||3 AUDIT REQUIREMENT
3.1 Corporations Subject to External Audit
1. Any stock company of which amount of total asset as of the end of the preceding fiscal year is equal to or greater than 10 billion Korean Won,
2. Any stock company of which amount of total asset and liability respectively as of the end of the preceding fiscal year is equal to or greater than 7 billion Korean Won,
3. Any stock company of which amount of total asset as of the end of the preceding fiscal year is equal to or greater than 7 billion Korean Won and of which the numbers of total employees as of the end of the preceding fiscal year are equal to or greater than 300, shall prepare the financial statements, and have them audited by an auditor with respect to the accounting.
1 The auditor qualified to conduct the audit shall be as follows; however, that whether the auditor among those who fall under any of the following shall be qualified to conduct the audit on the consolidated or combined financial statements and the financial statements of stock-listed corporations shall be appointed among accounting firms.
· An accounting firm
· An audit team
2 Any certified public accountant capable of performing the auditing duties by belonging to the auditor shall be limited to the person who has undergone the training in actual business as prescribed by the Presidential Decree.
3.3 Appointment etc. of Auditor
1 A company shall appoint an auditor within four months from the commencement of each fiscal year. The auditor who shall conduct an audit on the financial statements, consolidated financial statements and combined financial statements shall be the same.
2 In the selection and appointment of an auditor, any company shall get approval thereof from the statutory auditor or the auditor appointment committee secured with its expertise and independence :provided, That any stock-listed corporation, any Association-registered corporation and any affiliated company of an enterprise group to which a company that was notified by the SFC of the need to prepare a combined financial statement during the immediately preceding fiscal year belongs shall obtain approval therefore from the auditor appointment committee.
3 Any company shall, when it appoints an auditor under paragraph (2), report his appointment at an ordinary general meeting of shareholders called first after his appointment.
4 In the event that any company appoints a new auditor in the face of the case falling under each of the following subparagraphs, the provisions of paragraphs (1) and (2) shall not apply thereto: provided, That in case that any company as prescribed in the proviso of paragraph (2) appoints a new auditor after falling under subparagraph 2, such company shall obtain approval therefore from the auditor appointment committee:
1 Where the company replaces the current auditor and appoints a person nominated
by the SFC as an auditor; and
2 Where an already appointed auditor is unable to discharge his duties as an auditor
on the grounds prescribed by the PD, including dissolution of the company during the fiscal year.
5 If a company appoints, or replaces with, an auditor according to each subparagraph of paragraph (4), the appointment shall be made within two (2) months from the occurrence of cause.
6 Notwithstanding the provisions of paragraph (2), where a company, which is not a stocklisted corporation, an Association-registered corporation and an affiliated company of an enterprise group to which a company that has been notified by the SFC of the need to prepare a combined financial statement, intends to reappoint the auditor who served as an auditor during the immediately preceding fiscal year, it may decide not to obtain the approval of the statutory auditor or the auditor appointment committee.
3.4 Appointment etc. of Auditor by Stock-Listed Corporation and Association-Registered Corporation
1 A stock-listed corporation and an Association-registered corporation shall appoint an auditor for the period of three consecutive fiscal years within four months from the commencement of the initial fiscal year.
2 Notwithstanding paragraph (1), the violation of auditor's duty occurs; a company may dismiss the auditor upon approval from the auditor appointment committee within three months after the end of each fiscal year even during the period of three consecutive fiscal years.
3 A company shall, when it dismisses the auditor under paragraph (2), file without any delay a report thereon with the SFC.
4 The company pursuant to paragraph (1) shall be prohibited from having the same perform the auditing duties in excess of the continued six business years: Provided that the same shall not apply to the cases corresponding to any of the following subparagraphs:
1 Case of a foreign-invested company registered under Article 21 of the Foreign
Investment Promotion Act for which a continued auditing by the same auditor is
inevitable due to the relations with the overseas parent company due to the causes as prescribed by the Presidential Decree; and
2 Where the securities are listed on the foreign Stock Exchange as prescribed by the
Presidential Decree (limited to the Stock Exchange which allows the listing of securities only for the enterprises guaranteeing a considerable level of the accounting transparency).
3.5 Report on Appointment of Auditor
If a company appointed or replaced with an auditor, the company shall report thereof to the SFC.
Prepared by: Mr. Doo-Yeol Lee
Woori Accounting Corporation
Amended: November 2010
For further information on the services available from the DFK International Member firm in South Korea please contact:
Mr. Doo-Yeol Lee
Woori Accounting Corporation
Tel: +82 2 565 7083