Gyeonggi Province Uncovers 536 Cases of Improper Apartment Complex Management, Including Undisclosed Accounting Audits

[Suwon Ilbo=Park No-hun Reporter] Gyeonggi Province has identified management entities and residents' representatives councils of apartment complexes that caused financial losses to residents through improper management practices, including failure to disclose external accounting audit results to residents and arbitrary selection of contractors through direct procurement.

Through the '2021 First Half Joint Housing Management Audit,' Gyeonggi Province detected 536 cases of improper apartment management practices across a total of 55 complexes, including 9 complexes subject to civil complaint audits and 46 complexes subject to planned audits. The province announced on the 26th that it has processed these cases through referrals for prosecution and investigation (5 cases), administrative fines (76 cases), corrective orders (64 cases), and administrative guidance (391 cases).

Audits were conducted at 4,617 mandatory management joint housing complexes in Gyeonggi Province (complexes with 300 or more households, those with elevators or 150 or more households using central heating systems, etc.). The province conducts civil complaint audits when 30% or more of residents consent to audits, and continues to conduct planned audits by selecting vulnerable areas in joint housing management operations. This year, the province focused on intensive audits of the accounting management sector.

Major cases of improper management show that the 'audit' conducted by the residents' representatives council of Complex A failed to audit management operations for several years despite its obligation to do so, and in cases where audits were conducted, they were not disclosed to residents.

The residents' representatives council of Complex B concluded contracts with contractors through direct procurement rather than competitive bidding as required, while the management entity neglected construction supervision and completion procedures, failing to comply with management regulations.

Management entities of Complexes C and D received audit result reports from external accounting auditors and were required to report to the residents' representatives council and disclose them on websites and other platforms within one month, but violated these regulations by failing to do so.

Meanwhile, the province identified four institutional improvement measures through this audit and recommended them to the Ministry of Land, Infrastructure and Transport.

The province first recommended institutional improvements to make it mandatory for residents' representatives councils of joint housing to request recommendations for accounting auditors from credible institutions such as city or county mayors or the Korean Institute of Certified Public Accountants, rather than directly selecting auditors.

The province explained that when residents' representatives councils of joint housing directly select accounting auditors, audit independence may be compromised, potentially failing to properly address issues such as embezzlement of apartment management fees.

Additionally, the province recommended ▲mandating quarterly audits in writing since there are no regulations on the timing of audit implementation, resulting in audit non-compliance in some complexes ▲making it mandatory to prepare design documents when ordering construction projects valued at a certain amount (200 million won) or higher ▲improving the originating party patent construction method usage agreement to prevent cases of excessively restricting bidding participation through patent construction methods in limited competitive bidding.

Ko Yong-su, head of the Joint Housing Division of Gyeonggi Province, said, "Through continuous audits of apartment complex irregularities and disputes, we will create conditions for transparent and efficient joint housing management." He added, "We will strengthen administrative guidance by producing case studies and distributing them to mandatory management joint housing complexes to prevent similar cases from occurring in the future."