FSS Issues Accounting Settlement Guidelines... "Prepare Financial Statements Directly Under Own Responsibility"

[Asia Economy Reporter Lee Jung-yoon] On the 26th, the Financial Supervisory Service (FSS) provided guidance on matters that companies and auditors should pay attention to when preparing and disclosing financial statements and conducting year-end audits.

The FSS first emphasized that companies must prepare financial statements under their own responsibility. It also stated that companies should submit the pre-audit financial statements they have prepared themselves to external auditors within the legal deadline and immediately submit them to the Securities and Futures Commission under the Financial Services Commission.

The submission targets are publicly listed companies and unlisted companies with assets of 100 billion KRW or more, and financial companies are also subject to submission regardless of listing status or asset size. If not submitted within the deadline, reasons must be submitted and disclosed.

According to the FSS, since the legal obligation to submit pre-audit financial statements was enacted on December 30, 2013, the number of violating listed companies has decreased. However, the number of unlisted companies increased from 75 in 2018 to 182 in 2019 due to the impact of COVID-19 and the expansion of submission targets. It was expected to be 140 in 2020.

Additionally, as of the end of the 2021 fiscal year, listed companies with assets of 100 billion KRW or more are subject to external audits of internal accounting control systems for the 2022 fiscal year, so thorough preparation for this was also requested. In particular, following the recent occurrence of large-scale embezzlement cases and the raised need to strengthen internal controls to respond to fraud risks, the FSS emphasized thoroughly checking the status of internal controls by referring to "checkpoints for preventing embezzlement."

Furthermore, the FSS requested ▲ active disclosure and improvement when internal accounting weaknesses are found ▲ confirmation of key audit accounting issues and careful accounting treatment ▲ efforts to prevent accounting errors and prompt correction of past accounting errors ▲ thorough management and disclosure of external audit implementation ▲ utilization of "inquiries, responses, and pointed cases" when interpretation of accounting standards is difficult.

An FSS official stated, "We will guide companies and auditors on these precautions through the Korea Listed Companies Association, KOSDAQ Association, and the Korean Institute of Certified Public Accountants, and will closely monitor whether they are faithfully implemented thereafter."

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