April 20, 2024

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[THE INVESTOR] The financial regulator said on Aug. 30 it will revise supervisory standards on accounting rules for pharmaceutical and biotechnology firms.

Kim Yong-beom, vice chairman of the Financial Services Commission, made the remarks at a meeting with executives from pharmaceutical and biotechnology firms earlier in the day.

The current supervisory rule does not specify when a pharma or biotech company should treat its research and development spending as an asset in its accounting book, according to the FSC.

Some firms have treated their research and development spending as an asset after clinical tests of a product. Other firms have treated them as an asset after the government granted approval for a product.

Treating R&D spending as an expenditure in accounting books could negatively affect earnings of a company.

Financial authorities have conducted an inspection into accounting practices of local pharmaceutical and biotechnology firms amid criticism that their accounting practices are not in line with global standards.

By Song Seung-hyun and newswires (ssh@heraldcorp.com)