South Korea's financial authorities are planning to shift the focus of accounting supervision from violation detection and restrictions toward prior guidance. This is to prevent confusion and burden on the part of enterprises with the South Korean government taking accounting reform measures such as the new Act on External Audit of Stock Companies.
The Financial Services Commission of South Korea made the announcement at its conference in Seoul on June 13. The conference was attended by the Financial Supervisory Service, the Korea Exchange, companies, accounting firms, and scholars.
According to the announcement, companies will be advised to correct their slight corporate accounting standards violations without delay by using financial statements inspection and audit review will be limitedly applied only to accounting frauds. In addition, companies that voluntarily correct their mistakes and cannot be held accountable for the mistakes will be subject to no restrictions.
Also, companies now can send accounting-related inquires to the Korea Accounting Institute as well as the Financial Supervisory Service and information such as answers to the inquiries will be open to the public. Furthermore, market participants such as listing managers, external auditors and the Korea Exchange will be given more audit review-related responsibilities.