FSS "Prolonged COVID-19 Phase... This Month's Guidelines for Remote Audits"

[Asia Economy Reporter Minji Lee] The Financial Supervisory Service (FSS) is preparing supervisory measures together with related organizations such as the Korean Institute of Certified Public Accountants and the Korea Accounting Standards Board to ensure that settlements and audits proceed smoothly amid the prolonged COVID-19 pandemic. They plan to provide practical guidelines for non-face-to-face audits and offer an audit roadmap to help the internal accounting control system smoothly settle in the market.

On the 13th, an FSS official stated, "Proactive measures are necessary to address potential issues arising during corporate settlements and the audit process conducted by external auditors (accounting firms). Not only the supervisory authorities but also companies and auditors need to actively prepare and respond so that stakeholders such as shareholders and creditors can access transparent accounting information in a timely manner despite the COVID-19 situation."

So far, financial authorities have made efforts to ease accounting treatment and audit burdens, such as extending the deadline for audit report submissions and revising lease accounting standards since the onset of COVID-19. Last month, although the scope of consolidation was expanded to include small non-public companies without exception as subsidiaries, the application was deferred considering the COVID-19 situation.

Additionally, through three online non-face-to-face (untact) briefings this year, they actively communicated topics such as the appointment of external auditors for companies subject to external audits, enhancing understanding of the designation system and submission of designation base data, and the contents of K-IFRS amendments and revisions.

First, the FSS plans to provide practical guidelines on non-face-to-face audit procedures together with the Korean Institute of Certified Public Accountants within this month. They intend to explain alternative procedures such as observing inventory audits using video relay technology when physical attendance or overseas visits are difficult.

Regarding the internal accounting control system, newly introduced by the amendment of the External Audit Act, the FSS plans to present an audit roadmap to alleviate market concerns about supervisory directions. To this end, they plan to prepare an internal accounting control system audit roadmap focusing on initial guidance audits in the first quarter of next year.

An FSS representative said, "If numerous settlement adjustments occur due to uncertainties from COVID-19, there is a risk that the internal accounting control system may be evaluated as weak. We will also provide practical guidelines for assessing vulnerabilities related to settlement adjustments within this month."

Furthermore, they plan to flexibly operate deadlines for submitting audit reports and concluding audit contracts, and hold events such as the '2020 Accounting Issues Briefing' to listen to voices from the field. The accounting issues briefing will be held on the 23rd for auditors to share current issues and provide guidance on year-end audit precautions. Regional briefing sessions related to appointment and designation systems will be held in January next year targeting small and medium-sized enterprises.

The FSS stated, "Practical guidelines will be provided early so they can be applied from this year's settlement, and we will monitor whether the COVID-19 situation continues to decide on implementing extensions for audit report submissions and audit contract deadlines. Companies and auditors also need to proactively respond by identifying in advance the areas affected by COVID-19 to ensure transparent accounting information is disclosed," urging proactive measures.

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