Korea

The statutory framework for corporate financial reporting and auditing in the Republic of Korea is established through the Korean Commercial Act and the Act on External Audit of Stock Companies, which together define the requirements for the preparation, presentation, and audit of financial statements.

Financial reporting requirements are primarily governed by the Korean Commercial Act, which mandates the maintenance of accounting records and the preparation of financial statements. Entities meeting specified size or public interest thresholds are subject to mandatory statutory audit requirements under the Act on External Audit of Stock Companies.

Accounting standards in the jurisdiction are established by the Korean Accounting Standards Board (KASB). Publicly accountable entities, including listed companies, financial institutions, and state-owned enterprises, are required to apply Korea International Financial Reporting Standards (K-IFRS). K-IFRS are fully converged with International Financial Reporting Standards (IFRS Accounting Standards) as issued by the International Accounting Standards Board (IASB) and are applied without modification. Accordingly, publicly accountable entities prepare financial statements in accordance with IFRS Accounting Standards as issued.

Other entities apply Korean Generally Accepted Accounting Principles (K-GAAP), which constitute a separate national financial reporting framework. A differential reporting framework therefore exists, whereby the application of K-IFRS is mandatory for publicly accountable entities, while K-GAAP applies to non-publicly accountable entities. The IFRS for Small and Medium-sized Entities has not been adopted and is not permitted for use in the jurisdiction.

Auditing standards are established under the Act on External Audit of Stock Companies. The Financial Services Commission (FSC) is the authority responsible for setting auditing standards and has delegated this responsibility to the Korean Auditing and Assurance Standards Board (KAASB), which operates under the Korean Institute of Certified Public Accountants (KICPA). Korean Standards on Auditing (KSA) are issued following the recommendation of the KAASB and require approval by the FSC prior to becoming effective. The standards are developed with reference to the International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board (IAASB), with ongoing processes in place to incorporate new and revised pronouncements into national requirements.

The accountancy profession in the Republic of Korea operates under a shared regulatory model. The Certified Public Accountant Act establishes the legal framework for the profession and vests overall regulatory authority in the Financial Services Commission (FSC). The Act regulates the Certified Public Accountant (CPA) designation, registration, practice rights, accounting corporations, the Korean Institute of Certified Public Accountants (KICPA), and disciplinary measures applicable to CPAs. KICPA operates under the supervision of the FSC.

The CPA designation is the sole protected professional designation for the accountancy profession in the jurisdiction. Entry into the profession is governed by the Certified Public Accountant Act. Candidates are required to pass the national CPA examination and, in order to register and provide services, complete at least one year of apprenticeship training in accordance with the Act and related regulations. Registered CPAs and registered accounting corporations are required to become members of KICPA. The Act also requires CPAs to comply with KICPA’s bylaws and professional rules.

KICPA is the sole professional accountancy organization established under the Certified Public Accountant Act. Its statutory role is to enhance professional ethics, improve and develop the functions of CPAs, and instruct and supervise its members. Under the Act, KICPA is responsible for providing training to members and to individuals seeking registration as CPAs through its accounting training center, subject to FSC approval and supervision. KICPA also establishes professional ethics rules for members under the legal framework set by the Act.

Responsibility for quality assurance and audit oversight is shared among public authorities and the profession. Korea’s post-2017 audit reform strengthened the supervisory role of the Securities and Futures Commission and the Financial Supervisory Service in relation to external audit oversight, auditor designation, and audit quality control. Within this framework, KICPA continues to play an operational role in the profession, while public oversight of audit quality has been reinforced for listed companies and other entities subject to enhanced supervision.

This framework reflects a system in which the profession is established and regulated by law, with the FSC serving as the primary public authority, the Securities and Futures Commission and the Financial Supervisory Service exercising key oversight functions in the audit area, and KICPA carrying out statutory responsibilities related to membership, ethics, training, and professional supervision.

Independent public oversight of the audit profession in the Republic of Korea is established under the Certified Public Accountant Act and the Act on External Audit of Stock Companies, which together provide the legal framework for the regulation and supervision of auditors and audit firms.

The Financial Services Commission (FSC) is the primary authority responsible for the oversight of the audit profession. The FSC establishes regulatory policies, approves auditing standards, and exercises supervisory authority over auditors, audit firms, and relevant institutions. The Securities and Futures Commission (SFC), operating under the FSC, plays a central role in audit oversight, including the supervision of audit quality, enforcement actions, and the designation of auditors for certain entities.

The Financial Supervisory Service (FSS), which operates under the oversight of the FSC, is responsible for the execution of audit inspections and quality reviews. The FSS conducts inspections of audit firms and auditors of listed companies, financial institutions, and other entities subject to enhanced public interest oversight. These inspections form a key component of the audit quality assurance framework in the jurisdiction.

