"KOSPI 200 Companies Conducted 89% of Audit Training Last Year... 31% Increase from Previous Year"

[Asia Economy Reporter Ji-hwan Park] The number of Audit Committee meetings and educational activities for auditors and audit committee members at KOSPI 200 companies have both increased compared to the previous year, indicating a step closer to enhancing accounting transparency.

According to the '2020 Audit Committee Outlook' published by Samjong KPMG on the 14th, the average number of Audit Committee meetings for KOSPI 200 companies in the 2019 fiscal year was 6.3 times, up from 6.0 times the previous year. The percentage of companies whose Audit Committee meetings did not meet the recommended standard of four times per year decreased to 6.2%, less than half compared to 13.9% in the 2018 fiscal year. The proportion of companies conducting education for auditors and audit committee members also significantly increased from 116 companies (58.0%) last year to 177 companies (88.5%).

The average number of agenda items for Audit Committees was 17.6, a 22.2% increase from 14.4 the previous year. Analyzing the agenda items of 162 KOSPI 200 companies that have established Audit Committees by activity area, the proportion of agenda items related to the supervision of external auditors (760 items, 26.6%) and internal accounting control system supervision (555 items, 19.4%)?both recently emphasized?showed the highest growth.

Regarding the tenure of audit committee members affiliated with KOSPI 200 companies, 11.8% of members have served more than six years. With the amendment of the Enforcement Decree of the Commercial Act in January this year, outside directors of listed companies can serve a maximum of six years at the company and up to nine years including affiliates, so the proportion of audit committee members serving more than six years is expected to decrease significantly in the future.

Among the 532 audit committee members of KOSPI 200 companies, 13 (24%) were women, a slight increase from 9 (18%) the previous year, but still a low level. Following the amendment of the Capital Market Act in February, which introduced provisions on gender composition within the boards of listed companies, listed companies with total assets of 2 trillion won or more cannot compose their entire board with members of a single gender, so the number of female audit committee members is expected to increase going forward.

Kim Yu-kyung, leader of the Audit Committee Support Center (ACI) at Samjong KPMG, emphasized, "The number of Audit Committee agenda items is increasing due to strengthened activities such as the appointment and supervision of external auditors under the new External Audit Act, supervision of internal accounting control systems, and increased communication with external auditors following the introduction of the core audit system. The strengthening of laws and systems is fostering a better corporate governance structure and enhancing accounting transparency in companies."

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