"December Fiscal Year-End Listed Firms Must Submit Auditor Designation Data by September 15"

Online Seminar on Auditor Designation System Held
Auditor May Be Appointed for Late Submission
Guidance on Important Considerations Provided

Publicly listed companies with December fiscal year-end, as well as large unlisted companies where ownership and management are not separated, are required to submit the basic data for auditor designation between September 1 and September 15 of the following month. Failure to submit the materials within the deadline may result in an auditor being appointed by the authorities, so extra caution is advised.

The Financial Supervisory Service announced on August 28 that, ahead of the submission period, it will release an online video seminar and explanatory materials on the "Auditor Designation System" through its YouTube channel and the websites of related organizations.

In accordance with the Act on External Audit of Stock Companies, companies subject to periodic designation and accounting firms seeking auditor designation must submit the basic data for designation annually. Companies subject to periodic designation include publicly listed companies, except for the KONEX market, and large unlisted companies where ownership and management are not separated. The periodic designation system assigns auditors for three consecutive fiscal years to companies that have freely selected their auditors for six consecutive fiscal years.

This year, approximately 2,700 December fiscal year-end corporations and 39 auditing firms for listed companies are required to submit basic data for designation. The submission period for corporations is from September 1 to September 15. Accounting firms must submit their data between August 31 and September 14.

During this online seminar, the Financial Supervisory Service will provide guidance on how to prepare the basic data for designation and will explain the main points of the auditor designation system. Companies are required to report the status of auditor appointments for the past six years, whether ownership and management are separated, and whether an industry-specialized designated auditor is needed. Accounting firms must submit the number of certified public accountants in the firm, the number of personnel responsible for quality control work, and their professional liability coverage.

The session will also cover the reasons for periodic and ex officio designation, specific designation periods and methods, procedures for requesting re-designation, and the industry specialization system. Information about the periodic designation deferral system introduced last year, reasons for ex officio designation that are included within the periodic designation period, and the option to extend the designation period will also be provided.

Additionally, the Financial Supervisory Service will address frequently asked questions from companies and accounting firms in a Q&A format. For example, even if a company records a financial criteria-based cause for designation, such as three consecutive years of operating losses during the periodic designation period, the period will not be extended separately, as such reasons are incorporated within the current periodic designation period.

Furthermore, if a company requests to change its auditor after one has been designated, it may request a change to an auditor belonging to the same or a higher group as the originally designated auditor, once. In cases involving periodic designation, anticipated listing, or company-requested designation, companies may also request re-designation to an auditor in a lower group than the originally designated one.

This information can be found by searching for "Financial Supervisory Service" on YouTube, or through the websites of the Financial Supervisory Service, Korea Listed Companies Association, KOSDAQ Association, KONEX Association, Korea Federation of SMEs, and the Korean Institute of Certified Public Accountants. An official from the Financial Supervisory Service stated, "If company or accounting firm personnel have any questions, they can contact the Financial Supervisory Service website, and we will respond promptly to support the preparation of the basic data for designation."

This content was produced with the assistance of AI translation services.