Article 1(Purpose) #
The purpose of this Rule is to prescribe matters mandated by the Act on External Audit of Stock Companies, Etc. and the Enforcement Decree of the Act on External Audit of Stock Companies, Etc. and matters necessary for enforcing said Act and Decree.
Article 2(Registration of Audit Team) #
(1) An entity (hereinafter referred to as "applicant") which intends to be an audit team (hereinafter referred to as "audit team") defined in subparagraph 7 (b) of Article 2 of the Act on External Audit of Stock Companies, Etc. (hereinafter referred to as the "Act") shall register with the Korean Institute of Certified Public Accountants established under Article 41 of the Certified Public Accountant Act (hereinafter referred to as the "Korean Institute of Certified Public Accountants") after meeting all of the following requirements:
1. Members shall be certified public accountants registered under Article 7 of the Certified Public Accountant Act who have completed an on-the-job training course, etc. specified in Article 10 of the Enforcement Decree of the Act on External Audit of Stock Companies, Etc. (hereinafter referred to as the "Decree");
2. The number of members shall be at least three persons;
3. None of members shall fall under Article 26 (1) 2 or 3 of the Certified Public Accountant Act;
4. None of members shall be employed by any accounting corporation under Article 23 of the Certified Public Accountant Act (hereinafter referred to as "accounting corporation") or any other audit team.
(2) The applicant shall submit the following documents to the Korean Institute of Certified Public Accountants:
1. A written application for registration;
2. The rules agreed upon by members in relation to the operation, etc. of the relevant audit team;
3. A document substantiating the fact that all members have agreed upon the rules referred to in subparagraph 2;
4. Other documents determined by the Korean Institute of Certified Public Accountants.
(3) The Korean Institute of Certified Public Accountants shall, upon receipt of the documents under paragraph (2), issue a certificate of registration to the relevant applicant.
(4) The Korean Institute of Certified Public Accountants shall state and manage the following matters in a document after issuing a certificate of registration to an applicant:
1. Registration number of the relevant audit team;
2. Names and addresses of members;
3. Location of the offices of members;
4. Principal office of the audit team;
5. Other matters determined by the Korean Institute of Certified Public Accountants.
(4) Where an audit team falls under any of the following subparagraphs, the Korean Institute of Certified Public Accountants may revoke the registration of the audit team: Provided, That in cases falling under any of subparagraphs 1 through 3, it shall revoke the registration thereof:
1. Where the audit team fails to supplement the requirements under paragraph (1) within three months from the date it failed to meet the requirements;
2. Where the audit team is registered by improper means such as preparing documents under the subparagraphs of paragraph (2) by fraud;
3. Where the audit team makes a resolution on its dissolution;
4. Where the audit team fails to comply with the following standards that it should observe when conducting the audit of a company under Article 4 of the Act:
(a) At least three of its members shall participate in the relevant audit;
(b) Where it prepares an audit report under Article 18 (1) of the Act, all its members that participated in the relevant audit shall sign or put their names and seals thereon;
(c) It shall submit a report stating its business performance in the immediately preceding business year to the Korean Institute of Certified Public Accountants by June 30 each year.
(5) An audit team shall, where there exists any change in the requirements under the subparagraphs of paragraph (1) or it makes a resolution on its dissolution, report such fact to the Korean Institute of Certified Public Accountants without delay.
Article 3(Composition of the Accounting Standards Committee) #
(1) The accounting standards committee established under Article 7 (2) of the Decree (hereinafter referred to as the "accounting standards committee") shall be composed of nine members including one chairperson taking gender equality into consideration.
(2) The President of the Korea Accounting Institute (hereinafter referred to as the "Korea Accounting Institute"), an incorporated association established with the permission of the Financial Services Commission pursuant to the Civil Act, shall also serve as the chairperson of the accounting standards committee.
(3) The President of the Korea Accounting Institute shall commission as members of the accounting standards committee eight persons from among the candidates recommended by the committee for recommending candidates for accounting standards committee members, following the resolution by the Board of Directors of the Korea Accounting Institute, and shall commission one of the eight persons as a full-time member after obtaining approval at a general meeting of the Korea Accounting Institute.
(4) The committee for recommending candidates for accounting standards committee members shall be composed of nine members recommended by the following persons taking gender equality into consideration:
1. Chairperson of the Korea Chamber of Commerce and Industry established under Article 34 of the Chambers of Commerce and Industry Act (hereinafter referred to as the "Korea Chamber of Commerce and Industry");
2. Chairperson of the Korea Listed Companies Association established with the permission of the Financial Services Commission pursuant to Article 370 (1) of the Financial Investment Services and Capital Markets Act (hereinafter referred to as the "Korea Listed Companies Association");
3. Chairperson of the Korea Federation of Banks, an incorporated association established with the permission of the Financial Services Commission pursuant to the Civil Act;
4. Chairperson of the Korea Financial Investment Association established pursuant to the Financial Investment Services and Capital Markets Act;
5. President of the Korean Institute of Certified Public Accountants;
6. Governor (hereinafter referred to as the "Governor of the Financial Supervisory Service") of the Financial Supervisory Service established under Article 24 of the Act on the Establishment of Financial Services Commission (hereinafter referred to as the "Financial Supervisory Service");
Article 4(Composition of the Standards for Accounting Audit Committee) #
(1) The standards for accounting audit committee under Article 22 (2) of the Decree (hereinafter referred to as the "standards for accounting audit committee") shall be composed of 11 members including one chairperson.
