Last year, an average of 8.7 improvement issues in audits was recorded per accounting firm. Since the implementation of the registering system for auditors of listed companies in 2020, the number of identified issues has shown a consistent downward trend.
The Securities and Futures Commission, under the Financial Services Commission, held its 10th meeting on the 21st of last month and on the 1st, it announced that it had decided on improvement recommendations based on the quality control review results of last year's accounting firms.
The Securities and Futures Commission and the Financial Supervisory Service conduct annual sequential reviews focusing on six key quality management elements for some of the 40 registered accounting firms as auditors of listed companies. Recommendations for improvements are made for issues identified in the review. The main inspection items include leadership responsibility, ethical requirements, work acceptance, and maintenance, among six others.
This year, reviews were conducted on a total of 14 accounting firms, including two major firms, Samjong KPMG and Deloitte Anjin. The identified issues averaged 6.0 for major accounting firms and 9.2 for others.
By element, there were an average of 2.2 issues in work performance, 1.9 in leadership responsibility, and 1.5 in ethical requirements and human resources.
Issues identified in quality management reviews have consistently decreased since the introduction of the system in 2020. In 2020, the average number of identified issues was 12.6, decreasing to 14.4 in 2021, 10.5 in 2022, and 9.1 in 2023.
The Securities and Futures Commission noted, "The overall trend of decrease in the number of identified issues in quality management reviews can be viewed as a positive signal for improving audit quality, but active efforts for improvement are still required for some issues that continue to occur."