[2020 National Audit] Landfill Corporation Conducted Financial Audits with the Same Accounting Firm for 22 Years

Lee Su-jin "Formal audit inevitable... Ministry of Environment also has supervisory responsibility"

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] The Sudokwon Landfill Site Management Corporation under the Ministry of Environment has been criticized for making the audit of financial statements formalistic by entrusting the same accounting firm with the audit for 22 years since its launch in 2000.

On the 19th, Lee Sujin, a member of the National Assembly's Environment and Labor Committee from the Democratic Party of Korea, confirmed this fact after analyzing data submitted by the Ministry of Environment.

According to Article 9, Paragraph 3 of the current regulations on accounting audits and financial statements of public institutions (Board of Audit and Inspection rules), public enterprises and quasi-governmental institutions are allowed to entrust the audit of financial statements to the same accounting firm for a maximum period of 6 years.

This regulation is to prevent the audit of financial statements from being conducted in a formalistic manner when entrusted to the same accounting firm for too long. However, other public institutions are not subject to this law.

The corporation has entrusted the audit of financial statements to the same accounting firm for a total of 22 years from its launch in 2000 until next year.

During this period, the budget for the audited accounts entrusted by the corporation amounted to a total of 5.9993 trillion KRW, and the total contract amount for audit services was 738.23 million KRW.

The corporation contracted with the accounting firm through private contracts from 2000 to 2015, and from 2016 onward, through public bidding every three years.

The corporation stated that it only contracted with firms designated by the Minister of Environment under Article 27 of the Corporation Act.

However, in reality, the corporation ranked the candidate firms and submitted the list to the Ministry of Environment, which approved and designated them, meaning the corporation effectively made the selection, according to Lee's criticism.

Lee pointed out, "Entrusting the audit of financial statements for nearly 6 trillion KRW in budget to the same firm for 22 years through a process where the corporation evaluates and selects the firm and the Ministry of Environment approves it inevitably leads to formalistic audits."

He also criticized, "The Ministry of Environment also bears management responsibility for this."

This content was produced with the assistance of AI translation services.