Vol. 1 ('24.1Q, The First Issue)
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.)
Column
We provide insight for effective and strengthening measures through internal control issues and case analysis.
Continuous Occupational Fraud Cases... thorough Implementation of 'Segregation of Duties' to reduce potential risk
Seonghoon Moon, Finance & Accounting Planning Team, HMC
Since the External Audit Act was revised in 2019 and the audit of “Internal Control over Financial Reporting (ICFR)” became mandatory, many public companies and entities in financial services in Korea have been making special efforts to strengthen their internal processes and to prevent various types of fraudulent activities.
Opinion
Through the opinions of experts, we consider the direction of effective internal control improvement and derive solutions.
200 billion embezzlements, just monitoring the funds...
Lee Hyungmin Partner, Samil PwC Internal Control Center
The internal embezzlement of 200 billion won at ○ company two years ago caused a big stir in Korean society. What was as shocking as the astronomical amount of embezzlement was that fraudulent accidents such as embezzlement occurred in various industries and departments, from manufacturing and service to finance.
Knowledge Hub
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.
[SOX Act]
Abbreviation of Sarbanes-OXley Act.
It was named after U.S. Senator 'Paul Sarbanes' and Representative 'Michael Oxley', who billed the federal law "Public Company Accounting Reform and Investor Protection Act". The law was enacted in July 2002 to enhance financial disclosure as a reaction to a number of major corporate accounting scandals in 2001, including Enron and WorldCom.
Korea has established and implemented "Internal Accounting Management System", which is also known as "K-SOX", by adopting the US ICFR. In Korea, listed companies with assets exceeding 2trillion KRW started receiving audits in 2019(Separate Financial Statements), and in 2023(Consolidated Financial Statements).
[3 Elements of Fraud]
According to the Fraud Triangle suggested by American criminologist Donald R. Cressey, financial fraud can occur when the below 3 elements come together, and most fraudulent cases happening these days were analyzed to show the same elements.
Example : It's just this one time! My predecessor did it as well…
③ Rationalization
When a person justifies their own self conducting fraud.
Example : Money is best! I'm getting super pressured with this month's revenue!
② Incentive or Pressure
When external pressure, emotional pressure etc. triggers a person to conduct fraud.
Example : Nobody is checking me! They have so many things to review so they won't check in detail! We don't
① Opportunity
When fraud plan can undergo undetected or environmental situation allows it to happen.
Annual Operation & Schedule
[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)
