On Dec. 4, SK FSC, SK FSS said standard audit time was finalized.
SK FSC and SK FSS announced the Korean Institute of Certified Public Accountants (KICPA) has finalized the standard audit time to be applied from 2025 until 2027.
Follows SK FSC Dec. 2023 said revisions re external audit were approved, #194672.
Background
The standard audit time was introduced in Nov. 2017 to determine the general and average audit time that external auditors should invest by industry and company size.
As per Act on external audit of stock companies, the Standard Audit Time Deliberation Committee was formed in Q1 2024, to review the validity of the standard audit time.
The neutrality of the formed committee has been strengthened by the Enforcement decree of the act on external audit revised in Dec. 2023, which reduces the number of members recommended by KICPA Chairman to five from nine.
Overview of Revised Standard Audit Time
SMEs with total assets of less than KRW 20bn are not subject to standard audit hours until 2027; the application rate for listed/unlisted firms with total assets of less than KRW 2trn is not additionally increased but partial application extended until 2025.
But whether to extend partial application since 2026 will be determined in H2 2025.
Second, the basis for lowering the standard audit time is established in cases where a company is deemed to have an excellent governance structure, by appointing an external auditor independently, effectively checking and supervising the management.
Or in cases where an auditor integrates the internal accounting management system into auditing financial statements or use digital audit technology in the audit process.
Third, small subsidiaries with less audit time can be deducted from the number of subsidiaries when calculating standard audit time for consolidated financial statements.
Standard audit time that must be invested as per characteristics of account items can be reasonably applied; reflected revised Act on external audit of stock companies and Enforcement decree for easing the burden re internal accounting management system.
Effectiveness
The standard audit time will be applied from the fiscal year starting after Jan. 1, 2025.
Regulators
SK FSC; SK FSS
Entity Types
Auditor; Corp
Reference
PR 12/4/2024; Dec 34014, 12/19/2023; Law 20055, 1/16/2024;
