Jeong Eun-bo "Strengthening Preventive Accounting Supervision... Considering Incentive-Based Auditor Designation System"

[Asia Economy Reporter Park Jihwan] Jeong Eun-bo, Governor of the Financial Supervisory Service, emphasized on the 14th that while maintaining the basic principle of strengthening preventive supervision related to accounting oversight of listed companies and accounting firms, efforts will be made to harmonize and balance it with ex-post supervision. In particular, he hinted at improving the auditor designation system by providing incentives so that more companies can be designated to accounting firms with high audit quality.

Governor Jeong made these remarks at a meeting with CEOs of accounting firms held at the Kensington Hotel in Yeouido, Seoul. Attendees included Kim Young-sik, Chairman of the Korean Institute of Certified Public Accountants, as well as Yoon Hoon-soo, CEO of Samil Accounting Corporation; Kim Gyo-tae, CEO of Samjong Accounting Corporation; Park Yong-geun, CEO of Han Young Accounting Corporation; Hong Jong-sung, CEO of Anjin Accounting Corporation; Kim Myung-chul, CEO of Samduck Accounting Corporation; Cho Seung-ho, CEO of Daeju Accounting Corporation; Nam Ki-bong, CEO of Hanul Accounting Corporation; and Kim Byung-ik, CEO of Woori Accounting Corporation.

On this day, Governor Jeong expressed his intention to follow laws and principles regarding the basic direction of accounting supervision for listed companies and accounting firms, while seeking harmony and balance between preventive and ex-post supervision. He emphasized, "To enable proactive accounting supervision for risk-vulnerable sectors, we will flexibly operate the audit cycle and scope considering the quality control level of registered accounting firms." Along with this, he mentioned plans to improve the designation system by providing incentives so that more companies can be designated to accounting firms with high audit quality.

Institutional measures to reduce the burden on companies arising from the implementation of the new external audit law will also be pursued. The Financial Supervisory Service plans to review measures to alleviate corporate burdens caused by the expansion of designated audits, such as granting the right to request auditor re-designation within the same group. Additionally, to reduce the burden of external audits, the introduction of accounting audit standards for small-sized companies, which is currently being discussed internationally, was also mentioned.

Governor Jeong stated, "We plan to proactively respond to discussions and certifications regarding the social responsibility of companies related to ESG (Environmental, Social, and Governance)," and emphasized, "We will prepare disclosure standards without delay according to future international discussion trends, such as the sustainability financial disclosure standards being developed by the International Sustainability Standards Board (ISSB)."

Governor Jeong urged, "As gatekeepers of the capital market, please strive to further enhance the social and public value of accounting and foster an accounting culture that can coexist (win-win) with the growth of audited companies."

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