Key Considerations for the Submission of Pre-Audit Financial Statements
Recently, the Financial Supervisory Service (FSS) identified 76 violations in its review of the submission of pre-audit financial statements for fiscal year 2024. The findings indicate that not only a lack of familiarity with the relevant regulations or factual misunderstandings, but also seemingly simple administrative errors—such as miscalculating submission deadlines or omitting certain financial statements—can result in violations.
The pre-audit financial statement submission system requires certain companies to submit their pre-audit financial statements to both their external auditors and the Securities and Futures Commission (SFC), with the aim of clarifying management’s responsibility for preparing financial statements and enhancing the reliability of external audits.
The primary entities subject to the submission requirement include listed companies, unlisted companies with total assets of KRW 500 billion or more, and financial institutions. In addition, companies subject to business report filing requirements or belonging to a designated business group may also be subject to the requirement if their total assets are KRW 100 billion or more. In particular, financial institutions are subject to the requirement regardless of whether they are listed or their asset size.
The FSS review identified various practical errors, including:
- An unlisted financial institution incorrectly determining that it was not subject to the requirement because its assets were below the threshold
- A company incorrectly assuming that it was no longer subject to the requirement following delisting
- A newly listed company incorrectly determining that it was not subject to the requirement because it had been unlisted in the previous year
- Omission of notes or consolidated financial statements despite submitting the financial statements
- Mistaking a temporarily saved submission or incomplete file upload for a final submission
In this Hyesung Issue Brief, we summarize the key aspects of the pre-audit financial statement submission requirements, along with actual violations identified by the FSS and practical considerations companies should keep in mind.
