New financial statement in dispute

With one day left before the July 31 deadline to submit their consolidated financial statements, 16 local large conglomerates, excluding Samyang Ind.,which closes its books at the end of June, are growing edgy.

A consolidated financial statement shows the revenues, income and losses, assets and liabilities and capital flows among a business group¡¯s subsidiaries.

Figuratively speaking, it can be compared to a detailed medical certificate. The supervisory device, which was introduced for the first time ever in Korea, demands from business groups a far wider range of in-depth financial reports than the existing integrated financial statement system, which is drawn up with income statements of affiliated firms that have investment or controlling relations with their mother companies.

According to business sources, the 16 groups reported sharply reduced revenues and net profits with the consolidated financial statement system, while their debt ratios surged. Therefore, the large conglomerates fear the possible distortion of their sales performances. The new financial report system will likely emerge as a controversial issue between the government and business circles in this year`s second half.