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Financial & Accounting System

The Korean financial market consists of a financial market in the traditional sense, in which short- and long-term financial products are traded in relation to the procurement and operation of funds, a foreign exchange market, and a derivatives market. Korean Financial Accounting Standards (KFAS) comply with International Accounting Standards (IAS), as Korea has announced the adoption of the Korean International Financial Reporting Standards (K-IFRS).

Korea’s financial structure

Financial
Market

  • Traditional
    Financial
    Market
    • Money
      Market
      • Call
        RP
        CD
        CP
        Cover Bill
        Currency
        Stabilization Bond

    • Capital
      Market
      • Bond Market
        • Government Bond
          Municipal Bond
          Corporate Bond
          Financial Bond
          Special Bond

      • Asset-Backed
        Securities Market
      • Stock Market
  • Foreign
    Exchange
    Market
  • Derivatives
    Market
    • Securities-Related
      Market
      • Forward
        Futures
        Option
        Swap

    • Interest Rate Related
      Market
    • Currency Related
      Market
    • Credit Derivatives
      Market
    • Derivatives Linked
      Securities Market

Business accounting standards & audit policy

Business accounting standards

The Korean Accounting Institute publishes new or revised business accounting standards with a designated serial number through the Statements of Korea Accounting Standards. The Statements of Korea Accounting Standards apply when corporations under the Act on the External Auditing of Stock Companies prepare financial statements for external users, and when external auditors conduct audits.

External audit system

The external audit system refers to the auditing of a company by external accountants with no vested interests in that company. The system was established to ensure that external auditors conduct audits independently from internal auditors in order to protect interested parties such as shareholders, creditors, employees, etc. and to promote the sound development of companies. Article 2 of the Enforcement Decree of the Act on the External Auditing of Stock Companies stipulates that companies subject to an external audit are corporations under certain categories.

Internal accounting control system

The internal accounting control system, which is part of the internal control system, is designed and operated to provide rational grounds for determining whether a company’s financial statements have been prepared and disclosed according to the Generally Accepted Accounting Principles (GAAP).

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BAEK Jin-jong Executive Consultant