Accounting and accounting rules in South Korea

Accounting Rules

Tax Year

A company's tax year is its accounting period as specified in the articles of incorporation, which normally is a 12-month period. The tax year cannot exceed 12 months.

Accounting Standards

Listed companies and unlisted financial institutions are required to adopt K-IFRS (Korea- International Financial Reporting Standards). However, unlisted companies may choose either K-IFRS or Korean Generally Accepted Accounting Standards (K-GAAP) for financial accounting. Certain provisions of the tax laws (e.g. depreciation, foreign currency translations) have been amended to reflect the adoption of K-IFRS.

For more information, consult the Korea Accounting Standards Board website.

Accounting Regulation Bodies

FSS

Accounting Reports

Financial statements (income statement, balance sheet, statement of cash flows, statement of changes in equity and statement of appropriation of retained earnings) and a business report must be filed each accounting year.

Publication Requirements

1) Companies listed at the stock exchange and KOSDAQ market must follow the following disclosure regulation:
- Periodic disclosure: business reports after the end of a fiscal year, semi-annual reports and quarterly reports.
- Timely disclosure: major business details as outlined in the Securities Exchange Act and the Disclosure Regulations of the KRX-Stock Market.
- Special disclosure: mergers, spin-offs, reports of business takeover and transfer, reports of acquisition and disposal of treasury stocks, etc.

2) External Auditing companies are required to disclose auditing reports.

3) Corporations issuing securities are required to disclose public securities registration statements, business prospectuses, records of securities issuances, etc.

More information is available at the Korea exchange website.

Professional Accountancy Bodies

Certification and Auditing

Companies are required to utilise a statutory auditor for an annual audit of the organisation's financial health. Some examples of entities that offer statutory auditing services include Ernst and Young Global, Deloitte Touche Tohmasu, KPMG International, PricewaterhouseCoopers.

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