If a financial audit is conducted, can all irregularities be detected?

Hello. I will provide an answer regarding financial audits.

You asked whether irregularities are detected during a financial audit.

A financial audit is a procedure to verify whether a company's financial statements have been prepared fairly in accordance with accounting standards.

In other words, not all irregularities are detected through a financial audit.

This is because the auditor assesses whether the financial statements are free from material misstatements.

Therefore, if irregularities are meticulously concealed or do not exceed the materiality threshold, they may not be detected during the audit process.

In particular, cases such as embezzlement, breach of trust, and accounting fraud may not be apparent from the surface of the financial statements or related materials alone.

Although the auditor considers the risk of fraud when establishing the audit plan, it is difficult to uncover all intentional concealment by management or related parties through ordinary audit procedures alone.

However, if signs of suspicion are detected, additional audit procedures may be carried out, and if necessary, there is also an obligation to report to the financial supervisory authorities.

A financial audit is not conducted only when irregularities are suspected; it is carried out regularly to strengthen internal controls or pursuant to statutes such as the external audit obligation for listed companies.

If irregularities exist, there is a possibility that they will be found during the audit process, but the system does not guarantee 100% detection.

If irregularities are suspected or a dispute is anticipated, you should prepare a separate legal response beyond a simple financial audit.

If irregularities are suspected, it is advisable to proceed after consulting an attorney experienced in accounting reviews and financial disputes.