FSS Mandates Disclosure of Anti-Fraud Measures Starting 2025

Corporate accounting practices are set to become stricter starting next year. According to the “2024 Corporate Year-End Closing and External Audit Guidelines” released by the Financial Supervisory Service (FSS) on December 26, listed companies and large unlisted companies will be required to disclose detailed anti-fraud measures aimed at preventing issues like embezzlement.

This requirement is a key component of the new “Internal Accounting Control System Evaluation and Reporting Standards,” which will take effect this year. Companies must independently prepare their financial statements and submit them to the Securities and Futures Commission within the designated timeframe. If deadlines are missed, they must disclose the reasons for the delay.

The FSS has also outlined critical accounting issues for companies to focus on in the coming year. These include recognizing revenue, valuing non-marketable assets, managing transactions with related parties, and accounting for virtual assets. These areas will receive particular scrutiny in 2024.

Smaller companies, however, will be granted flexibility. Listed companies and large unlisted firms with assets under KRW 1 trillion may defer adopting the new standards until 2026. Additionally, companies that voluntarily identify and correct accounting errors will face reduced penalties, offering an incentive for proactive compliance.

This initiative reflects the FSS’s commitment to enhancing transparency and accountability in corporate financial management while accommodating smaller firms’ practical needs.