Number of Corrections in Audit Reports of Listed Companies Increased by 26% Compared to the Previous Year

[Asia Economy Reporter Gong Byung-sun] The number of corrections to audit reports of listed companies increased by 26% compared to the previous year. Among these, corrections to financial statements accounted for the largest proportion.

According to the Financial Supervisory Service (FSS) on the 4th, out of 2,382 listed companies as of the end of last year, a total of 125 companies corrected their audit reports. This corresponds to 5.2% of the total. The number of corrections totaled 305, a 26% increase from 242 last year.

Among the auditors of the 125 companies that corrected their audit reports, the Big Four accounting firms (Sam-il, Sam-jung, Han-young, An-jin) accounted for 29 companies, representing 23.2% of the total. Other accounting firms accounted for 96 companies.

Corrections to financial statements excluding notes were the largest, totaling 257 cases. This accounted for 84.3%, an increase of 10.3 percentage points compared to the previous year. The number of listed companies whose audit opinions changed in individual audit reports was 20. Among them, 18 changed from 'adverse' to 'unqualified'.

The average time taken from the initial disclosure of the audit report to the correction disclosure was 18 months. In 2019, it took 19.9 months, and last year it was shortened by about 1.9 months.

Expanding to companies subject to external audits, the total number of companies that corrected audit reports including consolidated reports last year was 972. This corresponds to 3.1% of the total 31,744 companies. The number of corrections to audit reports for these 972 companies was 1,301, similar to 1,319 in 2019.

An FSS official stated, “Companies need to strengthen internal controls and financial statement verification procedures to prevent accounting errors,” and added, “Auditors should communicate sufficiently with companies regarding key audit matters and accounting issues related to significant transactions to minimize time confusion caused by adverse opinions.”

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