Financial Supervisory Service Chief: "Thoroughly Inspect Audit Quality of Accounting Firms... Strict Response to Fraud"

Lee Bok-hyun, Governor of the Financial Supervisory Service [Photo by Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Lee Bok-hyun, Governor of the Financial Supervisory Service, announced that he will induce improvements in audit quality while strictly detecting and sanctioning serious accounting fraud after the fact.

At the 'Accounting Firms CEO Meeting' held on the 6th at the Kensington Hotel in Yeouido, Governor Lee stated, "We will thoroughly implement the evaluation of quality control levels and the inspection of whether registration requirements are maintained for registered accounting firms auditing listed companies, which will be fully introduced this year."

He added, "We plan to link the results of quality control level evaluations and inspections not only to incentives for auditor designation but also to penalties, thereby encouraging accounting firms to improve their quality control."

The meeting was attended by Kim Young-sik, Chairman of the Korean Institute of Certified Public Accountants; Kim Ui-hyung, President of the Korean Accounting Standards Board; 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; and Hong Jong-sung, CEO of Anjin Accounting Corporation.

Governor Lee said, "We will cooperate with the Financial Services Commission to promptly establish audit standards for small-sized companies that simplify audit procedures for small and medium-sized enterprises while ensuring audit quality. We will limit the inspection and investigation period to one year in principle to prevent excessive prolongation of the inspection period, and guarantee the right to defense so that the inspected parties can feel it on-site, thereby realizing effective protection of the rights of the inspected parties." He also stated, "We will thoroughly check compliance with the strengthened supervision measures for designated auditors, which were prepared last October to prevent unfair practices by designated auditors."

Governor Lee also said he would strengthen sanctions against serious accounting fraud. He said, "We will strictly detect and sanction serious accounting fraud after the fact while strengthening preventive accounting supervision. To proactively respond to risk-vulnerable areas, we will promptly conduct financial statement reviews under the principle of completion within three months and differentiate the audit inspection cycle and scope according to the quality control level of accounting firms."

Furthermore, he explained, "We plan to establish measures to strengthen monitoring and supervision functions through the internal accounting management system to prevent and detect fraudulent acts such as embezzlement. The full-scale internal accounting inspection, which has undergone a three-year guidance period, will also be sequentially and smoothly conducted from next year."

Governor Lee also pledged to actively resolve accounting uncertainties. He said, "Through expert meetings related to virtual asset accounting supervision, we are proactively identifying various issues. After follow-up discussions with the Financial Services Commission and related accounting organizations, we plan to prepare accounting and audit guidelines and publicize them through seminars." He added, "Accounting treatment guidelines for the pharmaceutical and bio sectors will also be announced soon after reporting to the Securities and Futures Commission to be practically useful in the field."

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