Korea Exchange announced on March 26 that three KOSPI-listed and 27 KOSDAQ-listed companies received adverse audit opinions this year.
According to listing rules, a listed company showing adverse audit opinions for two fiscal years in a row is subject to delisting procedures. In 2018 and 2019, the number of such companies was one in KOSPI and seven in KOSDAQ.
This year’s audit report deadline for last fiscal year is March 23 and 17 KOSPI-listed and 47 KOSDAQ-listed companies failed to submit their reports by that date. Under the circumstances, it is pointed out that a large number of adverse opinions will be added and the number of companies with adverse opinions will reach an all-time high beyond that of last year. In 2019, the first year of the new Act on External Audit of Stock Company, a total of 37 listed companies, 10 more than in the previous year, posted adverse opinions regarding their business reports for 2018.
This has to do with the trend of tighter auditing. This year in particular, elements of the new act such as standard audit time became effective to lead to more burden on enterprises. Besides, the spread of the COVID-19 pandemic has affected listed companies and auditors along with the internal accounting control introduced this year.