Certified Public Accountant Performing Goodwill Appraisal Found Not Guilty in First Trial

"Key Money Is Not Subject to Appraisal"

[Asia Economy Reporter Choi Taewon] A court ruling has found that a certified public accountant (CPA) is not guilty of conducting goodwill valuation, a domain traditionally known to be exclusive to certified appraisers.

According to the legal community on the 19th, Judge Yoon Yang-ji of the Seoul Western District Court Criminal Division 10 acquitted CPA A on the 12th of charges of violating the Appraisal Act.

The court's judgment was that the act of goodwill valuation “cannot be considered as appraisal business as defined under the Appraisal Act.” The court explained, “Goodwill cannot be regarded as a real right related to land, its fixtures, or movable property itself.” According to the Appraisal Act, appraisal targets are ‘land, etc.’, but the court viewed goodwill as compensation for utilizing intangible or tangible property values such as business ‘know-how’ or client relationships.

The court also accepted A’s claim that since the goodwill valuation was conducted under court commission, it was a lawful act. In 2021, the Supreme Court ruled that “even if the qualifications of the appraiser or the person commissioned for appraisal are not limited to certified appraisers, the expertise, fairness, and reliability of the appraisal can be ensured through procedures such as giving parties the opportunity to express opinions on the appraisal results.” Based on this, the court stated, “The defendant received the court’s designation or commission as an appraiser and conducted the goodwill valuation, thus there is no illegality.”

A was selected as an appraiser by the Incheon District Court at the end of 2018 and performed appraisal tasks such as business loss valuation and unlisted stock valuation. In 2019, A was commissioned by the Incheon District Court to appraise the goodwill of a pub located in a building involved in an eviction lawsuit and prepared an appraisal report. An eviction lawsuit is filed when a buyer has paid for real estate but the occupant refuses to deliver possession of the property.

In response, the Korea Association of Certified Appraisers filed a complaint alleging that A violated the Appraisal Act. According to the Appraisal Act, appraisal business can only be conducted by persons qualified as certified appraisers.

In September 2021, the court issued a summary order imposing a fine of 1 million won on A. A appealed this decision and requested a formal trial, where the first-instance court ruled that A did not violate the Appraisal Act.

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