By Park Hyong-ki
The Financial Service Commission (FSC) will change the way it audits the books of listed companies, the regulator said Thursday.
In a meeting with academics, accounting firms and corporate executives at the Korea Exchange, FSC Chairman Choi Jong-ku said the regulator will not play a role in post-managing and disciplining companies that recorded wrong numbers.
Instead, the FSC will "guide" companies to file and disclose their earnings properly and correctly in the early stages to prevent any mistakes or accounting irregularities.
"Our post-disciplinary system had made companies constantly look over their shoulders at the regulator," Choi said.
"I do not deny that this had made them and their accountants nervous, and hindered the development of a sound auditing system in the market."
The FSC will no longer be the one that will sanction companies, but a "helper" that can assist companies and their auditors in reviewing and examining their books prior to their official disclosure.
It will also help build human resources of auditors, which are in short supply here compared to other developed economies.
He added the change will enable both the regulator and companies to focus on risk management and improving transparency.
This renewed system will give companies more freedom and responsibility.
However, the FSC said it will severely punish those who misuse this system.
The regulator and the Korea Exchange will further discuss the change in an effort to revise the Capital Market Law by October this year.
The Financial Service Commission (FSC) will change the way it audits the books of listed companies, the regulator said Thursday.
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| Financial Services Commission Chairman Choi Jong-ku speaks about his plan for a renewed auditing system in a meeting in Seoul, Thursday. Yonhap |
Instead, the FSC will "guide" companies to file and disclose their earnings properly and correctly in the early stages to prevent any mistakes or accounting irregularities.
"Our post-disciplinary system had made companies constantly look over their shoulders at the regulator," Choi said.
"I do not deny that this had made them and their accountants nervous, and hindered the development of a sound auditing system in the market."
The FSC will no longer be the one that will sanction companies, but a "helper" that can assist companies and their auditors in reviewing and examining their books prior to their official disclosure.
It will also help build human resources of auditors, which are in short supply here compared to other developed economies.
He added the change will enable both the regulator and companies to focus on risk management and improving transparency.
This renewed system will give companies more freedom and responsibility.
However, the FSC said it will severely punish those who misuse this system.
The regulator and the Korea Exchange will further discuss the change in an effort to revise the Capital Market Law by October this year.
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