Gyeonggi-do Proposes Mandatory Recommendation of Credible Institutions for Accounting Auditors of Apartment Complexes

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province is taking steps to ensure the fairness of accounting audits to eradicate accounting corruption in apartment management fees and other joint housing accounting irregularities.

The plan mandates that the accounting auditor, directly selected by the residents' representative meeting of the joint housing, must be chosen by requesting recommendations from credible institutions such as the mayor, county governor, or the Korean Institute of Certified Public Accountants, and aims to enhance the auditor's capabilities through professional training.

Gyeonggi Province announced on the 23rd that it has proposed an amendment to the Joint Housing Management Act containing these measures to the Ministry of Land, Infrastructure and Transport.

According to Article 26 (Accounting Audit) of the Joint Housing Management Act, joint housing complexes with 300 or more households are required to undergo an accounting audit at least once a year. There are about 3,500 such complexes in the province.

However, since the residents' representative meetings directly select the accounting auditors, the independence of the audit is compromised, resulting in failure to properly address issues such as embezzlement of apartment management fees.

Additionally, a 2019 report by the Korean Accounting Association pointed out a decline in audit quality due to low-cost mass engagements, with 20 accounting firms handling more than half of the accounting audits.

In response, the province's proposal insists that when selecting accounting auditors, the residents' representative meetings must request recommendations from the mayor, county governor, and the Korean Institute of Certified Public Accountants. Currently, the law only allows for optional requests for recommendations, not mandatory ones.

Furthermore, it suggested conducting specialized training on joint housing accounting audits for auditors. This aims to improve audit quality and establish grounds for prioritizing recommendation of auditors who have completed the training, linked to the auditor recommendation regulation.

Shin Wook-ho, head of the Joint Housing Division of the province, said, "Accounting corruption such as embezzlement of apartment management fees has been continuously occurring recently, so we have prepared improvement measures to resolve this," adding, "We will strive to ensure fair and efficient accounting audits in joint housing."