The Seoul City Council passed the amendment to the 'local government ordinance on the delegation of administrative affairs to the private sector', and the Certified Public Accountants Society welcomed it while the Tax Accountants Society expressed opposition, reported on the 10th. The amended ordinance stipulates that only accountants can inspect the settlement of account statements for project expenses, and tax accountants are prohibited from doing so.
According to the Seoul City and the Seoul City Council, the Council held a plenary session on the 7th, where 37 out of 62 members present voted in favor, 2 voted against, and 23 abstained, passing the amendment to the 'local government ordinance on the delegation of administrative affairs of the Seoul Special City'.
The amended ordinance changes the name 'inspection of settlement of account for project expenses' to 'audit' and stipulates that only accountants can perform audits on project expenses. It is known that the project expenses operated on behalf of the city by private contractors amount to around 1 trillion won annually. According to the amended ordinance, only accountants will receive the audit fees for this.
The conflict between the accountants and tax accountants surrounding the ordinance is not the first time. In the past, auditors for project expenses in private delegation projects of Seoul City were exclusively performed by accountants. However, in December 2021, while the Democratic Party of Korea was the majority in the City Council, an ordinance was passed changing the name from 'audit' to 'inspection of settlement of account for project expenses', allowing tax accountants to participate as well.
In response, the Financial Services Commission stated that the 'inspection of settlement of account for project expenses' is a unique duty of accountants, and Mayor Oh Se-hoon of Seoul requested the City Council to reconsider the ordinance. When the City Council re-passed the ordinance in its original form in April 2022, Seoul City filed a lawsuit with the Supreme Court claiming the ordinance was invalid.
The Supreme Court sided with the tax accountants last October. However, with the People Power Party as the majority, the ordinance was amended again so that only accountants could perform audits on project expenses in the private delegation.
In response, the Tax Accountants Society stated in a press release on the 7th that 'the Seoul City Council is obsessed with securing the accountants' legal interests rather than cutting the budget and is encouraging tax wastage.' They further stated, 'We strongly condemn the members of the People Power Party, including Chairperson Choi Ho-jung of the City Council,' and added that they would take legal action regarding the flaws in the chairperson's authority to propose, the passage of the ordinance, and the voting procedures.
The Korean Institute of Certified Public Accountants stated in a statement that day, 'We actively welcome the responsible decision of the Seoul City Council to ensure accounting transparency and fairness.' The accountants argued that the project expense verification that tax accountants can conduct is a 'simple inspection', saying it would make it impossible to properly detect fraud in project expenses such as false transactions, price inflation, and misuse of purpose, and to recover the misappropriated amounts.