Under the 'internal accounting management system evaluation and reporting standards' that come into effect this year, corporations must diligently inform the public of control activities aimed at preventing financial irregularities, such as embezzlement.
The Financial Supervisory Service (FSS) provided guidance on the '2024 corporate settlement of accounts and external audit precautions' on the 26th.
The FSS noted that companies applying the internal accounting management system evaluation and reporting standards must fully disclose controls against financial irregularities. Starting from this business year, listed companies and large non-listed companies will newly disclose control activities to prevent and detect financial irregularities such as embezzlement.
However, the regulatory authority has deferred the application of these requirements until the 2026 business year for listed companies with assets under 100 billion won and large non-listed companies (excluding financial firms). The FSS urged auditors to consider the possibility of distortions due to financial irregularities when conducting audits.
Additionally, companies must prepare financial statements directly under their own responsibility. The financial statements prepared prior to the audit must be submitted to the Korea Securities and Futures Commission (KOSDAQ) within the legal deadline. If they fail to submit on time, they must submit and disclose the reasons.
Corporations should verify and pay attention to the key accounting issues for the 2024 financial statements that the FSS pre-announced in June of this year. The FSS selected revenue recognition accounting treatment, non-market asset valuation, related party transaction accounting treatment, and virtual asset accounting treatment as key accounting issues for review this year.
Moreover, corporations and auditors must prevent accounting errors and promptly correct any discovered past accounting mistakes. If accounting errors are self-corrected, mitigated actions will be taken. Minor violations related to 'negligence' will incur warnings or cautions. The FSS asked auditors to conduct strict external audits on companies with potential accounting irregularities.