How do a financial statement review and an audit review differ? Is this a situation in which I should get the help of an accountant attorney?

Hello. I am an accountant attorney at Daeryun Law LLC.

A financial statement review is a preliminary inspection procedure, whereas an audit review is a subsequent investigation premised on liability for a violation.

First, the financial statement review system is a procedure that directly inspects a company's financial statements to confirm whether there has been a violation of the accounting standards, and it is a preliminary supervisory system operated in a relatively simplified manner compared with the existing audit review.

Through this system, the financial authorities manage accounting transparency by proactively inspecting the recent financial statements not only of companies against which specific suspicions have arisen but also of many companies.

At the financial statement review stage, the company is required to submit explanatory materials regarding particular accounting treatments or figures, and where the matter is judged to be a mere difference in interpretation or an error, the procedure may be concluded with a recommendation to correct the financial statements.

However, where, during the review, a violation of the accounting standards is serious or intent is suspected, and where the details of the violation are specifically confirmed, the matter may immediately be converted into an audit review.

An audit review is a procedure that broadly inspects not only the financial statements but also the external auditor's audit report and the actual operation of the internal accounting management system, and depending on the outcome, it can lead to the imposition of a penalty surcharge, sanctions against officers, and even criminal liability, so it can be a considerable burden from the company's standpoint.

Therefore, from the financial statement review stage, it is important to respond in a way that also considers the possibility of expansion into an audit review and the legal risks.

It is advisable, through the advice of an accountant attorney who understands both the accounting standards and the supervisory procedures, to organize the direction of your explanation and to manage in advance the risk of leading to an unnecessary misunderstanding of accounting fraud or to sanctions.