KICPA: "Seoul's Private Consignment System Should Be Maintained"

Seoul Metropolitan Council announces proposed amendment to replace accounting audits of privately commissioned projects
with examinations of project expense settlement statements
Adds tax accountants and others as examiners
"No grounds to change the system restored to accounting audits"

On November 2, the Korean Institute of Certified Public Accountants (KICPA) expressed concern over the “Amendment to the Ordinance on Private Consignment Projects,” which the Seoul Metropolitan Council had announced for public comment. It argued that the current audit system should be maintained to ensure that taxpayers’ money is spent transparently.

The amendment is a partial revision of the Ordinance on the Private Consignment of Administrative Affairs by the Seoul Metropolitan Government. Its main provisions are to replace the accounting audit system for privately commissioned projects with an examination of project expense settlement statements and to add tax accountants and tax accounting firms as examiners.

The KICPA said that the essential purpose of verification—preventing tax revenue from being wasted—should not be obscured by “turf issues.” Funds for privately commissioned projects are public funds raised from taxes paid by the public, and as of 2025, local governments nationwide had budgets of approximately KRW 14.6 trillion for such projects. In 2014, the Seoul Metropolitan Government became the first local government to introduce an accounting audit system to ensure transparency and fairness in project implementation. The KICPA said, “The amendment would roll back a rigorous accounting audit system to a simplified ‘examination of settlement statements,’” and pointed out that “it is not appropriate to lower the level of verification for privately commissioned projects in order to expand the pool of those authorized to perform the work.”

It also said there was no reasonable basis for changing the system again after it had been restored to accounting audits. In 2022, despite opposition from the central government and the Seoul Metropolitan Government, the Seoul Metropolitan Council passed an ordinance replacing accounting audits with examinations of project expense settlement statements. The Supreme Court ruled in a suit seeking to invalidate the ordinance that it could not be deemed a violation of the Certified Public Accountant Act, leaving the ordinance in effect. Immediately after the ruling, however, the Seoul Metropolitan Council deleted the settlement statement examination provision and revised the ordinance again to strengthen verification by reinstating accounting audits.

The KICPA stressed, “A reasonable basis is needed to change a system that was restored to normal through ‘accounting audits’ back to a simplified ‘examination of settlement statements’ just over a year later.”

It added, “An unsupported change would only fuel controversy over ‘lowering the level of verification’ for privately commissioned projects funded by taxpayers, while creating confusion and burdens for the Seoul Metropolitan Government and entrusted institutions due to controversy over frequent changes to the system.”

The KICPA also argued that the amendment to the Local Autonomy Act should be reviewed and enacted without delay. At present, the methods and scope of oversight for privately commissioned projects vary according to ordinances adopted by each local government. As a result, the level of verification differs by region even though the projects are all funded by taxpayers, and disputes over ordinance revisions keep recurring. The KICPA said, “The amendment to the Local Autonomy Act, which stipulates accounting audits of privately commissioned projects, needs to be reviewed and passed without delay so that a common oversight framework can be established at the statutory level.”

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