1,319 Corrections in Last Year's Corporate Audit Reports... 14% Decrease Compared to Previous Year

[Asia Economy Reporter Ji-hwan Park] The number of corrected audit reports by companies last year has slightly decreased.

The Financial Supervisory Service announced on the 30th that the number of corrected audit reports (including consolidated audit reports) for companies subject to external audits last year was 1,319, down 14.0% from 1,533 the previous year.

The number of corrected audit reports increased over the past few years, from 969 in 2016 to 1,230 in 2017, and 1,533 in 2018. In 2018, it increased to 1.58 times that of 2016.

Among companies subject to external audits, the number of corrected audit reports for listed companies gradually decreased from 150 in 2016, 327 in 2017, and 380 in 2018 to 242 last year.

Among these, the number of corrections for companies listed on the Korea Composite Stock Price Index (KOSPI) decreased by 102 from 151 cases the previous year to 49 last year, while the KOSDAQ market saw a decrease from 211 to 186 during the same period.

Looking at the 1,319 corrections for companies subject to external audits last year by correction timing, over 70% occurred within six months after the audit report disclosure. This was followed by 6 months to 1 year (12.5%), 1 to 2 years (8.6%), and over 2 years (8.6%). The Financial Supervisory Service explained that minor errors such as typos or small amount errors in the audit report were promptly corrected within one month after disclosure, resulting in a shorter correction period.

Among the 107 listed companies that corrected their audit reports last year, 87 companies corrected the main text or notes of the financial statements for the 2017?2018 fiscal years. Among them, 32 companies changed auditors at the time of correction, 59 companies corrected the main text of the financial statements, and 28 companies corrected only the notes. Corrections were made in the order of related party transaction notes (14 cases), revenue recognition (13 cases), intangible assets (13 cases), and investments in subsidiaries and affiliates (12 cases), with 32 companies changing auditors at the time of correction.

The Financial Supervisory Service emphasized, "Even minor errors in corrected audit reports can undermine trust in a company's financial information," and added, "It is necessary to be more cautious by verifying whether financial information and external audit implementation details are properly recorded before disclosing the audit report."

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