{"id":836,"date":"2026-05-29T06:04:26","date_gmt":"2026-05-29T06:04:26","guid":{"rendered":"https:\/\/www.mooresejong.com\/?p=836"},"modified":"2026-05-29T06:04:28","modified_gmt":"2026-05-29T06:04:28","slug":"overview-of-koreas-accounting-oversight-system","status":"publish","type":"post","link":"https:\/\/www.mooresejong.com\/ko\/overview-of-koreas-accounting-oversight-system\/","title":{"rendered":"Overview of Korea\u2019s Accounting Oversight System"},"content":{"rendered":"<p style=\"font-size:17px;line-height:1.5\"><strong><u>1. Overview<\/u><\/strong><\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">Under the <strong>Act on External Audit of Stock Companies<\/strong> (the \u201c<strong>External Audit Act<\/strong>\u201d), Korean financial supervisory authorities conduct oversight activities over entities subject to statutory external audits (the \u201c<strong>Accounting Oversight System<\/strong>\u201d) in order to verify whether appropriate accounting treatments have been applied and whether statutory audits have been properly performed by external auditors.<\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">The Accounting Oversight System aims to enhance the reliability of financial information, protect stakeholders, and contribute to the sound management and sustainable development of companies. The system encompasses procedures for reviewing compliance with applicable accounting and auditing standards and, where violations are identified, imposing sanctions on the responsible parties in accordance with relevant laws and regulations.<\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">Depending on the legal status and characteristics of the entity subject to oversight, the supervisory authority responsible for conducting such oversight is either the <strong>Financial Supervisory Service (\u201cFSS\u201d)<\/strong> or the <strong>Korean Institute of Certified Public Accountants (\u201cKICPA\u201d)<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">This newsletter provides a brief overview of the Accounting Oversight System.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\"><strong><u>2. Key Features<\/u><\/strong><\/p>\n\n\n\n<p style=\"font-size:17px\">Accounting oversight is conducted through two primary mechanisms:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li style=\"font-size:17px;line-height:1.5\"><strong>Financial Statement Review<\/strong> (the \u201c<strong>Review<\/strong>\u201d), which involves examining whether the company\u2019s financial statements comply with applicable accounting standards and recommending corrections where accounting violations are identified; and<\/li>\n\n\n\n<li style=\"font-size:17px;line-height:1.5\"><strong>Accounting Investigation<\/strong> (the \u201c<strong>Investigation<\/strong>\u201d), which involves confirming compliance with accounting standards and, where violations are found, determining responsibility and imposing sanctions as appropriate.<\/li>\n<\/ul>\n\n\n\n<p style=\"font-size:17px\"><strong>#1 Financial Statement Review<\/strong><\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">In the Review, the supervisory authority examines whether the financial statements of a selected entity violate applicable accounting standards. Entities subject to review are selected based on <strong>risk-based criteria<\/strong>, <strong>random sampling<\/strong>, <strong>focused accounting issues<\/strong>, or <strong>whistleblower reports<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">Where potential issues are identified in the financial statements, the supervisory authority requests explanations and supporting materials from the company. Based on the explanations and materials voluntarily submitted by the company, the authority determines whether accounting violations have occurred.<\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">If no violations are identified, no further procedures are conducted. However, if accounting violations are identified, the supervisory authority may recommend corrections to the financial statements.<\/p>\n\n\n\n<p style=\"font-size:17px\"><strong>#2 Accounting Investigation<\/strong><\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">The Investigation is initiated where the company fails to comply with correction recommendations, where identified issues in the Review are deemed intentional, or where allegations obtained through whistleblower reports are specific and material.<\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">During the Investigation, the supervisory authority is vested, pursuant to the External Audit Act, with statutory powers to inspect accounting books and records and to investigate the company\u2019s business operations and financial condition.<\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">Where violations are confirmed during the investigation, the case is reviewed by the <strong>Accounting Oversight Review Committee<\/strong> and subsequently subject to deliberation and resolution by the <strong>Securities and Futures Commission (\u201cSFC\u201d) <\/strong>or the <strong>Financial Services Commission (\u201cFSC\u201d)<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\"><strong><u>3. Conclusion<\/u><\/strong><\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">To strengthen preventive accounting oversight and enhance supervisory efficiency, the FSS annually announces <strong>priority accounting review issues<\/strong>, identifying accounting matters that will be subject to focused review during the relevant year. In addition, the FSS publicly discloses major enforcement cases and sanctions on its website each year.<\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">Depending on the severity of violations identified by supervisory authorities, sanctions may range from administrative fines to criminal referrals, including prosecution. As a result, it is becoming increasingly important for companies to respond proactively to regulatory accounting oversight.<\/p>\n\n\n\n<p style=\"font-size:17px;line-height:1.5\">To mitigate the risk of sanctions arising from a lack of understanding of the Accounting Oversight System, it is advisable to implement preventive measures with the assistance of accounting and audit professionals.<\/p>","protected":false},"excerpt":{"rendered":"<p>1. Overview Under the Act on External Audit of Stock Companies (the \u201cExternal Audit Act\u201d), Korean financial supervisory authorities conduct oversight activities over entities subject to statutory external audits (the \u201cAccounting Oversight System\u201d) in order to verify whether appropriate accounting treatments have been applied and whether statutory audits have been properly performed by external auditors. [&hellip;]<\/p>\n","protected":false},"author":50,"featured_media":797,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":true,"footnotes":""},"categories":[21],"tags":[],"location":[],"class_list":["post-836","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-audit"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Overview of Korea\u2019s Accounting Oversight System - Moore Sejong<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.mooresejong.com\/ko\/overview-of-koreas-accounting-oversight-system\/\" \/>\n<meta property=\"og:locale\" content=\"ko_KR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Overview of Korea\u2019s Accounting Oversight System - Moore Sejong\" \/>\n<meta property=\"og:description\" content=\"1. Overview Under the Act on External Audit of Stock Companies (the \u201cExternal Audit Act\u201d), Korean financial supervisory authorities conduct oversight activities over entities subject to statutory external audits (the \u201cAccounting Oversight System\u201d) in order to verify whether appropriate accounting treatments have been applied and whether statutory audits have been properly performed by external auditors. 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