No Penalty for Late Submission of Audit Reports Due to 'Corona19'

Fair Trade Commission Eases Data Submission Burden for Businesses Affected by COVID-19
Submission Deadline for Respondent's Opinion Extended from 4 to 6 Weeks Until COVID-19 Subsides

Jongwook Cho, Chairman of the Fair Trade Commission. (Photo by Yonhap News)

[Asia Economy Reporter Moon Chae-seok] The government has decided to exempt fines for companies that fail to submit audit reports within the deadline due to the novel coronavirus infection (COVID-19).

On the 25th, the Fair Trade Commission announced measures to reduce the burden of submitting various reports for businesses affected by COVID-19.

In principle, if a business fails to submit materials within the deadline, a fine must be imposed. However, considering difficulties faced by respondents in collecting materials due to the spread of remote work, it was judged that preemptive measures are necessary to ensure sufficient defense rights for companies.

First, fines will be waived for funeral service companies that inevitably fail to submit audit reports by the 31st of this month.

According to the Installment Transactions Act, if a prepaid installment transaction business operator (funeral service company) does not submit an audit report to the Fair Trade Commission within three months after the end of the fiscal year, a fine of up to 30 million KRW can be imposed.

The Fair Trade Commission decided to exempt fines if an application is submitted with an auditor's opinion letter that meets the exemption requirements, applying the Act on the Regulation of Violations of Order. The law states that fines can be exempted if there is no intentional or negligent violation or if there is a substantial reason.

The exemption requirements include ▲ the company's fiscal year-end being December 31, 2019, and ▲ the business location being in a special disaster area or if the preparation of the 2019 financial statements or external audit was delayed due to COVID-19 or quarantine measures.

If it is difficult to finalize financial status by the regular change registration deadline for franchise disclosure documents on the 29th of next month, the business will be excluded from fines or registration refusal. A statement of reasons must be submitted and supplemented within a certain period.

However, for other items where delayed submission reasons cannot be recognized, change registration must be applied for within the regular change deadline. These items include the number of executives and employees as of the end of the previous business year, the number of franchise and directly operated stores operating as of the end of the last three business years, and advertising and promotional expenses spent in the previous business year.

The deadline for submitting respondents' opinion letters will also be extended by two weeks temporarily. The submission period for respondents' opinion letters will be extended from the current 4 weeks (3 weeks for small committees) to 6 weeks (5 weeks for small committees) and notified accordingly. The extension of the opinion submission deadline will be temporarily implemented until the COVID-19 situation subsides.

A Fair Trade Commission official said, "The administrative sanctions for violations caused by unavoidable external factors such as the spread of COVID-19 will be exempted, reducing the burden on businesses," and added, "Since sufficient time for submitting opinions has been given to respondents during the Fair Trade Commission's review and resolution process, substantial defense rights can be guaranteed."

This content was produced with the assistance of AI translation services.