(2) The chairperson of the standards for accounting audit committee shall be elected from among and by members other than those referred to in paragraph (4) 1 and 2.
(3) Members of the standards for accounting audit committee shall be persons with an expert knowledge of accounting and the morality to perform their duties fairly, who have any qualification falling under any subparagraph of Article 3 (5).
(4) The following persons from among those having the qualifications under paragraph (3) shall be appointed or commissioned by the President of the Korean Institute of Certified Public Accountants as members of the standards for accounting audit committee: Provided, That paragraph (3) shall not apply to a member falling under subparagraph 1 or 2:
1. One full-time Vice President of the Korean Institute of Certified Public Accountants designated by its President;
2. One head of an accounting-related department of the Financial Supervisory Service designated by its Governor;
3. One member of the Korean Accounting Association recommended by its President from among any of the following persons:
(a) A researcher of an officially accredited research institute in the field of finance or accounting;
(b) A person who teaches in the field of finance or accounting while serving as at least an assistant professor at a university or college;
4. Two persons each recommended by the President of the Korean Institute of Certified Public Accountants from among the following certified public accountants respectively:
(a) Certified public accountants who are employed by an accounting corporation with at least 500 certified public accountants;
(b) Certified public accountants who are employed by an accounting corporation with less than 500 certified public accountants or an audit team;
5. One person each recommended by the following persons from among certified public accountants who are not employed by an accounting corporation or audit team:
(a) Chairperson of the Korea Listed Companies Association;
Article 5(Matters to Be Entered in Business Reports and Submission Thereof) #
(1) Matters to be entered in a business report pursuant to Article 25 (2) of the Act shall be as follows:
1. Outline of the current status of the relevant accounting corporation:
(a) Financial statements and specifications annexed thereto;
(b) Sales by business area, such as audit, vicarious execution of tax affairs, and business management consulting, for the last three business years;
(c) Current status of the management of the relevant accounting corporation, such as its organization, alliance with a foreign accounting corporation, etc., as determined by the Financial Services Commission;
2. Matters determined by the Financial Services Commission in relation to the standards for designing and conducting an audit under Article 17 (1) of the Act;
3. Matters concerning human resources of the relevant accounting corporation:
(a) Current status of directors, employees, and certified public accountants under its supervision;
(b) Number of persons and remuneration by business area, such as audit, vicarious execution of tax affairs, and business management consulting, for the last three business years;
(c) Other matters determined by the Financial Services Commission in relation to the education and training of human resources, changes in human resources, etc.;
4. Matters concerning the accumulation of reserves for damage compensation under Article 28 (1) of the Certified Public Accountant Act, the accumulation of the joint fund for damages under Article 32 (1) of the Act, and the purchase of a compensation liability insurance policy under Article 38 (1) of the Decree;
5. Matters determined by the Financial Services Commission among the results of supervision and assessment under Article 26 (1) of the Act (hereinafter referred to as "supervision, etc.") by the Securities and Futures Commission established pursuant to the Act on the Establishment, etc. of Financial Services Commission (hereinafter referred to as the "Securities and Futures Commission") for the last three years;
6. Matters concerning civil and criminal suits related to the affairs of the relevant accounting corporation (including directors, and certified public accountants under its supervision) for the last three years.
Article 6(Procedures and Methods for Preparing Occasional Reports) #
(1) An auditor who is the accounting corporation of a stock-listed corporation (hereafter in this Article referred to as "auditor") shall prepare a report stating any fact falling under any subparagraph of Article 28 (3) of the Decree (hereafter in this Article referred to as "occasional report") in a form determined by the Governor of the Financial Supervisory Service.
(2) When an auditor submits an occasional report to the Governor of the Financial Supervisory Service pursuant to Article 25 (5) of the Act, he or she shall do so along with data necessary for the Governor of the Financial Supervisory Service to verify the details of the report objectively.
(3) An auditor may submit an occasional report to the Governor of the Financial Supervisory Service in the form of an electronic document.
Article 7(Operation of Joint Fund for Damages) #
(1) The joint fund operation committee (hereafter in this Article referred to as the "committee") shall be established under the Korean Institute of Certified Public Accountants to deliberate and decide on matters relating to the operation and management of the joint fund for damages under Article 32 (1) of the Act (hereinafter referred to as "joint fund").
