Public Institution Heads Take Responsibility for Financial Statement Management... Eradicating Accounting Errors

Decision Made at the 17th Public Institution Management Committee by the Ministry of Economy and Finance

A panoramic view of Naju Innovation City, Jeollanam-do, where the headquarters of Korea Electric Power Corporation, a major public institution, is located. (Image source=Yonhap News)

[Sejong=Asia Economy Reporter Moon Chaeseok] The government plans to strengthen management and supervision to enhance the reliability of accounting in public institutions and encourage long-term service of accounting staff.

On the 29th, the Ministry of Economy and Finance held the 17th Public Institution Management Committee and announced that it would promote measures to improve the reliability of accounting in public institutions to the level of private companies. This measure was prepared after repeated accounting errors were found in the settlement data of public institutions during the Ministry's comprehensive settlement preparation and the Board of Audit and Inspection's examination process.

The government will revise the accounting standards for public enterprises and quasi-governmental institutions next year to specify that the head of the public institution is responsible for preparing financial statements, and will make it mandatory to submit the financial statements presented to external auditors before the accounting audit to the relevant ministries as well. Until now, unlike private companies, public institutions did not have regulations stating that the CEO is responsible for preparing financial statements, which led to excessive reliance on external parties for financial statement preparation or disputes over responsibility.

The operation performance of accounting management control procedures will be reflected in management evaluations, and an internal accounting management system considering the special characteristics of public institutions will be introduced step by step. Starting next year, to encourage long-term service of accounting staff in public institutions, preferential hiring of accounting personnel, job security, and the operation performance of the compensation system will be reflected in management evaluations.

Accounting and settlement education for accounting staff in public institutions will also be conducted repeatedly. To strengthen the function of external accounting supervision, the establishment of regulations for the operation of auditor appointment committees and the reflection of their implementation status in management evaluations will be implemented. To improve the quality of accounting audits, the introduction of a public institution-type standard audit hour system will be reviewed. A research project will be promoted next year for this purpose. Currently, the public institution settlement system only allows input and inquiry of settlement figures, but plans are underway to advance this system by 2024. Functions such as integrated settlement statement generation and financial information analysis will be implemented to automate the settlement process of public institutions.

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