[Accounting Reform Pros and Cons①] Soaring Accountant Salaries, Qualification Exam Scores Also Rising Rapidly

Since the Implementation of the New External Audit Act in October 2018
Surge in Hiring of Accountants by Accounting Firms
Average Annual Salary of Accountants at the Big Four Accounting Firms Surpasses 100 Million KRW
First Exam Cutoff Score Rises by 27 Points This Year

[Asia Economy Reporter Ji Yeon-jin] On February 27, when the number of COVID-19 confirmed cases exceeded 100,000 daily, breaking all-time records, the Namsan Youth Hostel in Seoul was filled with tense atmosphere. Under the supervision of nurses wearing D-level protective suits, the main participants of this year's first Certified Public Accountant (CPA) exam were COVID-19 positive individuals. Nationwide, 93 confirmed cases took the exam, and including 20 self-quarantined individuals, more than 100 people participated in this exam. The minimum passing score for this exam was 396 points, which was 27.5 points higher than the previous year.

This year, the fourth year since the implementation of the External Audit Act (New External Audit Act), the path to becoming a CPA has become even more challenging. According to the Financial Supervisory Service, 13,123 candidates took this year's first CPA exam, an increase of 1,469 (12.6%) compared to last year. Since 2020, the number of candidates has increased by double digits every year.

Until the mid-2010s, accountants were considered an undesirable profession due to low starting salaries and demanding work. However, after the New External Audit Act, as corporate audits became stricter, accounting firms increased their hiring of accountants, and companies strengthened their internal accounting, leading to a growing demand for accounting professionals. This has resulted in a four-year-long shortage of personnel and intensified competition for the exam.

The New External Audit Act was created amid demands for accounting reform after it was revealed that Anjin Accounting Firm, an external auditor, overlooked the worst accounting fraud in domestic history involving Daewoo Shipbuilding & Marine Engineering. The act includes expanding the scope of external audits, introducing a standard audit hours system, periodic auditor designation, and strengthening internal accounting control systems. As the number of companies required to undergo audits by accounting firms increased and audit hours per company rose significantly due to the standard audit hours system, accounting firms began to massively recruit accounting personnel.

According to the Financial Supervisory Service, the number of accountants affiliated with accounting firms was 10,698 in 2017, just before the New External Audit Act was implemented, accounting for 53.3% of all accountants. As of June last year, this increased to 56.9% (13,004). During this period, total revenue of accounting firms rose from 2.9839 trillion KRW to 3.9226 trillion KRW, an increase of over 1 trillion KRW. This was due to increased audit costs from longer audit hours and a significant rise in designated audits by the government following the implementation of the periodic auditor designation system in 2020. As of the end of last year, the number of companies subject to external audits was 33,250, up 13.62% from 29,263 in 2017. Designated audits surged 3.6 times from 546 in 2018 to 1,969 at the end of last year.

With well-funded accounting firms fiercely competing to attract 'smart accountants,' the treatment of accountants has greatly improved. The average annual salary for audit accountants at the Big Four accounting firms rose from the 80 million KRW range in 2017 to over 100 million KRW in 2020. For example, Samil Accounting Firm, the industry leader, saw its average annual salary jump to 151.62 million KRW in the first year of the New External Audit Act.

Additionally, since the full implementation of the 52-hour workweek in 2020, the possibility of 'work-life balance (WLB)' for accountants has become one of the reasons for their growing popularity. Some accountants in audit departments have even taken long vacations by accumulating overtime after the December year-end audits of domestic companies, which conclude in March. A representative from an accounting firm said, "The starting salary for accountants at accounting firms has become much higher than before, and with the ability to maintain work-life balance, job satisfaction has increased."