Within this system, the Korean Institute of Certified Public Accountants (KICPA) continues to perform delegated and complementary functions. KICPA is responsible for conducting quality assurance reviews of auditors and audit firms that do not fall under the direct inspection scope of the FSS, as well as supporting the implementation of auditing and ethical requirements, continuing professional development, and investigative and disciplinary processes for its members.

The FSC, SFC, and FSS collectively form a multi-layered public oversight system that has been strengthened in recent years through audit reform measures aimed at enhancing audit quality, independence, and accountability. Both the FSC and FSS are members of the International Forum of Independent Audit Regulators, supporting international cooperation and alignment with global audit oversight practices.

The Korean Institute of Certified Public Accountants (KICPA) is the sole professional accountancy organization in the Republic of Korea. It is established under the Certified Public Accountant Act and operates as the statutory body representing Certified Public Accountants (CPAs) in the jurisdiction. Membership in KICPA is mandatory for individuals and accounting corporations registered under the Act.

KICPA is responsible for enhancing professional ethics, improving and developing the functions of CPAs, and instructing and supervising its members. Under the legal framework, KICPA operates an accounting training center, provides training for prospective and registered CPAs, and plays an important role in the implementation of professional requirements in the jurisdiction. It also continues to support the profession through activities related to ethics, education, professional guidance, and member oversight.

KICPA operates within a shared regulatory framework in which key public interest responsibilities are exercised alongside public authorities. While the Financial Services Commission, the Securities and Futures Commission, and the Financial Supervisory Service exercise core regulatory and oversight functions, KICPA continues to perform important statutory and operational responsibilities in relation to the profession, including training, ethics, and support for implementation of professional standards.

In addition to its national role, KICPA is a member of the International Federation of Accountants and the Confederation of Asian and Pacific Accountants. KICPA also maintains an active presence in regional and international professional activities, including representation on CAPA’s Board.

Under the Act on External Audit of Stock Companies, the quality assurance (QA) review system in the Republic of Korea is established within a public oversight framework led by the Financial Services Commission (FSC) and the Securities and Futures Commission (SFC). The SFC, operating under the FSC, is responsible for oversight of audit quality and has delegated inspection activities to the Financial Supervisory Service (FSS) for listed companies, financial institutions, and other higher-risk entities, and to the Korean Institute of Certified Public Accountants (KICPA) for most non-listed externally audited entities.

The QA review system is operational and applies to mandatory audits through a combination of public inspections and delegated reviews. The FSS conducts regular inspections of audit firms and auditors of listed entities and other entities of public interest, while KICPA conducts inspections of auditors and firms outside the direct scope of FSS supervision. The framework is established in law and supported by ongoing inspection activity and enforcement mechanisms.

The applicable quality management framework remains based on International Standard on Quality Control 1. As of 2026, International Standard on Quality Management 1 and International Standard on Quality Management 2 have not yet been adopted and made effective in the jurisdiction.

Accordingly, the QA review system is assessed as Partially Adopted, as the framework is operational but does not yet incorporate the quality management standards in effect at the time of the assessment.

Current Status: Partially Adopted

Under the Certified Public Accountant Act, initial professional development and continuing professional development requirements for Certified Public Accountants (CPAs) in the Republic of Korea are established and overseen by the Financial Services Commission (FSC), with implementation support from the Korean Institute of Certified Public Accountants (KICPA).

The initial professional development framework includes university-level education requirements, a two-tier national professional examination administered by the FSC, and mandatory practical experience. Candidates are required to complete relevant academic coursework, pass both levels of the CPA examination, and undertake at least one year of practical experience and structured training prior to registration, with an additional year of experience required to perform statutory audits.

Continuing professional development requirements are established by KICPA under the oversight of the FSC. Members are required to complete a minimum of 40 hours of continuing professional development annually, with compliance monitored as part of the professional regulatory framework. The education and qualification system is subject to ongoing review through institutional mechanisms led by the FSC and relevant stakeholders, including reforms initiated to enhance the CPA qualification and training framework.

The jurisdiction-level framework incorporates key elements of the International Education Standards, including requirements related to entry, professional examinations, practical experience, and continuing professional development. However, available evidence indicates that the framework is not fully aligned with the latest International Education Standards (2019, with subsequent revisions effective thereafter), particularly in relation to learning outcomes approaches and full incorporation of all requirements for initial and continuing professional development.

