KOREAN REPUBLIC: FSC Introduces New Audit Rules

Wednesday November 1 2017

On 1^st November 2017, changes to the Act on External Audit of Stock Companies became effective. The Financial Services Commission of Korea has stated that the changes will set higher standards for all stakeholders in their role, including companies, auditors and financial regulators, to further advance Korea’s accounting reform efforts.

The New Rules will implement more stringent punishment where audits are not completed correctly either deliberately or negligently. In cases where Companies or external auditors commit accounting fraud the following sanctions will be imposed under the new rules:

• Imprisonment: less than 10 years, up from the current penalty of 5 to 7 years
• Fine: less than one or three times unfair profits, which could be larger than the current penalty of KRW50 million to KRW70 million.
• Limitation period for liability claims for damages: 8 years, up from the current 3 years

For additional information please click the link below