Jeong Eun-bo "Enhancing Audit Quality is a Priority... No Consideration for Revising the New External Audit Act Rollback System"

Jeong Eun-bo, Governor of the Financial Supervisory Service, is delivering opening remarks at the 'Accounting Firm CEO Meeting' held on the 14th at the Kensington Hotel in Yeouido, Seoul. Photo by Jang Jin-hyung aymsdream@

[Asia Economy Reporter Ji-hwan Park] On the 14th, Jeong Eun-bo, Governor of the Financial Supervisory Service (FSS), emphasized that concerns about the institutional improvements being pursued by the FSS to reduce corporate burdens?such as granting the right to request auditor reappointment within the same group?potentially representing a regression of the new External Audit Act (Shin-oegambeop) are unfounded. He stated, "Enhancing audit quality is the priority, and we are not considering any institutional modifications that could lead to a regression of the new External Audit Act."

Regarding the cancellation of fines imposed on market makers, he said, "We will decide on necessary institutional improvements or issues related to fines after the results of the Korea Exchange’s inspection of the overall market maker system are released."

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 Kyo-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.

After the meeting, Governor Jeong spoke with reporters about concerns that the FSS’s institutional improvement plans?such as introducing accounting audit standards for small-sized companies and granting the right to request auditor reappointment within the same group?might be perceived as a regression of the new External Audit Act. He said, "The new External Audit Act was introduced and is being operated to enhance the independence of external auditors and improve audit quality. As we enter the third year of its operation, naturally, there may be areas that require institutional supplementation." He added, "The fundamental principle is that there should be mutual checks and balances between accounting firms and companies undergoing external audits. Discussions are being held from this perspective, and we are not making institutional fine-tuning at the expense of audit quality."

When asked about the possibility of canceling the 48 billion KRW fine imposed on market makers, he pointed out, "Since the introduction of the system, there has been insufficient review and evaluation regarding its operation." Governor Jeong said, "The Korea Exchange is currently reviewing the operation status of market makers during its inspection process. Once the results are out, if necessary, we will implement institutional improvements and also conclude on the fine cancellation issue at that time." Regarding the extension of the Korea Exchange’s comprehensive inspection period, he said, "It has been extended by two weeks until this week. Whether to extend further or conclude the comprehensive inspection and proceed with additional document-based verification will be decided by the working team."

Regarding the audit of Celltrion, he said, "It is currently being discussed by the Financial Services Commission’s Audit Committee. Since discussions are based on facts confirmed during the audit process, it is difficult to comment on what is being discussed."

In his opening remarks at the meeting, Governor Jeong expressed his intention to pursue accounting supervision of listed companies and accounting firms based on laws and principles, aiming for harmony and balance between proactive and reactive supervision. He emphasized, "To enable proactive accounting supervision for risk-vulnerable sectors, we will flexibly operate the audit cycle and scope considering the quality management level of registered accounting firms." He also mentioned plans to improve the designation system by providing incentives so that accounting firms with high audit quality can be appointed to more companies.

Institutional measures to reduce corporate burdens arising during the implementation of the new External Audit Act will also be pursued. The FSS plans to review ways to alleviate corporate burdens caused by the expansion of designated audits, such as granting the right to request auditor reappointment within the same group. Additionally, the introduction of accounting audit standards for small-sized companies, which has recently been discussed internationally to reduce external audit burdens, was also mentioned.

Governor Jeong said, "We plan to proactively respond to discussions and certifications related to corporate social responsibility in ESG (Environmental, Social, and Governance)." He 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 achieve a win-win growth with audited companies."

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