감사인의 비상장주식 가치평가 관련 업무 수행실패와 게이트키퍼로서의 책임 -B사 감리사례분석을 중심으로 -

This study examines the audit failure case of Company B which was subject to the audit review by the Financial Supervisory Service (hereafter, FSS) during 2007-2008. We analyze the degree to which the auditors of Company B may be responsible for the failure of audit procedures applied to the accounts of investment related prepaid payments and to the equity method applied to the valuation of non-listed shares. Investments on shares are more relevant when measured at fair values relative to other measurement attributes when reported in the balance sheet. However, the measurement of non-listed shares fall in a gray zone as it is difficult for them to be measured at fair values. For this reason, a more stringent auditing procedure is required for valuation of non-listed shares. We believe that the auditors of B company during 2007-2008 did not fulfill their due responsibilities as gatekeepers. B company overestimated the investment related prepaid payments to avoid the risk of being delisted from the stock market in 2007. Y and D auditors who attested Firm B’s financial statements during 2007-2008 violated the auditing standards. By investigating the cause and consequences of this specific incident, we intend to provide comprehensive perspectives in terms of the responsibilities of auditors from regulatory, ethical and social focus, which, in turn, will help improve our understanding of corporate fraud and auditors’ responsibilities as gatekeepers. We summarize our major findings from this case study as follows: (1) The auditors of Company B did not fulfill their due responsibilities with regard to assessing the adequacy of the valuation of the non-listed shares as reported by Company B in terms of sufficiency, relevance, and reliability of source data in accordance with Audit Standard 620. (2) The auditors of Company B may be liable for the losses incurred to the third party who relied on the valuation report of the non-listed shares for the lack of proper attestation. (3) The auditors of Company B may hold responsible for not taking proper measures consistent with the Code of Ethics when they face a difficulty in maintaining fair and equitable views with regard to the valuation of non-listed share investments. (4) The auditors of Company B were not able to fulfill their social responsibilities for the sake of information users who relied on the accounting information for their investment decisions in the belief that those information was properly attested by the auditors. In addition, we make several suggestions with a view to provide useful implications for regulators who are aiming at mitigating the risk of auditing failures associated with the valuation of non-listed share investments. The audit failure may be attributable either to the lack of expertise or to the lack of independence owing to the interest alignment with clients. The former issue could be handled, in part at least, by requiring experienced auditors to be in charge and/or implementing special training or educational programs with regard to valuation of non-listed shares. The latter issue necessitates the improvement of regulatory systems. First possible improvement may relate to the current audit review system, which falls under the jurisdiction of FSS. By including the firms engaging in the valuation of non-listed shares within the potential review target group, the regulators may take preemptive measures against potential auditor failure associated with the client’s valuation related errors or frauds. Second, we argue that it is necessary to impose restrictions against allowing auditors to conduct audit services for a client firm if the auditor was formerly engaged in the valuation service of non-listed investee firms on behalf of the same client firm.