Regarding financial audits, who bears the legal responsibility?

Hello. I will answer your question regarding financial audits.

If a problem arises in the internal accounting control system, the representative director, the executive in charge of finance, the internal accounting control officer, and the external auditor may all bear legal responsibility, and the scope of each person's responsibility varies depending on their role and whether they fulfilled their obligations.

As the highest responsible person for the operation of the internal accounting control system, the representative director may bear civil liability for damages and criminal punishment if an accounting error or fraud arises due to neglect of this responsibility.

Criminal punishment for accounting errors and accounting fraud may be aggravated where it is intentional.

Where accounting fraud is committed intentionally, a person may be subject to imprisonment for not more than 10 years, and where false financial statements are prepared and disclosed in violation of the External Audit Act, a person may be subject to imprisonment for not more than 7 years or a fine of not more than 70 million won.

The executive in charge of finance and the internal accounting control officer are responsible for designing and operating the internal control system, and if they neglect this or commit fraud, they may be subject to criminal punishment for breach of trust or embezzlement, and civil liability for damages may also arise.

The external auditor has a duty to independently audit the appropriateness of the financial statements, and if the auditor overlooks an internal control deficiency despite being aware of it, the auditor may bear criminal punishment and civil liability for damages.

Because the allocation of responsibility related to a financial audit differs depending on each person's role and whether there was negligence, if a problem arises, it is important to respond carefully with the advice of a legal expert in financial audits.