Korean Institute of Certified Public Accountants: "No Additional Audit Cost Burden for Childcare Centers Under Local Autonomy Act Amendment"

Korean Institute of Certified Public Accountants Refutes Claims by Korea Childcare Center Association
"No Double Burden or Increased Costs from External Audits"
Amendment Aims to Standardize Management and Enhance Fiscal Transparency

The Korean Institute of Certified Public Accountants announced on September 1 that the recent claim by the Korea Childcare Center Association-that mandating external auditor accounting audits would increase the administrative burden on staff and lead to higher audit costs-is not true.

A representative from the Korean Institute of Certified Public Accountants explained, "Most childcare centers are operated with government subsidies and local government subsidies (including private consignment funds), and are already subject to annual accounting verification for subsidized projects by external auditors (certified public accountants)." The representative added, "Since projects that have already undergone accounting verification do not require a second audit, there is no double administrative burden or additional cost for staff."

Regarding audit costs, the representative stated, "Childcare centers do not bear these costs directly," and explained, "The verification fees can be covered by local government budgets or included as part of project expenses, so there is no additional financial burden on childcare centers."

In response to claims that "the average annual audit cost per private consignment institution is 6 million won," the representative said, "This comparison is inaccurate, as it refers to certain subsidized project operators who, by law, are subject to financial statement audits similar to for-profit companies." He further added, "The private consignment audit is the same in nature as the subsidized project accounting verification. In fact, in Seoul, where the scale of private consignment projects is large, the budget is set at an average of about 2 million won per case."

The Korea Childcare Center Association recently expressed opposition to the proposed amendment to the Local Autonomy Act, which would mandate external auditor accounting audits. In response, the Korean Institute of Certified Public Accountants clarified, "The amendment does not designate all childcare centers as audit subjects across the board. Instead, the implementing ordinance or local government regulations will separately define the audit subjects and monetary thresholds." The representative also noted, "In particular, under the 'Act on the Management of Subsidies,' only projects of 100 million won or more are subject to accounting verification, so, as in other legislative cases, small-scale and low-income childcare centers are likely to be excluded from audit requirements."

The representative from the Korean Institute of Certified Public Accountants emphasized, "The purpose of this amendment is not to impose new burdens on childcare centers, but to standardize the management criteria for private consignment projects, which have been operated differently by each local government, and to strengthen transparency in fiscal execution." He further stressed, "Concerns about double work and increased costs are unfounded." The representative also stated, "Since the National Assembly has agreed to thoroughly discuss the amendment to the Local Autonomy Act, which was proposed by both the ruling and opposition parties, we expect a reasonable improvement plan will be developed."

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