Korean accounting firms poised for seismic changes next year

August 1, 2013 Leave a comment

Accounting firms poised for seismic changes next year

By Park Seung-cheol/ Lee Ga-yoon

2013.07.31

South Korea’s accounting industry is fussing over the largest-ever seismic changes slated for next year. Critical changes will all come next year: international audit standards will become effective; the period for audit firm rotation will approach on the annulment of the rule, under which businesses must replace an audit firm with another in six years; and an independent auditing committee will be given rights to pick audit firms.  Large accounting firms including Samil PwC, Deloitte Anjin, Samjong KPMG Advisory and Ernst & Young Korea are already in the cutthroat competition, believing the next year’s accounting firm selection will be the event that will reshape the market landscape. An official at Ernst & Young Korea noted, “accounting firms had enjoyed extra demand for consulting services with the introduction of the international financial reporting standards, but now failed to seek new breakthroughs to be in the doldrums over the last few years,” adding “the next year will be the cornerstone for accounting firms to get out of the hardships.”  The international audit standards call for a parent company’s auditor to hold responsibility for the audit results of its consolidated subsidiaries. Accounting firms project that the introduction of international audit standards will eventually make parent company and its subsidiaries have the same audit firm. In addition, it has been three years since Korea scrapped the rule, by which businesses are obliged to rotate their auditors every six years, in 2009. This is acting as another catalyst for fueling competition among accounting firms.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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