Auditors Getting Tougher in Korea in Blessing for Investors

South Korean auditors are refusing to sign off on more and more corporate financial statements due to tighter regulations, giving investors earlier warning signs of trouble ahead, Bloomberg News reported. Auditors declined to give the green light on 37 financial statements by listed companies for 2018, about a 68 percent increase from a year earlier, according to the Financial Services Commission. The jump in rejections comes as South Korea takes more steps to ensure that auditors have independence from companies that hire them, while increasing penalties in case of fraudulent accounting. Asiana Airlines Inc.’s troubles are a recent example: auditors said their opinion of the company’s annual report was “qualified,” before fully signing off on it a few days later. But that triggered market concern about the airline’s liquidity and ultimately led its controlling shareholder to put it up for sale. Read more

Location