"Thorough Business Reports" Financial Supervisory Service's Key Inspection Items for This Year Revealed

12 Financial Items · 2 Non-Financial Items

Financial Supervisory Service, Yeouido, Seoul. Photo by Huh Younghan younghan@

On the 19th, the Financial Supervisory Service (FSS) announced that it will pre-announce key inspection items to encourage companies to faithfully prepare their 2023 business reports.

The key items to be closely examined include 14 items in total: 12 financial items and 2 non-financial items.

Among the financial items, the FSS will inspect ▲basic financial information, ▲reasons for restating financial statements, ▲status of allowance for doubtful accounts, ▲inventory status, and ▲status of order contracts.

Disclosure related to auditors will also be reviewed, including ▲audit opinions and key audit matters, ▲audit fees and hours, ▲discussions between internal audit organizations and auditors, ▲discrepancies between previous and current financial statements, and ▲changes in auditors.

To ensure the stable operation of the internal accounting management system, the FSS will also examine ▲auditor opinions on the internal accounting management system and ▲operation reports.

For non-financial items, the FSS will review ▲the use of funds raised through direct financing such as stocks and corporate bonds, and ▲post-merger information. In particular, with the increase in reverse listings through Special Purpose Acquisition Companies (SPACs), the FSS will examine the differences between forecasted and actual business performance of SPAC-listed companies.

The FSS will conduct inspections of business reports in April and May and guide companies with deficiencies to voluntarily correct them. Companies with serious misstatements will be considered for selection for financial statement review and will face strengthened disclosure reviews.

The FSS stated, "We will enhance the capability to prepare business reports by disseminating inspection results through disclosure explanation sessions and training organized by associations," and added, "We will continuously strive to prevent misstatements."

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