Go Seung-beom "Deviant Acts of Listed Companies Instantly Undermine Accounting Trust"

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] Ko Seung-beom, Chairman of the Financial Services Commission, pointed out on the 21st regarding the Ostem Implant scandal, which recorded the largest embezzlement amount in history, that "the deviant behavior of some listed companies shows that the trust in accounting transparency built over a long period can be destroyed in an instant."

Chairman Ko said at the first online meeting with the accounting industry in the afternoon, "There are also opinions that the audit quality of some accounting firms does not meet market expectations."

Attending the online meeting were Kim Young-sik, Chairman of the Korean Institute of Certified Public Accountants, Kim Ui-hyung, President of the Korea Accounting Standards Board, as well as Yoon Hoon-soo, CEO of Samil Accounting Corporation, Kim Kyo-tae, CEO of Samjung Accounting Corporation, Park Yong-geun, CEO of Han Young Accounting Corporation, Hong Jong-sung, CEO of Anjin Accounting Corporation, Bae Hong-gi, CEO of Seohyun Accounting Corporation, Lee Jin-bok, CEO of Jungjeong Accounting Corporation, and Lee Yoo-jung, CEO of Jeongjin Accounting Corporation.

However, Chairman Ko stated, "It is a consensus among experts that accounting audits have limitations and cannot detect all fraudulent activities of companies," and added, "It is difficult to achieve accounting reform solely through government system improvements and strengthened penalties, so I ask accounting professionals to enhance audit quality based on their expertise and ethical awareness to create an environment where our citizens can invest with confidence."

He also announced plans to reflect auditors' quality management capabilities in auditor scores and to give preferential treatment to accounting firms with excellent quality management systems in auditor group classifications, thereby creating an environment where auditors with high-quality management levels can audit more listed companies.

Additionally, he promised ▲continued administrative efforts for smooth designated audits ▲consideration of measures to reduce audit burdens for small and medium-sized enterprises without compromising accounting transparency ▲and proactive responses to the spread of ESG.

On the same day, the Korean Institute of Certified Public Accountants emphasized that strengthening the oversight function of internal governance, such as ensuring the independence of the board of directors and audit committees, is essential for fundamentally preventing accounting fraud. They also stated that to prevent audit failures and restore market trust, it is necessary to improve the auditor designation system by providing incentives to firms with excellent quality management. The Korea Accounting Standards Board announced measures to resolve difficulties in interpreting guidelines and practical application due to the principle-based nature of 'K-IFRS.'

The accounting industry expressed difficulties in performing audit tasks due to the worsening COVID-19 situation and requested exemption from administrative sanctions for delays in submitting business reports and other documents, as was done last year.

In response, Chairman Ko said, "We empathize with the difficulties faced by companies and accounting firms due to the spread of COVID-19, and plan to exempt sanctions for unavoidable delays in submitting business reports, as was done last year."

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