Watching the Watchers

Financial Supervisory Service
Financial Supervisory Service

 

The Financial Supervisory Service (FSS) announced on Oct. 20 that it will conduct quality management supervision on 15 big and mid-sized accounting firms, including Samil PricewaterhouseCoopers, Samjong KPMG, Deloitte Anjin, and Ernst & Young Korea for two weeks from the end of this month. In particular, they will supervise Samil PricewaterhouseCoopers in partnership with the Public Company Accounting Oversight Board (PCAOB) of the U.S. in Nov.

The Korea Institute of Certified Public Accountants will conduct supervision on eight accounting firms starting at the end of this month. The institute picked out the eight out of 100 small and mid-sized accounting firms. This supervision aims to check whether or not accounting firms’ internal control systems about employees’ stock investment are working properly.

At the end of Aug., some young accountants of big accounting firms were caught making stock investments with undisclosed information of companies that they were auditing. This case prompted the Financial Supervisory Service, the Financial Supervisory Commission, and the Korea Institute of Certified Public Accountants to come up with improvement measures against insider trading. This supervision is also part of improvement measures.

The Korea Institute of Certified Public Accountants computed the classified total of stock trades of 98 accounting firms that audit listed companies and the status of the construction of their internal control systems by the beginning of this month.

The financial watchdogs and the institute are planning to look into whether or not there are problems at accounting firms based on the results. On the other hand, the case compelled each accounting firm to considerably reinforce the control and supervision of stock trading, such as receiving written oaths from employees in accordance with the governmental measures. Equally important, accounting firms are conducting various campaigns and education to make drastic changes.

“We recommended accounting firms to make quality management policies and procedures related to insider trading,” said an official at the Financial Supervisory Service. “We will thoroughly check whether or not accounting firms prepared policies and procedures and are carrying out supervision and prevention activities.”

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