(2) The Korean Institute of Certified Public Accountants shall operate the joint fund in the following methods:
1. Purchase of Government bonds, public bonds, and other securities determined by the committee;
2. Deposit in a financial institution designated by the committee;
3. Other methods determined by the Financial Services Commission.
(3) Where profits are generated as a result of the operation of the joint fund, the Korean Institute of Certified Public Accountants shall accumulate such profits (referring to the amount excluding the costs incurred in the process of operating the joint fund) in the joint fund in the relevant business year.
(4) The composition and operation of the committee, and other matters necessary for the management of the joint fund shall be determined by the Korean Institute of Certified Public Accountants after obtaining approval from the Financial Services Commission.
Article 8(Reporting of Management Status of Joint Fund) #
The Korean Institute of Certified Public Accountants shall report important matters relating to the management, etc. of the joint fund in the relevant business year to the Financial Services Commission by the end of July each year.
Article 9(Payment of Joint Fund) #
(1) Where a company or a third party referred to in Article 31 (1) or (2) of the Act files an application for the payment of the joint fund pursuant to Article 33 of the Act, the Korean Institute of Certified Public Accountants shall pay the joint fund from the date such application is filed to the last day of the following month.
(2) When the Korean Institute of Certified Public Accountants has paid the joint fund pursuant to paragraph (1), it shall report such fact to the Financial Services Commission.
Article 10(Return of Joint Fund) #
(1) Where an accounting corporation that has accumulated the joint fund is dissolved on the grounds referred to in the subparagraphs of Article 37 (1) of the Certified Public Accountant Act (excluding subparagraph 3 of that paragraph; hereafter in this Article the same shall apply), the Korean Institute of Certified Public Accountants shall return to employees of the accounting corporation (limited to employees at the time of the dissolution of the accounting corporation) the amount remaining after subtracting the amount used by the Korean Institute of Certified Public Accountants pursuant to Article 42 (1) and (2) of the Decree from the amount accumulated by the accounting corporation in the joint fund (hereafter in this Article referred to as "balance of the joint fund").
(2) The Korean Institute of Certified Public Accountants shall return the balance of the joint fund after three years elapse from the date the ground for return under paragraph (1) occurred: Provided, That where judgment on a lawsuit related to the liability for damages under Article 31 of the Act has not become final and conclusive on the day the Korean Institute of Certified Public Accountants intends to return the balance, such return shall be made on or after the date the relevant judgment becomes final and conclusive (where the joint fund is paid under Article 9, referring to the date the joint fund is paid).
Article 11(Composition of the Entrusted Supervision Committee) #
(1) The entrusted supervision committee under Article 44 (5) of the Decree (hereinafter referred to as the "entrusted supervision committee") shall be composed of one chairperson and eight members taking gender equality into consideration.
(2) The chairperson shall have an expert knowledge of accounting and the morality to perform his or her duties fairly and shall be commissioned by the President of the Korean Institute of Certified Public Accountants (hereafter in this Article referred to as the "President") after obtaining consent from the Securities and Futures Commission.
(3) Members of the entrusted supervision committee shall be appointed or commissioned by the President from among the following persons:
1. One person in charge of affairs relating to the system for certified public accountants from among public officials of at least Grade IV in the Financial Services Commission;
2. One person in charge of supervision, etc. from among the heads of departments in the Financial Supervisory Service;
3. One person in charge of supervision, etc. from among the heads of departments in the Korean Institute of Certified Public Accountants;
4. One executive officer of the Korea Accounting Institute;
5. One person with much knowledge and experience in accounting and audit, related statutes, etc. who obtains approval from the Korean Institute of Certified Public Accountants;
6. One person recommended by the Korean Accounting Association who is a professor in the field of finance or accounting at a university or college;
7. One person recommended by the Korea Chamber of Commerce and Industry who has expert knowledge and practical experience in accounting or audit affairs;
8. One attorney-at-law who has an expert knowledge of accounting or audit affairs.
(4) Article 3 (6) shall apply mutatis mutandis to the grounds for disqualification of members.
(5) The chairperson and members referred to in paragraph (3) 5 through 8 shall hold office for a term of two years and may be reappointed only once: Provided, That even where their terms of office expire, they may perform their duties until their successors are commissioned.
(6) Where the chairperson is unable to perform his or her duties for any unavoidable cause, a member designated by the chairperson shall act on behalf of the chairperson, and where the chairperson is unable to designate a member who is to act on behalf of the chairperson for any unavoidable cause, a member designated by the President shall act on behalf of the chairperson.
Article 12(Supervisory Fees) #
(1) The Korean Institute of Certified Public Accountants may collect, as a supervisory fee, an amount not exceeding one percent of the remuneration an auditor receives in the relevant business year, pursuant to the latter part of Article 38 (2) of the Act.
(2) Other detailed matters necessary for the collection of supervisory fees shall be determined by the Korean Institute of Certified Public Accountants.