Financial Supervisory Service, Key Point to Use New Audit Report “Checking the Audit Opinion First”

▲ Points to note when checking the audit opinion. ⒸFinancial Supervisory Service

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On the 19th, the Financial Supervisory Service provided information on how to find information that is helpful in making investment decisions in the audit report for investors who find it difficult to use a new audit report with a reorganized content and format.

The main contents are ▲Check the’audit opinion’ at the front of the audit report first. to be.

First of all, the audit opinion is the opinion of the auditor on whether the company’s financial statements are properly presented in accordance with the accounting standards. It is divided into four categories: fair opinion, limited opinion, negative opinion, and rejection of opinion.

It should be noted that an appropriate opinion is an opinion expressed when it is judged that the company’s financial statements are properly presented in accordance with accounting standards, and does not guarantee that the company’s management performance or financial soundness is good.

In the case of non-appropriate opinions (limited/inappropriate opinions, refusal of opinion), special attention should be paid to the risk of stock trading being suspended or delisting. The reason and basis for the non-appropriate opinion can be found in the section on’Evidence of Audit Opinion’.

In addition, caution should be exercised as the financial statements in which non-appropriate opinions are expressed are not appropriate financial statements in accordance with accounting treatment standards.

The key audit items were selected by the auditor as the most significant items in the audit of the financial statements after consulting with the company’s governing body (the audit committee). These include areas of high audit risk, estimates involving management judgment, and significant transactions or events.

If you look at the core audit items, you can identify important accounting and audit issues for the company. Therefore, it is useful to check what areas to look carefully at when analyzing the company’s financial condition and business performance.

It is also listed in the notes on the financial statements, so refer to the notes together for more details. However, it should be noted that the fact that a number of key audit items are listed does not mean that the company’s management risk is high or that the management status is poor.

Uncertainty related to a going concern means that an important event or situation (shortage of current funds, capital erosion, etc.) has occurred that may negatively affect the going concern assumption, which is the basic premise of preparing the financial statements.

The going concern assumption is the assumption that management will continue to operate for a foreseeable future period with no intention to liquidate or cease operations.

It is important to note that companies whose uncertainties related to going concern are stated in the main body of the audit report are highly likely to delist or become non-appropriate opinions in the future, even if they are appropriate.

Even if an important event or situation that may have a negative impact on the company’s management has occurred, cases in which the company has devised appropriate measures, such as a capital increase or asset sale, are listed in the notes of the financial statements and need to be checked together.

In particular, this year, due to the prolonged Corona 19 economy and business recession, uncertainties related to going-on companies may increase.

However, it should be noted that the absence of any mention of uncertainties related to the going concern in the audit report and notes does not guarantee the ability to survive as a going concern.

Emphasis does not affect the audit opinion, but it is helpful for information users to understand what is presented and disclosed in the financial statements. This includes important changes in the business environment such as mergers, important lawsuits, and the impact of Corona 19.

It provides information that can have an important impact on the company’s financial condition and business performance in the future, so it is useful to identify the risks exposed to the company. Details related to the emphasis are also included in the notes to the financial statements, so refer to the notes for more details.