Gyeonggi Province Should Mandate Recommendation of Credible Institutions When Selecting Audit Firms for Multi-unit Housing

[Suwon Ilbo=Park No-hun] Gyeonggi Province is moving to secure fairness in accounting audits to eliminate accounting irregularities such as embezzlement of apartment management fees in multi-unit housing.

The proposal mandates that accounting auditors directly selected by residents' representative councils of multi-unit housing be selected through recommendations requested from credible institutions such as mayors, county governors, or the Korean Institute of Certified Public Accountants, and proposes to enhance the capabilities of accounting auditors through professional education programs.

Gyeonggi Province announced on the 23rd that it has recommended to the Ministry of Land, Infrastructure and Transport amendments to the Multi-unit Housing Management Act containing such provisions.

According to Article 26 (Accounting Audit) of the Multi-unit Housing Management Act, multi-unit housing with 300 or more units is required to undergo accounting audits at least once per year.

There are approximately 3,500 multi-unit housing complexes with 300 units or more in the province.

However, since residents' representative councils of multi-unit housing directly select accounting auditors, audit independence is weak, making it difficult to properly identify problems such as embezzlement of apartment management fees.

Moreover, according to a 2019 report by the Korean Accounting Association, concerns about deteriorating audit quality due to low-cost mass engagement have been raised, with 20 accounting firms taking on more than half of accounting audits.

In response, the province argued in its recommendation that when residents' representative councils of multi-unit housing select accounting auditors, they should request recommendations for accounting auditors from mayors, county governors, and the Korean Institute of Certified Public Accountants.

The current legal provision is merely discretionary, stating 'recommendations may be requested,' not mandatory.

The province also proposed implementing specialized professional education in multi-unit housing accounting audits for accounting auditors. This aims to enhance the quality of accounting audits and, in connection with the accounting auditor recommendation provision, establish 'grounds for prioritizing recommendations to those who have completed education.'

Shin Wook-ho, director of the Multi-unit Housing Division of Gyeonggi Province, said "Recently, accounting irregularities such as embezzlement of apartment management fees continue to occur, so we have prepared improvement measures to address this" and added "We hope that fair and efficient accounting audits can be conducted in multi-unit housing."