Current Status: Partially Adopted

Under the Act on External Audit of Stock Companies, auditing standards in the Republic of Korea are established by the Financial Services Commission (FSC), which has delegated standard-setting responsibilities to the Korean Auditing and Assurance Standards Board (KAASB) operating within the Korean Institute of Certified Public Accountants (KICPA). Korean Standards on Auditing (KSA) are issued following the recommendation of the KAASB and require approval by the FSC prior to becoming effective.

Available authoritative sources indicate that KSA are developed based on the 2017 International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board (IAASB). Although processes are in place to incorporate subsequent revisions, the latest ISA in effect at the time of the assessment have not yet been adopted and made effective in the jurisdiction. Accordingly, ISA are assessed as Not Adopted, as the standards in use are based on a pre-2018 version of ISA and have not been updated to reflect the standards in effect at the time of the assessment.

International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE) has been adopted for application in the jurisdiction.

Current Status: Not Adopted

Under the Certified Public Accountant Act, ethical requirements for Certified Public Accountants in the Republic of Korea are established by the Korean Institute of Certified Public Accountants (KICPA) under the oversight of the Financial Services Commission (FSC). Korea’s independence and ethics requirements are set through the statutory framework and related professional rules rather than through direct adoption of a specific edition of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA).

Available authoritative sources indicate that the Korean framework has been developed to align with the independence requirements of the 2018 IESBA Code and includes strengthened provisions on non-assurance services, self-review threats, financial interests, partner rotation, and non-compliance with laws and regulations. However, no source confirms that the latest IESBA Code in effect at the time of the assessment has been adopted in its entirety, and KICPA itself reports that adoption of the latest Code remains underway.

Current Status: Partially Adopted

Under the National Accounting Act and the Local Accounting Act, responsibility for public sector accounting standards in the Republic of Korea is shared between the Ministry of Economy and Finance and the Ministry of the Interior and Safety. Public sector accounting standards are issued as National Accounting Standards and Local Government Accounting Standards.

Public sector entities prepare financial statements using accrual-based national standards. These standards were developed within the national framework, with consideration of international practices, including the International Public Sector Accounting Standards (IPSAS); however, IPSAS have not been adopted or incorporated into the national framework.

Current Status: Not Adopted

Under the Certified Public Accountant Act, the investigative and disciplinary (I&D) system in the Republic of Korea is established within a shared regulatory framework involving the Financial Services Commission (FSC) and the Korean Institute of Certified Public Accountants (KICPA). The FSC is the statutory authority responsible for imposing disciplinary sanctions on Certified Public Accountants (CPAs), including suspension, revocation of license, fines, and other measures for non-compliance with applicable laws and regulations.KICPA operates the investigation and disciplinary processes at the professional level. Its Ethics Committee and related bodies are responsible for investigating misconduct, including breaches of the Code of Ethics and professional requirements, and recommending disciplinary actions. These processes are supported by mechanisms linked to quality assurance reviews and continuing professional development compliance. Final disciplinary authority remains with the FSC, ensuring separation between investigation and sanctioning functions.

The I&D system is operational and applies to all professional accountants subject to the statutory framework. It incorporates key elements of Statement of Membership Obligations 6, including investigation, disciplinary procedures, and enforcement mechanisms, within a structure that combines professional and public oversight.

Current Status: Adopted

Under the Act on External Audit of Stock Companies, accounting standards in the Republic of Korea are established by the Korean Accounting Standards Board (KASB). KASB issues Korea International Financial Reporting Standards (K-IFRS), which are fully converged with International Financial Reporting Standards (IFRS Accounting Standards) as issued by the International Accounting Standards Board (IASB) and are applied without modification.

K-IFRS are required for publicly accountable entities, including listed companies, financial institutions, and other entities of public interest, for the preparation of consolidated financial statements. KASB maintains an ongoing process to incorporate new and revised IFRS Accounting Standards into K-IFRS, with updates issued to reflect the standards in effect. Non-publicly accountable entities apply Korean Generally Accepted Accounting Principles.

The jurisdiction-level framework requires the application of IFRS Accounting Standards, as issued, for all domestic publicly accountable entities and is aligned with the requirements of SMO 7 in terms of scope, legal mandate, and application.

The IFRS for Small and Medium-sized Entities (IFRS for SMEs) have not been adopted and are not permitted for application in the jurisdiction; however, this does not affect the overall adoption assessment.

Current Status: Adopted

Relevant Organizations

Financial Services Commission (Republic of Korea) Financial Supervisory Service (Republic of Korea)Korean Accounting Standards Board Korean Institute of Certified Public Accountants

Relevant Legislation

Act on External Audit of Stock CompaniesCertified Public Accountant Act Local Accounting ActNational Accounting Act

Relevant Publications

IFAC, KICPA SMO Action Plan (2024)