September 22 2003
On November 7 2002 a joint task force comprised of members from the Ministry
of Finance and Economy, the Financial Supervisory Service (FSS), the Financial
Supervisory Commission and other government agencies announced a plan to reform
accounting practice in Korea. The plan:
Since the plan was announced, in light of public opinion and recent accounting
fraud cases, more dramatic changes have become necessary to increase transparency
in accounting practice. Accordingly, the task force finalized the plan with
stricter rules and submitted a proposal to Congress for amendments to the
relevant laws (ie, the Securities and Exchange Act, the Act on External Audit of
Stock Companies and the Certified Public Accountant Act) reflecting the finalized
Under the reforms, the duties of listed companies are as follows:
From 2006 listed companies must change their auditors every six years. However,
this six-year rotation requirement will not be imposed if:
An auditor will be prohibited from providing its client with certain non-audit services
that may create potential conflicts of interest. For example, provision
of the following non-audit services will be prohibited:
An auditor will be required to maintain its clients' audit records for at
least seven years.
The penalties under the new regime are as follows:
For further information on this topic please contact Sang Moon Chang or Doo Song Kim at Woo Yun Kang Jeong & Han by telephone (+822 528 5200) or by fax (+822 528 5300) or by email (email@example.com or firstname.lastname@example.org).
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