (committee) must perform supervisory roles over the internal reporting system according to the Model Code for Internal Accounting Management Systems and the Model Code for Audit Committees," adding, "It is necessary to define the roles and authority so that the audit (committee) can smoothly supervise the internal reporting system and access internal reporting information during fraud investigations."

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