현대자동차 웹진

Vol. 4 ('24.4Q)

KOR

The Frontline

HMC Internal Control over Financial Reporting Newsletter

We offer a quarterly newsletter to help you gain an understanding and insight into the ICFR(Internal Control over Financial Reporting).
We hope to provide you with the opportunity to gain familiarity with ICFR through various contents, and your active attention to ICFR is highly appreciated.

- Finance & Accounting Planning Team -

News

[Summary of the articles]

We have summarized articles related to fraud, embezzlement accidents, and ICFR trends that are of issue recently. Through this, we hope to raise the company's awareness on fraudulent accidents and ICFR.
(Please note that the full text of the article inevitably appears as it is in Korean.)

Shinhan Investment's 130 Billion KRW Loss Incident... Regulatory Authorities on High Alert

Shinhan Investment & Securities has reported futures trading loss of 130 billion KRW due to its role as an Exchange-Traded Fund (ETF) Liquidity Provider (LP).

The LP is responsible for adjusting quotes to ensure that the price of the ETF does not deviate significantly from the Net Asset Value (NAV) contained within the ETF.

It is suspected that, in the case of Shinhan Investment Securities, an attempt to achieve high profits led to excessive orders beyond normal hedging levels, categorized as speculative trading.

The staff member involved concealed the loss by falsely reporting a “swap transaction(agreement between two parties to exchange cash or assets over a specific period)” with a foreign securities firm.

Securities companies and asset management firms have reacted with surprise to this unusual situation, claiming that there were loopholes in internal controls.

The Financial Supervisory Service (FSS) has dispatched an inspection team to Shinhan Investment & Securities for a financial incident investigation, and plans to expand the scope of investigation to include the entire securities firm and major asset management companies.

Financial Supervisory Service and the Korea Listed Companies Association Sign MOU for Cooperation on ICFR System

The Financial Supervisory Service (FSS) has signed a Memorandum of Understanding (MOU) with the Korea Listed Companies Association to strengthen cooperation on the ICFR System.

This partnership aims to prevent practical confusion caused by the dual ICFR system of the two organizations and to enhance the effectiveness of ICFR.

Previously, the design and operation of the ICFR concept were managed by the Listed Companies Association, while the evaluation and reporting standards fell under the jurisdiction of the FSS, resulting in a dual system.

Plans include mutual provision of established databases, as well as sharing information on ICFR-related seminars and training programs.

Through this MOU, both organizations aim to collaborate further, strengthening companies' capabilities in ICFR tasks and effectively supporting their operations.

Column

We provide insight for effective and strengthening measures through internal control issues and case analysis.

The Internal Control That Feels Distant. In Order to Become Routine…

Seonghoon Moon, Finance & Accounting Planning Team, HMC

Recently, the terms “internal accounting (in Korea)” or “internal control” have been frequently appeared in the media. However, these terms often do not resonate significantly to ordinary people in the context of daily office life.

Interview

Through the opinions of experts, we consider the direction of effective internal control improvement and derive solutions.

Listening to the Experts!
Five Years Since the Introduction of ICFR, What Areas Can We Further Prepare for?

Jae-Yong Aum Partner (EY-Han Young)

There are many differences between the accounting audit and internal control management systems in South Korea and the United States. We aim to explore what areas our companies, including Hyundai Motor Company, need to further prepare for in light of these differences.

We will briefly summarize and inform you of the knowledge related to ICFR. We hope it will be an opportunity to understand unfamiliar concepts and terms for ICFR.

[ICFR Audit Opinion]

Distinguished into three types depending on the identification of significant weaknesses and limitations of audit scope: 'Unqualified', 'Qualified', and 'Disclaimer of Opinion'.

- Unqualified: The company's ICFR is effectively designed and operated from the perspective of materiality.

- Qualified: The company's ICFR is not effectively designed and operated due to the impact of significant weaknesses.

- Disclaimer of Opinion: Unable to express an audit opinion because sufficient and appropriate audit evidence cannot be obtained.

Examples of "Significant Weaknesses" for Companies with Qualified Internal Accounting Audit Opinions

*Source : Analysis of Financial Statements and ICFR Audit Opinions for Listed Companies in the 2023 Fiscal Year, Financial Supervisory Service

Annual Operation & Schedule

2024 Calendar

2024 ICFR Annual Schedule

FAQ

Find the answers to your questions!

ICFR cartoon

Learn about ICFR through cartoon

[Contact Us]
Please contact to the email below if you have any questions.
sh.moon@hyundai.com (F&AP Team Seonghoon Moon Manager)

This newsletter has been sent for executives and employees to comply with K-SOX training obligation under the Korean External Audit Act (Enforcement Decree Article 9)