Korea Country Report
Business OpportunitiesSeptember 16, 2021 - Induk Accounting Corporation
This article is a contribution to the International Accounting Bulletin (IAB) Korea survey by PrimeGlobal member firm firm Induk Accounting Corporation, and it was published in IAB's August 2021 newsletter. Please read the full article below and reach out to Tae-Wook Park, Partner, regarding any questions in relation to the article and doing business in Korea.
Induk Accounting Corporation are part of PrimeGlobal's Asia Pacific region, which has seen unprecedented growth of 247% in the past year. You can find out more about the reasons why PrimeGlobal and its firms are flourishing in this region HERE>
Have there been any significant regulatory developments in Korea over the last 12 months?
The Korean government introduced mandatory audit firm rotations from fiscal years starting on or after January 1, 2020. The change of auditors will be made sequentially in accordance with the principles set by the Financial Supervisory Service (FSS). The auditor has been allocated by FSS by the rule set by the FSS.
Standard audit hours rule has been introduced from 2019 considering the size, industry, subsidiaries of the entity, etc.
K-SOX for the separated financial statements has been changed from review to audit from 2019 for entities whose total assets are two trillion won or more, from 2020 for entities whose total assets are 500 billion won or more, from 2021 for entities whose total asset are 100 billion or more, from 2022 for entities whose total assets are less than 100 billion won.
K-SOX for the consolidated financial statements will be applied from 2023 for entities whose total assets are two trillion won or more, from 2024 for entities whose total assets are 500 billion won or more, from 2025 for entities whose total assets are less than 500 billion.
The above changes will have a positive effect on Korean accounting firms.
The 52-hour weekly working hours rule was introduced in July 2018. The rule will be applied to entities whose employees are 300 or more from April 1, 2019, employees from 50 to 299 from January 1, 2021, and employees from five to 49 from July 1, 2021.
How would you describe the health of the accounting industry in terms of customer demand, fee pressure, and staff recruitment and retention?
Are there any services areas that have grown over the last 12 months?
Due to the regulatory changes, mandatory auditor rotation, standard audit hours and K-SOX scope changes, revenues from audit are significantly increased.
Last year, the IAB reported that the Financial Supervisory Service had implemented a registration system for accounting firms to provide auditing services for listed companies in Korea - was this a positive development for the accounting profession?
Yes. As we are the one of the twenty first-tier registered accounting firms, we were allocated approximately thirty listed companies to audit and revenues from the allocated clients are significant portion of our audit revenue.
Auditors will have to present audit opinions on the internal control over financial reporting (ICFR) of all listed companies in Korea by 2023. Has this created new business opportunities for accounting firms?
The changes of scope from the review to the audit on ICFR, present opportunities not only for additional audit on ICFR but also the set-up or update of the ICFR.
What are your expectations for the next 12 months? Are there any potentially significant developments in the pipeline?
I believe we have potential developments related to ICFR updates and set-ups for the entities whose total assets are less than 100 billion won.
In addition, since we have communicated more often among PrimeGlobal member firms, we expect more work as a result of these connections.
Induk Accounting Corporation
We at Induk Accounting Corporation have earned our reputation based on our top-quality performance. With 180 devoted professionals (including 100 CPAs) and our deep understanding of a variety of issues, we are prepared to respond to complex questions raised by government, enterprises, and individuals, and provide innovative solutions which enable our clients to gain competitive advantage in highly volatile circumstances.Learn more