[Background]
-While systems such as the internal audit organization and external audit are in operation to ensure accounting transparency, the need arises to codify strengthened measures as acts undermining the accounting supervision system persist.
*The obligation to prohibit acts related to undermining accounting supervision and the legal basis for measures by the Securities and Futures Commission (SFC) are already established in laws and regulations.
-When multiple violations occur due to negligence, current practice is to judge them on an account-by-account basis, often resulting only in light measures such as warnings or cautions. This leads to merely formal actions that fail to effectively prevent the recurrence of disclosure errors
*To achieve fundamental improvement in the company's internal control system and prevent the recurrence of financial statement disclosure errors, it is necessary to impose effective measures for multiple negligent violations.
[Main Points]
In cases of interference with the auditor's work or the undermining of the monitoring functions of the internal audit organization (such as requests for documents, information, cost claims, or demands for correction), these shall be newly established as aggravating factors for the measure of fraudulent preparation of financial statements. Additionally, it shall be explicitly codified that in cases where multiple negligent errors occur, the Securities and Futures Commission (SFC) may take the "necessary action" available under the law to mandate that the company undergo external audits of its internal accounting control system for a specified period.
