Financial authorities decided to strengthen the review of financial statements for corporations planning to go public (IPO). The authorities have taken steps to address the recurrent issues that arise from rapid stock price declines immediately after listing, raising doubts about the financial status.
The Securities and Futures Commission, under the Financial Services Commission, stated on the 26th that it has finalized the '2025 financial statement review and audit operation plan' in a regular meeting with the Financial Supervisory Service and the Korean Institute of Certified Public Accountants.
First, the accounting society has decided to add the 'risk of accounting fraud' to the new sample selection criteria to enhance the effectiveness of financial statement reviews. The accounting fraud risk is calculated by comparing the corporation's key financial indicators (operating cash flow, non-operating asset ratio, etc.) with historical violators and failing corporations.
The Financial Supervisory Service (FSS) will expand the scope of financial statement review and audit for companies scheduled to go public from assets over 1 trillion won to over 500 billion won. Previously, the review and audit were conducted only for corporations with over 1 trillion won in assets, but with the strengthened sampling criteria increasing the number of reviews by the accounting society, the FSS decided to expand its review range as well. The accounting society will be responsible for reviewing corporations with assets under 500 billion won.
The Financial Services Commission noted, 'As the criteria for selecting financial statement review targets by the accounting society are strengthened, and since the FSS has accumulated experience and capabilities in reviewing the financial statements of listed companies, stringent investor protection will become possible.'