Hangonghoe Unanimously Approves Revised Standard Audit Hours... "Considering Characteristics of Each Company"

[Asia Economy Reporter Ji-hwan Park] The Korean Institute of Certified Public Accountants (KICPA) announced on the 21st that the revised standard audit hours, which reflect companies' demands to calculate standard audit hours according to the characteristics of each company, were unanimously approved.

The revision reflects companies' demands by calculating standard audit hours considering the individual characteristics of companies, removing regulations on the upper and lower limits of audit hours, and eliminating the additional rate for internal accounting control system audits.

Looking at the main contents of the revision, it allows the calculation of standard audit hours by considering the individual characteristics and unique environment of each company instead of applying standard audit hours uniformly. Additionally, the additional rate for internal accounting control system audits and the upper and lower limit regulations of standard audit hours were removed. Considering the business difficulties caused by COVID-19, the phased application rate for next year will be maintained at the same level as this year.

Furthermore, adjustment factors were integrated and simplified for listed companies, KONEX, and unlisted companies. From next year, standard audit hours will be introduced for limited liability companies, and a basis for calculating standard audit hours will be established when laws, accounting, and auditing standards change.

Previously, KICPA commissioned the Korean Accounting Association to conduct a feasibility study on standard audit hours. From June to October, they held corporate meetings to listen to demands and discussed the feasibility study results and improvement issues through a review committee.

KICPA formed and operated the "Standard Audit Hours Review Committee" to increase companies' acceptance of standard audit hours and discussed revision issues including companies' difficulties and requests for improvement. The empirical analysis results from the feasibility study confirmed that the introduction of standard audit hours significantly improved audit quality. The validity review of the current standard audit hours model showed that the explanatory power of the regression model was at a reasonable level.

KICPA plans to announce the revised standard audit hours, collect opinions, and hold a public hearing to review the received opinions. Additionally, after deliberating on the announcement of the revised standard audit hours, it will be published in January next year.

Kim Young-sik, President of KICPA, emphasized, "It is very encouraging that the feasibility study results and the revised standard audit hours were unanimously approved with the consent of companies," adding, "We expect auditors and companies to work together in a spirit of coexistence toward the common goal of improving audit quality and enhancing accounting transparency."

President Kim added, "KICPA will continue to listen to the opinions of companies, the accounting industry, and information users regarding the standard audit hours system and will do its best to ensure that the system operates effectively to improve audit quality and protect investors by securing appropriate audit hours."

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