As cases of companies failing to comply with the internal accounting management system continue to be detected, the Financial Supervisory Service (FSS) has issued a notice of caution.
On the 30th, the FSS stated that 15 violations were found as a result of inspections of the internal accounting management system for the 2023 fiscal year. There were 6 cases of failing to report operating conditions or evaluations, 5 cases of not establishing the internal accounting management system, and 4 cases of lack of review opinions.
The internal accounting management system is an internal control system designed to manage accounting information to prepare reliable financial statements. The target audience includes listed companies and unlisted corporations with total assets of over 500 billion won.
As a result of the actions taken, companies received fines ranging from 6 million to 12 million won, while the CEO and auditor faced fines of 3 million to 6 million won, and external auditors were fined between 6 million and 7.2 million won.
The FSS emphasized that unlisted corporations with total assets exceeding 500 billion won at the end of the previous fiscal year must establish an internal accounting management system. However, even unlisted corporations are subject to this requirement if they are required to submit business reports based on the end of the previous fiscal year, belong to public disclosure groups, or are domestic companies and financial institutions with total assets of at least 100 billion won.
Furthermore, even if a corporation applies for rehabilitation procedures, it must establish the internal accounting management system before the start of the previous fiscal year. The CEO must designate an internal accounting manager and allocate sufficient personnel to the relevant organization. Additionally, reports on operational conditions must be made at shareholders' meetings, board meetings, and audits. The audit must report operational assessments to the board.
External auditors must accurately determine whether the company has an obligation to establish an internal accounting management system and express their opinions on this matter. They must also express opinions on companies that have not established internal accounting and those with adverse audit opinions.
Listed companies with total assets exceeding 2 trillion won must include matters related to consolidated financial statements in the internal accounting management regulations. External auditors must also express opinions on the consolidated internal accounting management system.
The FSS explained, "For the 2024 fiscal year, existing evaluations and reports can apply under existing voluntary regulations," stating, "From the 2025 fiscal year onward, evaluation and reporting standards will be mandatory."