The "2025 Accounting Trend Symposium" hosted by ChosunBiz on the 18th at the Westin Josun Hotel in Sogong-dong, Jung District, Seoul, concluded successfully. At the symposium, members of the accounting industry and representatives of nonprofit corporations gathered to discuss the need to enact a Basic Accounting Act to raise accounting transparency across society.
Experts engaged in an intense discussion on the need to enact a Basic Accounting Act that would extend current accounting norms, now limited to for-profit corporations, to the government and nonprofit corporations. While panelists agreed in broad terms on legislating to enhance accounting transparency, they offered opinions on practical issues such as the scope of application and exemptions and support measures for small entities.
The Basic Accounting Act is a law that stipulates universal, commonly applicable principles for the accounting of various organizations regardless of institutional sector, for-profit or nonprofit. For-profit corporations such as corporations are uniformly subject to the Korea International Financial Reporting Standards (K-IFRS) and the Accounting Standards for Non-Public Entities under the Capital Markets Act and the Act on External Audit of Stock Companies, but nonprofit corporations are different. Accounting governance laws differ by field, and the competent authorities in charge are all different.
Kim Ki-young, a professor in the Department of Business Administration at Myongji University, served as the moderator of the panel discussion. Kim said, "The need to enact a Basic Accounting Act is an important issue in enhancing accounting transparency across society," opening the discussion.
Ahn Tae-jun, a professor at Hanyang University School of Law who participated as a panelist, agreed on the need and direction of enacting a Basic Accounting Act but offered views on the scope of application. He said, "The biggest issue when we talk about creating a Basic Accounting Act is 'how far to set the scope of application,'" adding, "It may be ideal to include the government, local governments, for-profit corporations, and nonprofit corporations down to small organizations, but given resistance during the legislative process, it looks difficult in reality. Considering the realistic feasibility of legislation, we need to determine the subjects and scope of application."
Kim Bong-hwan, a professor at the Graduate School of Public Administration at Seoul National University, offered recommendations on principles and supplements to consider when enacting a Basic Accounting Act. Kim said, "Not only nonprofit corporations but also the state and local governments that use taxpayers' money should be included as subjects of the Basic Accounting Act," explaining, "Although the state and local governments use taxpayers' money, their accounting standards are completely different, and people who know the accounting standards of corporations do not understand the state's accounting standards."
He added, "Some countries, including the United Kingdom and Australia, have adopted International Financial Reporting Standards (IFRS) and conduct audits under those standards," and "In Korea, the Board of Audit and Inspection also conducts audits, but in the United States, general accounting firms offer opinions through audits of government departments."
Kim also said, "We need criteria for exemptions. If exemptions are allowed, the Basic Accounting Act will be hollowed out," adding, "The internal control over financial reporting system, for example, is hard even for corporations to comply with, so it is questionable whether nonprofit corporations can follow the rules. For areas where many exemptions would be needed, it would be better to add provisions gradually."
Choi Ho-yoon, CEO of Theham Accounting Corporation, stressed the need to consider the diversity of stakeholders. He explained, "Nonprofit corporations have different types of income and different providers of resources. There are stakeholders from entirely different spheres, including state and local government grants, private donations, and revenue from business activities," adding, "If the supervisory authority under the Basic Accounting Act is assigned to the competent administrative agency, the view will be only from the perspective of providers of state and local government grants."
Choi said, "The current Local Subsidy Act requires external audits, but there are no penalties when an organization fails to undergo an external audit, nor are there rules on who must submit audit reports or on disclosures," adding, "Accordingly, the Basic Accounting Act should require that, after preparing settlement of account statements or financial information, entities go through verification procedures such as audits, and it should also stipulate how disclosures are to be made to be meaningful."
Moon Jae-sung, Director General of the Higher Education Finance and Accounting Headquarters at the Korea Advancing Schools Foundation (KASFO), also argued that an approach considering stakeholders is necessary. Moon said, "Accounting is information intended to provide stakeholders with accurate data to support lawful and legitimate decision-making," adding, "If the ultimate goal of the Basic Accounting Act is to increase transparency, it is necessary to identify needs by stakeholder type and establish standards accordingly."
Kim Mi-ra, head of compliance at Korea Compassion, raised concerns about administrative and financial burdens from double regulation. Kim said, "For example, social welfare corporations already undergo audits and make disclosures under the accounting standards for public corporations, but they are also facing double regulation under the financial rules for social welfare corporations," adding, "If a Basic Accounting Act is enacted, it will need to coordinate as a higher-level law."
Bae Won-gi, president of the Korea Nonprofit Organization Evaluation Institute, said, "It is important to clearly delineate the government, for-profit corporations, and nonprofit corporations. Korea's accounting rules were influenced by Japan in the past and by the United States now, so unification is needed on how to integrate these."
Lee Su-mi, a standing member of the Korea Accounting Standards Board, said, "The accounting standards for nonprofit organizations announced 4th in 2017 were established out of the need for preparation standards that various stakeholders can easily understand and compare," adding, "However, due to the lack of institutional mechanisms, no one except the Accounting Standards Board currently uses these standards. Because it is important to lay an institutional foundation for the overall accounting system of society, we should continue the discussion starting with the enactment of the Basic Accounting Act."