State programs in Korea exceeding $75,000 subject to external audits from July

[Photo by MK DB]

Projects that receive more than 100 million won ($75,075) in state subsidies will be subject to external audits from as early as July as the South Korean government aims to look out for illegitimate supply of subsidy funds.

The Ministry of Economy and Finance on Sunday issued a legislative notice on the amendment to the enforcement decree of the subsidy management act that raises the criteria for external audits from the existing 300 million won. The change will take place as early as in the second half of this year after legislative notice period ends in May.

The enhanced rule is known to target labor unions and civic groups that have been criticized for their indiscriminate accounting practices. Once the plan takes effect, the number of programs subject to independent audits will be more than quadrupled to 40,411 from 9,079 last year.

The government aims to enhance the accounting transparency of militant labor unions and civic groups that have been condemned for eating up the government budget with reckless accounting during the Moon Jae-in administration.

There have been concerns as subsidy payments during the previous government have surged.

State subsidies jumped more than 70 percent to 102.3 trillion won last year from 59.6 trillion won in 2017. The share of subsidies in the central government budget also increased to 16.8 percent from 14.9 percent during the period.

President Yoon Suk Yeol has been emphasizing the need for a complete overhaul in the subsidy system.

“We will continue to work on developing institutional systems aimed at enhancing the transparency of subsidies so that people’s taxes are not wasted anymore,” said an unnamed official from the finance ministry.

The government, in the meantime, will tighten its reins on next year’s budget planning as well. Non-transparent subsidy programs will be subject to penalties or a subsidy cut in the next year’s budgeting process.