Increase in Amendments to Audit Reports of Listed Companies Last Year... 17%↑ Compared to Previous Year

[Asia Economy Reporter Ji-hwan Park] The number of cases in which listed companies corrected their audit reports significantly increased last year. This is interpreted as a result of the implementation of a series of accounting reform measures, such as the financial statement review system and the periodic auditor designation system, enabling listed companies to timely correct accounting errors.

On the 4th, the Financial Supervisory Service (FSS) announced that a total of 125 listed companies corrected their audit reports (including consolidated reports) last year, an increase of 18 companies (16.8%) from 107 companies the previous year. This corresponds to 5.2% of the total 2,382 listed companies as of the end of last year.

Among them, the number of corrections by companies listed on the KOSPI market was 44, up 83.3% from the previous year; KOSDAQ-listed companies were 75, up 2.6% from the previous year; and KONEX-listed companies remained the same at 6.

The audit opinions changed for a total of 20 companies. A total of 27 individual (separate) audit report opinions were changed, an increase of 12 companies and 19 cases compared to the previous year (8 companies, 8 cases). In cases where the audit opinion changed from 'adverse' to 'unqualified' after the company corrected the financial statements and resubmitted them to the auditor for re-audit, there were 18 companies, an increase of 11 companies from 7 companies the previous year.

Looking mainly at the corrected items, the financial statement body was the most frequent. Out of a total of 305 audit report corrections, 257 cases (84.3%) involved corrections to the financial statement body. This was followed by 33 corrections to notes (10.6%) and 14 corrections to the audit report body (4.6%). The proportion of financial statement body corrections was high at 84.3% for listed companies, whereas it was lower at 45.1% for unlisted companies. The FSS analyzed that "listed companies corrected audit reports mainly for significant errors compared to unlisted companies."

The average elapsed time until correction was 18 months after disclosure, shortened by 1.9 months compared to the previous year. This was relatively longer than the average elapsed period of 8.5 months for all companies subject to external audits.

The FSS evaluated that auditors need to communicate sufficiently with companies regarding key audit matters and accounting issues related to significant transactions to minimize market confusion caused by adverse opinions. An FSS official stated, "We plan to periodically review accounting errors and audit opinion corrections and conduct financial statement reviews if necessary."

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