Accountancy in South Korea

>> Audit Requirements in South Korea

Corporations subject to external audit

Any stock company in which either:

  • total assets as of the end of the preceding fiscal year are equal to or greater than 12 billion Korean Won,
  • total assets and liability as of the end of the preceding fiscal year are equal to or greater than 7 billion Korean Won,
  • total assets as of the end of the preceding fiscal year are equal to or greater than 7 billion Korean Won and the numbers of total employees as of the end of the preceding fiscal year are equal to or greater than 300,
  • a stock-listed corporation (as defined in the Financial Investment Services and Capital Markets Act), or a stock company that intends to become a stock-listed corporation during the relevant business year or the following business year

shall prepare the financial statements, and have them audited.

Auditor

The auditor qualified to conduct the audit shall be as follows;

1) any auditor who falls under any of the following shall be qualified to conduct the audit on the consolidated or combined financial statements and the financial statements of stock-listed corporations shall be appointed among accounting firms:

  • An accounting firm
  • An audit team

2) Any certified public accountant capable of performing the auditing duties, but limited to those who have undergone the training in actual businesses as prescribed by the Presidential Decree.

Appointment etc. of auditor

  • Companies that require and audit should appoint an auditor within four months from the commencement of each fiscal year. The same auditor should conduct the audit on the financial statements, consolidated financial statements and combined financial statements.
  • In the selection and appointment of an auditor for listed companies, the audit contract should be approved by the audit committee. For non-listed companies, the audit contract should be approved by the internal auditor or audit committee.
  • Any company shall, when it appoints an auditor, under paragraph (2), report his appointment at an ordinary general meeting of shareholders called after his appointment.
  • If a company appoints a new auditor under the following circumstances, the provisions of paragraphs (1) and (2) shall not apply provided any new auditor appointed for listed companies is approved by the auditor appointment committee:
    1. Where the company replaces the current auditor, and appoints a person nominated by the SFC as an auditor; and
    2. Where an already appointed auditor is unable to discharge his duties as an auditor on the grounds prescribed by the PD, including dissolution of the company during the fiscal year.
  • If a company appoints, or replaces with, an auditor according to each subparagraph of paragraph (4), the appointment shall be made within two (2) months
  • Notwithstanding the provisions of paragraph (2), where a company, which is not a stock-listed corporation, an Association-registered corporation or an affiliated company of an enterprise group to which a company that has been notified by the SFC of the need to prepare a combined financial statement, intends to reappoint the auditor who served as an auditor during the immediately preceding fiscal year, it may decide not to obtain the approval of the statutory auditor  or the auditor appointment committee.

Appointment etc. of auditor  by stock-listed corporation and association-registered corporation

  • A stock-listed corporation and an Association-registered corporation shall appoint an auditor for the period of three consecutive fiscal years within four months from the commencement of the initial fiscal year.
  • Notwithstanding paragraph (1), if an auditor violates their duties a company may dismiss the auditor upon approval from the auditor appointment committee within three months after the end of each fiscal year, even during their three consecutive fiscal years.
  • A company shall, when it dismisses the auditor under paragraph (2), file without any delay a report thereon with the SFC.
  • The company adhering to paragraph (1) shall be prohibited from having the same auditor perform the auditing duties in excess of the continued six business years, except in the following cases:
  1. the same auditor is inevitable due to the relations with the overseas parent company; and
    In a foreign-invested company registered under Article 21 of the Foreign Investment Promotion Act for which a continued auditing by
  2. Where the securities are listed on the foreign Stock Exchange as prescribed by the Presidential Decree (limited to the Stock Exchange which allows the listing of securities only for the enterprises guaranteeing a considerable level  of the accounting transparency).

Latest version updated 1st November 2017

Country Breakdown

51.25

Million

Population

?

South Korean Won

Currency

$ 1.411

Trillion

GDP

100,210

km2