The nation’s financial watchdog plans to launch a “comprehensive audit” on bourse operator the Korea Exchange (KRX) by the year-end, local reports said Wednesday.
If carried out, the in-depth audit will mark the first such inspection of KRX in nine years.
FSS headquarters in Yeouido, western Seoul. (Yonhap)
The news comes amid the Financial Supervisory Service’s ongoing audit of local brokerages and financial institutions, following its decision to revive the comprehensive audit, which was abolished in 2015. The audit allows authorities to inspect records and financial statements without boundaries.
The FSS had originally planned to carry out an inspection in the first quarter, but the plan was apparently pushed back after talks with the Financial Services Commission -- the nation’s top financial regulator.
“During the talks held at the start of the year, the FSC insisted on pushing back the discussion (on the KRX audit) and we were unable to decide on details such as the scope of inspections,” an FSS official was quoted as saying. “But we plan to carry out an audit by the year-end,” the official added.
The FSC gave a more toned-down response saying that “it is not against” the FSS’ plans to launch the KRX audit this year.
A spokesperson of the bourse operator who requested anonymity told The Korea Herald that there are apprehensions that the audit will take place within this year.
“The KRX is no longer a public institution, which will make it difficult for FSS to conduct a comprehensive audit,” the official said.
“Also, the FSC doesn’t seem to be too keen on an in-depth audit of KRX.”
Since the KRX was removed from the list of public institutions in 2015, the nation’s financial watchdog has to get approval of the FSC, which oversees key operations of the bourse operator. Public institutions are subject to regular reviews by the state auditor and are kept under close watch over their management and fund usage.
Industry watchers are also raising the possibility of a partial audit instead of a comprehensive one.
Prosecutors raided the KRX in March on suspicions that it was a complicit in an alleged accounting fraud by Samsung BioLogics.
The Samsung subsidiary was accused of breaking accounting rules to inflate the value of its subsidiary, Samsung Bioepis, ahead of its initial public offering in 2016.
The FSS is currently running both partial and comprehensive audits on a slew of financial institutions here -- a plan announced and adopted by the Moon Jae-in administration -- which has been fueling concerns of excessive probes that could limit growth of the financial sector.
By Jung Min-kyung (email@example.com