Financial Supervisory Service Discloses 18 Key Accounting Review and Audit Findings Including Revenue and Cost of Sales Issues

Financial Supervisory Service, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

On the 26th, the Financial Supervisory Service (FSS) announced the disclosure of major audit and inspection findings for the fiscal year 2022. A total of 18 cases were revealed, including 3 cases related to sales and cost of sales, and 4 cases of errors in the valuation of investment stocks.

The FSS has been disclosing representative audit findings to assist companies and auditors in applying the Korean International Financial Reporting Standards (K-IFRS). Including the 18 cases from 2022, a total of 141 findings have been disclosed over the 12 years since the implementation of K-IFRS.

Among the 2022 audit and inspection findings disclosed this time, 3 cases involved false or overstated sales and cost of sales. In the case of Company A, it was found that sales were recognized at the time products were delivered to consigned franchise stores, rather than at the point of sale to the final consumer, despite the company effectively managing and controlling the risks and rewards associated with the products after delivery to the consigned franchise stores.

Other cases included 4 errors in the valuation of investment stocks, 3 cases of overstated (false) inventory and tangible assets, and 2 cases of understated deferred corporate tax liabilities.

The FSS stated, "We plan to regularly disclose major audit and inspection findings every year to continuously build a database (DB) of such cases. Through related organizations, we will distribute these major findings to companies and auditors and provide ongoing education and guidance through accounting issue briefings to prevent recurrence of similar cases and assist investors in decision-making."

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