In the trend of strengthened oversight of accounting fraud, what should companies prepare?

The financial authorities have recently further strengthened preemptive monitoring and sanctions against high-risk accounting-fraud companies, such as those with frequent changes of the largest shareholder, negative opinions on the internal accounting management system, and cases of abuse of private-placement convertible bonds, as well as against serious accounting fraud that has caused social controversy, such as involvement in embezzlement, breach of trust, and unfair trading.

In particular, they are expanding full-scale audits of the internal accounting management system and have signaled a strict response, such as taking aggravated measures where these regulations are violated.

These strengthened accounting-fraud oversight policies are an important move to block companies' accounting-fraud risks in advance.

Accordingly, companies must carry out a close analysis of the causes of past accounting-fraud errors and prompt corrections.

It is very important to systematically overhaul control procedures so that repeated accounting-fraud mistakes do not occur.

In addition, companies must establish a process that can continuously check compliance with internal accounting management regulations to block any potential for statutory violations in advance, and must steadily make efforts to enhance accounting transparency.

Companies must be aware that, if such preparation and management are insufficient, it may lead to serious accounting-fraud-related disadvantages, such as severe sanctions from the Financial Supervisory Service's audit and a decline in corporate credibility.