In Korea, the responsibility for quality assurance (QA) reviews rests with the Securities and Futures Commission (SFC), operating under the oversight of the Financial Services Commission (FSC). The SFC has delegated the...

In Korea, the responsibility for quality assurance (QA) reviews rests with the Securities and Futures Commission (SFC), operating under the oversight of the Financial Services Commission (FSC). The SFC has delegated the responsibility for QA reviews to the Financial Supervisory Service (FSS) and KICPA. In accordance with the Certified Public Accountants Act (CPA Act), all auditors and audit firms of listed companies are subject to mandatory QA reviews. The FSS has established a QA review program that inspects audit reports of listed companies, audit firms that audit listed companies, and firms which fall under joint supervision with foreign regulators. KICPA’s Audit Quality Control Review Committee (AQCRC) is responsible for conducting QA reviews of unlisted companies and other audit firms that do not fall under the oversight of the FSS. The AQCRC is also responsible for recommending sanctions, to be imposed on auditors who violate applicable rules and regulations, to KICPA’s Ethics Committee which is responsible for administering KICPA’s investigation and disciplinary (I&D) function. In November 2018, KICPA reported that its QA program is aligned with the requirements of SMO 1.

In addition to the operations of its QA review procedures, the AQCRC also compiles the results of QA reviews, summarizes the findings and communicates them to auditors to improve audit quality work.

As the FSS’s QA review system is vital to the quality of auditing services in Korea, KICPA is encouraged to promote alignment of the FSS’ QA review system with the best practices of SMO 1.

In Korea, the Certified Public Accountant Act (CPA Act) establishes initial professional development (IPD) and continuing professional development (CPD) requirements for Certified Public Accountants (CPAs), which seem to...

In Korea, the Certified Public Accountant Act (CPA Act) establishes initial professional development (IPD) and continuing professional development (CPD) requirements for Certified Public Accountants (CPAs), which seem to adopt many of the IES requirements. CPAs in Korea are defined as professionals who engage in any work related to accountancy. The entities responsible for the implementation of IPD and CPD requirements are the Financial Supervisory Commission (FSC) and KICPA.

KICPA reports that a taskforce, consisting of key stakeholders in the jurisdiction, was established in 2017 to review and bring its IPD and CPD systems in line with the revised 2015 IES. While the taskforce has provided suggestions on the improvement and restructuring of the CPA exam and overall education system, the FSC is currently prioritizing activities related to Korea’s accounting and audit reforms which is slated to conclude in 2019.

KICPA reports that it is taking an active role, through its Education Committee in advocating for changes to the CPA Act that would extend the length of practical training for CPA candidates to three years instead of the current one year (or two for those that wish to be auditors) which would align with IES requirements. The institute has also advocated for the establishment of an organization that can monitor the quality of training provider programs to ensure that CPAs are appropriately trained. These proposals have stalled with the government although KICPA indicates it will continue to advocate for these changes. Other efforts by the Education Committee include translating and raising awareness of the IES for stakeholders such as the FSC, universities and training organizations so accountancy education and exams can be updated to reflect the new standards. The KICPA has also collaborated with the Korea Academy of Business Ethics to develop curriculum based on ethics for KICPA members. In 2018, the KICPA reports that it has promoted and enhanced the understanding of ethical requirements by providing evaluations on the ethics code in tis IPD courses.

Additionally, as all members are required to complete 40 hours of CPD annually, the institute has developed courses around accounting, audit, taxation, business advisory, IT, and professional ethics. The institute indicates that it also operates around 540 hours of online programs annually for members that cannot attend in-person courses.

Lastly, KICPA reports that it actively participates in the international standard-setting process by reviewing and responding to exposure drafts issued by the IAESB.

In the next update of its SMO Action Plan, the KICPA is encouraged to provide updates on the efforts to improve and restructure the education system that would be aligned with the revised IES.

Under the Act on External Audit of Stock Companies, the Financial Services Commission (FSC) is responsible for setting auditing standards to be applied in Korea. The FSC has delegated this function to the Korean Auditing...

Under the Act on External Audit of Stock Companies, the Financial Services Commission (FSC) is responsible for setting auditing standards to be applied in Korea. The FSC has delegated this function to the Korean Auditing & Assurance Standards Board (KAASB) operating within the KICPA. Auditing standards in Korea are called the Korean Standards on Auditing (KSA) and KICPA reports the standards are developed in line with the 2015 International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board (IAASB). KSA are issued following the recommendation of the KAASB and the approval of the FSC.

KICPA reports that during the last update of the KSA, which now include the new auditor’s report and Key Audit Matters, the institute developed training materials to assist its members with the implementation of the standards. For example, KICPA provided sample audit reports that reflect the new standards. Training was also provided through CPD and subject-specific seminars. In general, KICPA regularly monitors and updates education and training content to ensure that KICPA’s members are aware of new requirements.

Finally, the institute states that it participates in the international standard-setting process by disseminating IAASB updates and exposure drafts to members and submitting responses to the IAASB.

Under the Certified Public Accountant Act (CPA Act), the KICPA is responsible for establishing mandatory ethical requirements for Certified Public Accountants (CPAs). As reported on KICPA’s website, the Ethics Standard...

Under the Certified Public Accountant Act (CPA Act), the KICPA is responsible for establishing mandatory ethical requirements for Certified Public Accountants (CPAs). As reported on KICPA’s website, the Ethics Standard Board of KICPA (KESBA) has adopted the 2005 IESBA Code of Ethics to be applied in Korea. KICPA reports that there have been efforts since 2009 to update the Code (most recently in 2016); however, the current ethical requirements remain outdated. KICPA reports that upon completion of Korea’s accounting and audit reform that is expected to conclude in 2019, the KESBA will issue an exposure draft on the new 2018 IESBA Code of Ethics for eventual adoption.

