Designation of 1,521 Auditors... 24.3% Increase Compared to Previous Year

[Asia Economy Reporter Ji-hwan Park] Last year, the number of companies designated with auditors (accounting firms) by the Securities and Futures Commission reached 1,521, marking an increase of about 25% compared to the previous year. This rise is attributed to the introduction of a periodic designation system and the addition of designation reasons under the new External Audit Act.

On the 26th, the Financial Supervisory Service announced that as of the end of 2020, the number of companies with designated auditors was 1,521, an increase of 297 companies (24.3%) compared to the previous year (1,224 companies). The auditor designation system is a mechanism where the Securities and Futures Commission newly designates auditors for companies requiring audits to protect investors, instead of allowing free appointment.

There were 362 companies scheduled to be listed, and 462 companies were designated auditors due to periodic designation.

The proportion of companies with designated auditors among all companies subject to external audits was 4.8%. Among listed companies, 44.5% received auditor designation. By designation reason, companies scheduled for listing were the most at 362. This was followed by companies meeting financial criteria such as three consecutive years of operating losses (245 companies), management items (133 companies), and changes in major shareholders or CEOs (75 companies). The Financial Supervisory Service cited the increase in periodic designations under the new External Audit Act and the rise in designation applications from companies scheduled for listing as reasons for the increase in designated companies.

Last year, the total number of companies subject to external audits was 31,744, a decrease of 687 companies (2.1%) compared to the previous year (32,431 companies). Among those subject to external audits, 2,382 were publicly listed companies, and 29,362 were unlisted companies. The number of publicly listed companies increased by 56, while unlisted companies decreased by 743.

By total assets, companies with assets between 10 billion KRW and less than 50 billion KRW numbered 20,041, accounting for more than half (63.1%) of the total. Companies with assets between 50 billion KRW and less than 100 billion KRW were 4,334 (13.7%), and those with assets between 100 billion KRW and less than 500 billion KRW were 3,689 (11.6%).

Among all companies subject to external audits, 18,764 companies (59.1%) retained the same auditor as the previous year. Among these, 7,522 companies (23.7%) changed their auditor. Meanwhile, 5,458 companies (17.2%) appointed auditors for the first time.

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