Financial authorities are discussing a plan to increase the budget for rewards paid to internal whistleblowers who report corporations' accounting fraud. The cap on rewards paid to informants has risen from 1 billion won to 2 billion won, but the budget secured for paying rewards is only 400 million won. The authorities aim to bring the related budget in line with reality.
According to financial authorities on the 1st, a plan to increase the reward budget for accounting fraud reports is under review for next year's budget bill. A certain percentage of rewards is paid to those who report corporations' accounting violations based on the scale of the violation and the informant's contribution, but the surge in the number of reports and the size of rewards has pushed the budget to its limit.
The accounting fraud reporting system was introduced in 2019. It is intended to detect accounting fraud early through tips from corporate insiders and to protect informants. Since its implementation, as cases of detecting accounting violations based on internal corporate information have increased, the system's effectiveness has been confirmed, but the budget has been flagged as failing to keep pace with the system's expansion.
In fact, as the accounting fraud reporting system has quickly taken root, the number of reports and reward payments has risen sharply. The number of reports, which was 125 in 2021, increased to 130 in 2022 and 141 in 2023, and last year 179 reports were filed.
By year, the number of reward payments was 5 in 2021, 3 in 2022, 8 in 2023, and 7 in 2024, showing no major change, but the reward paid per report is increasing. Last year, the reward paid per case was 58.15 million won, with a total of 407 million won paid. That is 1.8 times higher than the previous year. This year, 450 million won was paid through May, exhausting the entire budget.
The problem is that reward payments exceeding this year's budget are already scheduled. Unpaid rewards through the first half of this year total 1.7 billion won. Unpaid rewards must be paid from next year's budget. If next year's budget is not increased, rewards that should be paid this year could be carried over into the year after next.
On top of that, with the government signaling a hard line on accounting fraud, the pace of reward budget depletion is expected to accelerate further. Starting in 2023, the reward cap was also raised from 1 billion won to 2 billion won.
However, the increase in the reward budget that financial authorities pursued last year fell through, creating a mismatch within the system. Initially, the Financial Services Commission (FSC) pushed to raise this year's reward budget to around 1.1 billion won, but during the National Assembly review, the government budget for this year was decided as a cut, leaving it at the current level of 400 million won.
A financial authority official said, "With the increase in this year's reward budget falling through, there was criticism that the system's operation was somewhat impractical," and added, "As internal whistleblowers' help is crucial for investigating accounting fraud, securing a sufficient budget is necessary."