'Persistent Management Failures' 159 Cases of Irregularities Found in 10 Apartments in Chungnam

[Asia Economy (Hongseong) Reporter Jeong Il-woong] Cases of poor management in apartments in the Chungnam region continue unabated.

The Chungnam Provincial Audit Committee announced on the 12th that it conducted audits on 10 apartments (residents' representative meetings) in 5 cities and counties within the province from January to November last year, uncovering a total of 159 cases of irregularities.

According to the provincial audit committee, the most common type of irregularity detected was the misuse and improper use of management fees for purposes other than intended, with 31 cases.

Additionally, the audit revealed ▲improper formation and operation of residents' representative meetings and election management committees (29 cases) ▲improper accounting tasks such as collection of management fees and late fees (27 cases) ▲improper selection of housing management companies and contractors (27 cases) ▲improper establishment of long-term repair plans and reserve fund accumulation (26 cases) ▲and 18 other cases.

For example, Apartment A failed to pay national and local taxes for several years and had to pay tens of millions of won in additional taxes last year. Although conducting profit-making activities such as selling recyclables within the apartment requires obtaining a business registration certificate before starting the business, Apartment A carried out profit-making activities without business registration, resulting in a heavy penalty.

The total additional tax paid by this apartment amounted to 27.45 million won. This includes 26.45 million won in additional tax on value-added tax and corporate tax of 30.3 million won, and 1.1 million won in additional tax on local income tax of 1.5 million won. These taxes could have been avoided if the business had been conducted through proper procedures.

There were also cases detected where litigation costs were excessively spent or the residents' representative meetings used operating expenses like petty cash.

Apartment B was found to have spent 83.77 million won on legal fees, including attorney fees for lawsuits, from miscellaneous income between 2018 and 2020. Notably, the litigation costs included attorney fees related to violations of laws concerning the residents' representative meetings and election management committee chairs, which exacerbated the problem.

To use miscellaneous income for litigation costs, it must benefit the entire residents, but the actual use did not meet this criterion, according to the provincial audit committee's judgment.

Also, the residents' representative meeting of Apartment C received a fixed monthly operating expense of 500,000 won but did not record this in the books and instead spent the amount as a separate management fee rather than operating expenses.

Furthermore, the residents' representative meeting of Apartment D was found to have given high scores to a specific cleaning service contractor during the selection process, helping that company to be selected as the actual contractor.

The provincial audit committee issued disciplinary actions according to the severity of violations: 103 warnings, 49 corrections, and 7 recommendations to each apartment, and demanded the return of 220.72 million won in improperly executed management fees.

Previously, to eradicate corruption in apartment management fees and enhance transparency, the provincial audit committee enacted the "Chungnam Province Apartment Management Audit Ordinance" and has conducted annual audits since 2016 on apartments with 150 or more households subject to mandatory management.

In this process, 7 irregular cases were detected in one apartment in Seosan in 2016, 3 cases in one apartment in Asan in 2017, 37 cases in 4 complexes across 3 cities and counties in 2018, and 131 cases in 10 complexes across 6 cities and counties in 2019. This shows that cases of poor management have been consistently detected from the year audits began up to last year.

Kim Jong-young, chairman of the provincial audit committee, said, “Although audits are conducted annually on local apartments, illegal and improper acts have not yet been eradicated. The provincial audit committee will continue efforts to create a transparent and livable apartment culture through ongoing audits.”

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