International Finance and Accounting Handbook

15 • 31

Korea (South)

The Korean Institute of

The KICPA enforces stan-

Auditors face legal liability

The auditor is not expected

Certified Public Accountants

dards; serious infractions are

for negligence and fraud.

to detect fraud in the course

(KICPA) has set standards re-

referred to the Ministry of

Suits by a third party and

of an audit. The KICPA and

sembling those followed in

Finance. Licenses may be

prosecution by the govern-

SEC have mandated extensive

the U.S., although modified

suspended for six months to

ment for a fraudulent audit is

audit procedures to avoid

to meet local circumstances.

two years. There have been

increasing.

fraud in accounting for cash

increasing instances of fines

and promissory notes.

or imprisonment as providedby law.

Philippines

The Code of Professional

The Board of Accountancy

The CPA has a liability to

The auditor is not primarily

Ethics promulgated by the

may issue reprimands, or sus-

clients and third parties. As to

responsible for the detection

Board of Accountancy aims

pend or revoke registration

clients, a CPA is liable for

of fraud but if the auditor’s

to provide for the mainte-

certificates.

damages for his negligence

examination indicates that

nance of high standards of

and breach of contract to

some fraud may have

competence and integrity by

render professional services.

occurred that could result in

CPAs.

As to third parties, a CPA is

material misstatement of the

liable for losses which are

financial statements, this

caused by his fraud or gross

would cause the auditor to

negligence.

extend his procedures to con-firm or dispel this concern.

Singapore

The rules of the Accountants

The Disciplinary Committee

There is liability for damages

The auditor is expected to

Act call for integrity and con-

of the ICPAS and PAB may

to the client and in some

seek reasonable assurance

fidentiality, and prohibit in-

censor, expel, or suspend a

cases third parties for negli-

that material fraud has not

compatible functions, adver-

member. It may also issue

gence in performing an audit,

occurred; if material fraud

tising, encroachment on the

fines of up to $5,000 and the

and criminal liablity for will-

has taken place, the auditor

business of others, certifica-

costs of an investigation.

fully making untrue state-

must ensure that the error is

tion of estimates, acceptance

ments in a prospectus.

corrected or that its effect is

of benefits from service for

Negligence may also bring

indicated in the financial

clients without consent, and

criminal liablity.

information. The Companies

acts discreditable to the pro-

Act also requires reporting of

fession. The standards on in-

fraud under certain circum-

dependence parallel those set

stances to the Minister of

by the United Kingdom.

Finance.

Exhibit 15.3

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