Accountant attorney, in what cases is an external audit conducted?

Hello. This is the accountant attorney at Daeryun Law Firm (LLC).

Whether subject to external audit is judged by legal standards such as assets and sales, and strict deadlines apply to the appointment of the auditor and reporting procedures.

Companies subject to external audit are classified according to whether they are listed and their financial scale.

In the case of stock-listed corporations, if the total assets or annual converted sales of the previous year is 50 billion won or more, they are subject to external audit.

In the case of unlisted corporations, if they meet two or more of the following requirements, they become subject to external audit.

(1) Sales of 10 billion won or more

(2) Number of employees 100 or more

(3) Assets of 12 billion won or more

(4) Liabilities of 7 billion won or more

When you become subject to external audit, you must first appoint an external auditor, and the principle is to appoint within 45 days after the start of the fiscal year with the approval of the audit committee or auditor.

However, in the case of an initial audit (the first audit after becoming subject to external audit), exceptionally, appointment is allowed up to 4 months after the start of the fiscal year.

After appointing the auditor, you must report to shareholders through a regular general meeting or notify shareholders by document or internet announcement, and report the appointment to the Financial Supervisory Service within 2 weeks after concluding the external audit contract.

If you fail to comply with these procedures or deadlines, regardless of intent, it can lead to fines for negligence, fines, or criminal liability, so caution is needed.

Since the determination of whether to be subject to external audit and the appointment and reporting of the auditor are areas where accounting and law are simultaneously at issue, it is desirable to check in advance through the advice of an accountant attorney.