To ensure members are kept aware of ethical requirements, KICPA requires its members to take eight hours of ethics-related CPD annually. KICPA has also developed an Ethics Education Toolkit, which includes case study videos, samples courses and other training materials. Other efforts by KICPA also include carrying out periodic surveys by phone and email with members to identify the current status of accounting practices’ compliance with ethical requirements, and to resolve any outstanding matters related to ethics. Lastly, KICPA has set up a Center for Ethics Complaints to enhance its monitoring of issues.

As accounting and auditing reforms are concluded, the KICPA and KESBA are strongly encouraged to consider how to reduce the time lag in adopting the latest IESBA Code of Ethics, given that the present requirements are from 2005. In the next update of its SMO Action Plan, the KICPA should provide updates on its ongoing efforts to adopt the 2018 IESBA Code which has been revised and restructured extensively.

Under the National Accounting Act of 2007 and the Local Accounting Act of 2016, the Ministry of Strategy and Finance (MSF) and the Ministry of the Interior and Safety (MIS) are responsible for establishing public sector...

Under the National Accounting Act of 2007 and the Local Accounting Act of 2016, the Ministry of Strategy and Finance (MSF) and the Ministry of the Interior and Safety (MIS) are responsible for establishing public sector accounting standards in Korea. Public sector accounting standards in Korea come in the form of the National Accounting Standards and the Local Government Accounting Standards. IPSAS are not currently adopted and there are no plans to do so.

Previously KICPA was responsible for the operations of the National Accounting Standards Center (NASC), which was focused on the research and development of accounting standards for the public sector. However, the NASC has been reorganized as the Government Accounting and Finance Statistics Center (GAFSC) under the Korea Institute of Public Finance, directly financed by the MSF. Although KICPA’s responsibility in this area has decreased, the institute continues to promote the adoption of IPSAS to the central and local government by recommending elements of IPSAS during the development of local public sector standards. In addition, as part of its efforts, KICPA has established a Public Sector Committee to conduct studies on the adoption of IPSAS and other public sector-related issues.

In 2017, KICPA published a summary report and articles on the National Government Annual Report to demonstrate the utility of accrual-based accounting information. KIPCA also established awards for the local government to encourage their efforts for promoting transparency in their reports.

Lastly, KICPA keeps its members updated on updates and revisions to the IPSAS by disseminating exposure drafts, and actively encourages members to provide comments to the IPSASB.

In Korea, both the Financial Services Commission (FSC) and KICPA are responsible for establishing investigative and disciplinary (I&D) systems. Under the Certified Public Accountant Act (CPA Act), the FSC is responsible...

In Korea, both the Financial Services Commission (FSC) and KICPA are responsible for establishing investigative and disciplinary (I&D) systems. Under the Certified Public Accountant Act (CPA Act), the FSC is responsible for taking disciplinary action against any Certified Public Accountant (CPA) that violates all applicable rules and regulations as set out in the act. In addition, the Act on External Audit of Stock Companies also allows auditors of listed companies to be sanctioned when they do not comply with applicable regulations as set out in the act.

The FSC has delegated responsibility to the KICPA to implement and operate the I&D system in Korea. As established under the CPA Act, KICPA’s Ethics Committee undertakes investigations and issues appropriate disciplinary measures against CPAs in violation of the CPA Act. In addition, a separate Ethics Investigation and Deliberation Committee undertakes investigations and issues appropriate disciplinary measures against CPAs in violation of KICPA’s Code of Ethics. The Ethics Committee also reviews recommended sanctions against non-compliance issued by KICPA’s Audit Quality Control Review Committee (AQCRC). Decisions on disciplinary measures are reported to the FSC which then imposes disciplinary actions such as revocation of practicing license, suspension, censure, and fines. The committee also takes appropriate disciplinary measures against CPAs who fail to complete the required professional training program. In November 2018, KICPA noted that its I&D system is aligned with the requirements of SMO 6.

KICPA actively promotes the rules and regulations of the institute to its members and the public by posting information on its website related to initiating a complaint and the complaint process. The institute has also set set up a Center for Ethics Complaints to enhance its monitoring of issues, and to receive voluntarily complaints by and about members.

Under the Act on External Audit of Stock Companies, the Korean Accounting Standards Board (KASB) is responsible for establishing accounting standards to be applied in Korea. The KASB issues the Korea International...

Under the Act on External Audit of Stock Companies, the Korean Accounting Standards Board (KASB) is responsible for establishing accounting standards to be applied in Korea. The KASB issues the Korea International Financial Reporting Standards (K-IFRS), which are fully in line with the International Financial Reporting Standards (IFRS) without modifications. The KASB also sets the Korean Generally Accepted Accounting Principles (K-GAAP), local accounting standards to be applied by unlisted entities.

Although KICPA is not responsible for the adoption of accounting standards, it has taken an active approach to support the implementation and use of IFRS in Korea. KICPA participates in the activities of the KASB and its standard-development process by providing review opinions on exposure drafts. The institute also undertakes research on implementation issues about K-IFRS and IFRS, and has demonstrated this by publishing a research paper on consolidated financial statements, the equity method and common control transactions, discount rate, implementation provisions, new revenue standard, and income taxes. Additionally, KICPA is undertaking a study on issues arising from the application of new K-IFRS in practice, such as new lease accounting, and will publish a research paper on the findings.

To support its members, KICPA offers CPD courses online and in-person on topics related to IFRS and K-IFRS. KICPA also regularly organizes conferences and seminars. Other activities reported by KICPA include arranging meetings between local practitioners to discuss key issues and trends. KICPA also supports and participates in K-IFRS trainings and seminars hosted by the Financial Supervisory Service (FSS) and KASB.