The nation’s sole bourse operator has been running an accounting program that helps firms listed on the secondary bourse Kosdaq deal with the reinforced external audit act.
According to the Korea Exchange, the number of Kosdaq firms that faced the risk of delisting due to disclaimer of opinion this year increased 66 percent on-year to 30 firms. A disclaimer of opinion is issued when an auditor is unable to complete the audit report due to insufficient information provided by the company.
Korea Exchange in Yeouido, western Seoul (KRX)
The bourse operator noted that a large portion of Kosdaq firms, categorized as small and medium enterprises, lack chartered accountants in their workforce, making it difficult for them to receive clean reports from auditors. Under the program, Kosdaq firms will receive education in building and strengthening their internal accounting control systems, which will help them assure their objectives through reliable financial reporting in compliance with laws, regulations and policies.
In addition, the KRX has been holding conferences around the nation, to meet with firms’ top officials and discuss the importance of accounting and financial reporting.
“This is a great opportunity for Kosdaq firms to strengthen their accounting capabilities and improve their ability to control their businesses,” a KRX official said.
The new external audit act, amended in November, places more responsibility on accounting firms for lax auditing practices. If companies are found guilty of fraud, external auditors will be subject to criminal punishment of up to 10 years in jail, up from the previous five to seven years.
It was pursued after Deloitte Anjin, one of three major accounting firms here, was accused of window dressing audit reports of debt-ridden Daewoo Shipbuilding & Marine Engineering in 2016.
By Jung Min-kyung (firstname.lastname@example.org)