Financial Supervisory Service Initiates Improvements to Internal Accounting Management System Evaluation and Reporting Standards

The Financial Supervisory Service (FSS) announced on the 14th that it will reasonably establish evaluation and reporting standards for the internal accounting management system.

Previously, due to amendments in regulations concerning external audits and accounting, the FSS was authorized to set guidelines for the evaluation and reporting of the internal accounting management system. Accordingly, the FSS plans to improve the lack of legal basis caused by the internal accounting management system standards being operated as voluntary regulations.

In addition, to enhance the sense of responsibility among corporate executives, promote the sound operation of the system, and utilize the standards during internal accounting management system inspections, evaluation and reporting guidelines will be prepared.

To establish the evaluation and reporting guidelines, the FSS formed the "Internal Accounting Management System Practical Advisory Committee" to select and clarify essential items of the current voluntary regulations and to secure objectivity as the standard. The advisory committee consists of 11 members: one from the FSS, two from related organizations, two from academia, three from the accounting industry, and three from the corporate sector. The evaluation and reporting guidelines will be drafted and revised through expert opinions gathered via the advisory committee’s review and the Accounting Deliberation Committee’s resolution, following an objective procedure.

At the advisory committee’s first meeting on the 12th of this month, the direction for establishing the internal accounting management system evaluation and reporting guidelines was discussed. Considering that listed companies have been building their internal accounting management systems and preparing for audits based on the current voluntary regulations, it was decided in principle to maintain the content of the current standards. At the same time, legal requirements will be reflected in the evaluation and reporting guidelines, and key procedures will be revised into concise and clear expressions to clearly present the principles that companies must comply with.

An FSS official stated, "Starting with the discussion on the establishment direction at the first advisory committee meeting, we will finalize the evaluation and reporting guidelines within the third quarter after two to three rounds of discussions and opinion gathering. We will prepare the evaluation and reporting guidelines by reviewing essential evaluation and reporting methods and procedures, as well as whether to incorporate important issues raised frequently during the operation process into the guidelines," he explained.

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