Financial Supervisory Service Selects 26 Best Practice Cases for Key Audit Matters Disclosure

Selected to Enhance Usefulness
"Request to Verify When Using Audit Reports"

[Asia Economy Reporter Lee Jung-yoon] The Financial Supervisory Service (FSS) announced on the 28th that it has selected "Best Practices for Describing Key Audit Matters (KAM)" in collaboration with the Korean Institute of Certified Public Accountants (KICPA) to enhance the usefulness of audit reports.

The Key Audit Matters system was introduced to improve the usefulness of audit reports by requiring the description of key audit matters, thereby helping information users make rational decisions. As it marks the fifth year since the introduction of KAM, the FSS and KICPA have selected and distributed best practice cases.

Considering diversity in terms of topics, industries, and company sizes, a total of 26 best practice cases for describing key audit matters were selected. Matters such as revenue recognition, asset impairment, allowance for doubtful accounts, and inventory, which are well addressed as actual key audit matters across all company sizes, were chosen. Taking into account industry proportions and the concentration in large corporations, selections were made primarily from manufacturing and financial sectors, and 11 best practice cases from companies with assets under 2 trillion KRW were also included.

These best practices faithfully describe the reasons for selecting key audit matters and the audit response methods, contributing to improved understanding and grasp of audit effectiveness.

An FSS official stated, "We have disclosed the best practices for describing key audit matters on our website and plan to conduct training for auditors as well as add and supplement best practices in the future. Since key audit matters are the most significant items selected in financial statement audits and are separately described in audit reports, we urge information users to be sure to check these when utilizing audit reports."

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