FSS and Exchange to Prevent Unfair Practices by 'Designated Auditors'

Meeting to Hear Difficulties of Designated Audit Target Companies on the 24th
Audit Fee Increase and Frequent Auditor Changes 'Troublesome'

Financial Supervisory Service building in Yeouido, Seoul. Photo by Younghan Heo younghan@

On the 24th, the Financial Supervisory Service (FSS) and Korea Exchange (KRX) held a 'Visiting Meeting' at the Korea Exchange's main conference room to listen to the difficulties faced by companies subject to designated audits.

The FSS and KRX heard the on-site difficulties and suggestions from accounting and finance executives of 16 listed companies undergoing designated audits during this meeting.

Participants mentioned concerns such as audit fee increases upon signing designated audit contracts and the decline in audit quality due to frequent auditor changes as the main difficulties, and requested efforts to alleviate the burden on companies.

Yoon Jeong-sook, a specialist committee member of the Financial Supervisory Service, stated, "We have rationalized the reasons for designation, resulting in a decrease of 184 designated companies in 2024," and added, "We will continue to promote the alleviation of corporate burdens based on the opinions raised today."

Hong Soon-wook, head of the KOSDAQ Market Division at Korea Exchange, introduced the 'Opinion Coordination Council' between companies and designated auditors, urging, "Please actively utilize this when unfair acts by designated auditors occur."

The FSS will actively pursue measures to reduce companies' audit burdens, such as improving the model standards for designated audit performance and reviewing the expansion of companies' choice of designated auditors. Additionally, the expansion of industries including industry experts, planned for 11 sectors, will be considered.

Furthermore, if a designated auditor refuses to comply with dispute resolution results from dispute mediation bodies without reasonable grounds or abuses authority, strict measures such as cancellation of designation will be enforced.

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