A Study on the Fulfillment of Company's Obligation on Preparing Financial Statements
Asian Tax Journal Vol. 11 No. 4 (2010), pp. 123-151
Abstract
The primary responsibility of preparing financial statements lies on the company. If there occurs confusion on this, auditor's independence would be in trouble. In this research, it was analyzed whether the approval of financial statements by board of directors, fair disclosure of business results, internal auditor's work, external audit, and stockholders' meeting proceed with adequate intervals. Board's approval of financial statements and internal audit do rarely comply with Commercial law in Korea. 74% of the sample shows that the board approves financial statements and 70%makes a public disclosure of provisional business results after the external audit begins. This means there are still lack of professional manpower in a company when the annual report is prepared. Accounting transparency could be achieved by timely supervision on the management of regulation as well as by adding a new regulation. Current disclosure system of annual report and audit report is to be made up for each other to reinforce the fundamental responsibility of the company when it prepares the financial statements.
Keywords
- Preparation of financial statements
- Independence of external auditor
- Disclosure
- Board of Directors
- Internal auditor
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