Financial Supervisory Service Strengthens Oversight of Accounting Fraud... Improves Reward Calculation Criteria

[Asia Economy Reporter Lee Jung-yoon] Financial authorities have decided to strengthen supervision over accounting fraud and other practices that undermine fairness in the capital market. They will also improve the criteria for calculating rewards for whistleblowers reporting accounting fraud.

The Financial Supervisory Service (FSS) announced on the 14th that it held the 2022 Online Accounting Issues Briefing Session to provide guidance on year-end audit precautions ahead of the closing season, thereby encouraging thorough accounting audits and enhancing audit quality.

The FSS will intensify supervision of accounting fraud. It plans to strengthen monitoring of companies at high risk of accounting manipulation and take swift and focused inspection measures against serious accounting fraud cases. Additionally, it will improve the criteria for calculating rewards to promote whistleblowing.

Furthermore, to enhance the capabilities of accounting firms, the FSS will fairly conduct the first-ever evaluation of accounting firms' quality control levels and actively utilize the results in auditor designation. Strict measures will be taken against violations of the registration requirements for auditors of listed companies.

A proactive accounting supervision system focused on prevention will also be established. After gathering opinions from experts, timely accounting issues will be selected and announced, standard review methods for each issue will be prepared for concentrated and efficient examination, and comprehensive feedback on identified issues will be provided to companies and auditors.

The FSS will improve accounting supervision systems and practices and strengthen field-oriented communication. In particular, it plans to distribute model cases of virtual asset note disclosures and continuously discover new accounting agendas through expert meetings to prepare supervisory guidelines. It will also expand the publicly available database of review and inspection findings to support companies in preventing accounting errors and assist information users in monitoring activities.

In addition, during this briefing session, the FSS provided guidance on major findings from this year’s accounting reviews and inspections, key deficiencies found in auditor inspections, and major changes in the auditor designation system reform.

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