The number of corporations that underwent external audits in the country last year is reported to have slightly increased.
The Financial Supervisory Service noted that the number of corporations subject to external auditing reached 42,118 at the end of last year, an increase of 2.2% compared to the previous year (42,212).
Corporations subject to external audits include listed corporations and corporations preparing for listing, as well as unlisted corporations that meet certain criteria for revenue, total assets, total liabilities, and the number of employees. Once designated as a corporation subject to external audits, the corporation must undergo an audit by external auditors and prepare financial statements.
The number of corporations subject to external audits has steadily increased over the past 10 years. Except for the year 2020, when improvements in the criteria for external audits were made, there has been an annual increase. However, the growth rate has recently tapered off. The growth rate of corporations subject to external audits, which reached a peak of 12.8% in 2022, has decreased to 9.8% in 2023 and 2.2% in 2024.
By type of company, unlisted stock companies accounted for 38,774, or 92.1%, of the total. Listed corporations numbered 2,705, or 6.4%, and limited companies totaled 639, or 1.5%.
Of the asset sizes, those with assets between 2 billion and 5 billion won total 14,260, making up 33.8%, while those with assets between 1 billion and 2 billion won total 12,539, making up 30%.
Corporations that retained their auditors from the previous year (2023) totaled 30,159, accounting for 71.6% of the total. A total of 7,152 (17%) changed auditors, while the remaining 4,807 (11.4%) appointed auditors for the first time.
However, the proportion of listed corporations changing their auditors is 37%, double that of unlisted corporations. Listed corporations must select their external auditors autonomously for six years due to the 'periodic designation system,' after which they must receive an external audit from an accounting firm designated by financial authorities for the next three years.
As of the end of last year, 1,859 corporations had designated auditors, marking an increase of 192 (11.5%) from the previous year. The decrease in periodically designated corporations by 41 was offset by a rise of 233 in those designated by authority. The authority designation occurs for companies preparing for listing, those without appointed auditors, those failing to meet financial criteria, and management issues.
The FSS stated, "We will support new corporations subject to external audits to easily understand the system through external audit briefings and other means," and added, "We will listen to their concerns through meetings and pursue reasonable improvements to enhance audit quality and reduce corporate burdens."