가결산 실적수정과 내부회계관리제도의 검토의견

[Purpose] A lot of firms release preliminary earnings to provide financial information more timely, but these are not audited figure which can be revised ex post and actually often revised. The revision of earnings can make a confusion in the market, also can make a concern about effectiveness of internal control system. If a material amount of revision arises, review opinion on ICFR can be modified due to material weakness in internal control. This article examines the impact of revision of preliminary earnings due to audit adjustment on review opinion on ICFR. [Methodology] The impact of financial statement revision on review opinion on ICFR was measured using absolute change in net income. If change in net income exceeds a critical point of materiality, it could be possible that review opinion on ICFR is modified. [Findings] According to the analysis, it seemed that as a materiality in amount of change in net income is larger, the probability of modification of review opinion on ICFR is higher. These results were sustained after control the various factors that seem to be related with a decision of whether or not to modify review opinion on ICFR. The probability of reporting existing weakness in internal control is negatively associated with firm size, listing period, book to market ratio and blockholders’ share；it is positively associated with auditor effort, financial distress, earnings revision in previous year, auditor size and auditor changes. [Policy Implications] The fact that review opinion on ICFR can be modified as material revision in preliminary earnings arises plays a significant role in whether or not to report existing material weakness in internal control, and also which has implications for the effective of ICFR in providing investors with advance warning of potential accounting problems.