The Korea Music Copyright Association, a incorporated association (Chairman Chuga-yeol Choo, hereinafter KMCA), flatly denied the audit system and accounting-related criticisms raised at the National Assembly Culture. Sports. and Tourism Committee's parliamentary inspection, saying there are parts that are not true.
The KMCA said on the 23rd that regarding allegations of "abuse of special audits" raised at the inspection, headquarters audits are regular audits conducted quarterly four times a year in accordance with the association's audit regulations, and that those audit regulations are enacted and operated after resolutions by the board of directors and the general meeting.
It also explained that in the case of "center special audits," until before the COVID-19 pandemic, regular audits of centers (branches) were conducted twice a year according to regulations, but during the pandemic, center operations were temporarily suspended due to performance stoppages and remote work, and were operated instead as internal audits by the center management team at headquarters overseeing nationwide centers.
After new centers were established and the need for audits was raised again, because the current audit regulations did not contain provisions related to center audits, it was unavoidable to proceed in the form of special audits until the regulations were revised. The KMCA added that it is currently pursuing revisions to the audit regulations to reestablish the center regular audit system and is carrying out procedures so that the institutional gap can be resolved promptly.
The KMCA also said claims that external accounting audits concealed deficits were not true. The KMCA explained that until now it has prepared financial statements divided into four items—general accounting, member accounting, hall accounting and trust accounting—but since August 2020 it has conducted external accounting audits on the basis of consolidated financial statements in accordance with the "Guidelines for preparing standard settlement of account forms for copyright trust management businesses" sent by the Ministry of Culture, Sports and Tourism (MCST).
The KMCA said that under consolidated financial statement standards it has recorded surpluses every year and that cumulative deficits have continuously improved, and that as of the end of 2024 it achieved net income of about 5.3 billion won. Accordingly, cumulative retained earnings turned positive to 2.9 billion won, further stabilizing the financial structure.
The KMCA also explained that the general accounting balance sheet cited in the article as of June 30, 2024, was a half-year (first half) figure to which year-end items that should be recorded at year-end were arbitrarily added, making it appear as if an inflated deficit of –9.9 billion won had occurred. In other words, they said the first-half settlement of account had prematurely summed year-end reflected items, making the deficit "look larger."
In reality, the general accounting performance as of the end of 2024 recorded a surplus of 2.79 billion won, and as a result cumulative deficits improved significantly year on year. They also said the shortfall of cash assets relative to retirement benefit provision liabilities fell to about 4.8 billion won at year-end, indicating that the association's financial soundness is gradually recovering.
In addition, regarding the audit system overall, the KMCA said the criticism raised by some media outlets and at the parliamentary inspection that "the chairman has audit authority under the audit regulations" is also not true. The KMCA explained that the audit regulations merely specify that the audit period and audit targets should be consulted with the chairman as needed for practical scheduling, and that it is not a structure in which the chairman can direct or control audit contents.
Chairman Chuga-yeol Choo said, "When audit requests have been made, we have accepted them all, and there has not been a single case in which the chairman intervened in or limited an audit," adding, "We plan to revise related regulations to prevent misunderstandings about audit independence."
[Photo] Provided by KMCA
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