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S. Korea moving to toughen regulations on accounting standards

2017/10/12 17:27

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SEOUL, Oct. 12 (Yonhap) -- South Korea plans to toughen rules on corporate accounting standards, in a move to regain investors' confidence at home and abroad, the nation's top financial regulator said Thursday.

Kim Yong-beom, vice chairman of the Financial Services Commission (FSC), said an independent audit into family-run business conglomerates is "difficult" in South Korea due to the opaque governance system.

"The government's regulatory function will be significantly widened against the market's failure on corporate accounting and outside audit," Kim told a meeting of senior FSC officials who are tasked with drawing up details of accounting reform measures.

Compared with other advanced nations, South Korea still lags far behind in overall accounting standards, Kim said.

The government will drastically hike fines against companies with accounting irregularities, the official said.

The vice chairman admitted that it has been a "practice" in South Korea to turn a blind eye to top executives of a company or an accounting firm involved in window dressing.

Under the accounting reform measures, which will be drawn up by the end of this year, Kim said, chief executives of a company or an accounting firm will face "stern punishment" if they are involved in accounting irregularities.