Bad Rap
The Korean Institute of Certified Public Accountant (KICPA) sent a letter to the International Institute for Management Development (IMD) of Switzerland and the World Economic Forum (WEF) to urge a change in accounting transparency evaluations.
KICPA announced on May 15 that it made the recommendation on April 30 and received a reply from both of the organizations. Such letters have been sent on repeated occasions, in fact.
“The assessment is made on just one subjective question, and this has led to the unacceptably low ranking of Korea in accounting transparency,” the KICPA explained. Last year, Korea ranked 58th out of 60 countries in IMD assessment and 91st out of 148 in that of the WEF to fall behind countries such as Gabon. Meanwhile, the position jumped to at least as high as 15th when the institute’s evaluation method is applied.
At present, the IMD uses the appropriateness of accounting and audit practices, and the WEF utilizes the intensity of auditing and public announcement standards in their questionnaires, which the KICPA think are too subjective and fragmented. Specifically, they just ask the single question of “Do you think corporate auditing and accounting practices in place are appropriate?” This means the ranking depends on the number of respondents giving a generous answer.
Under the circumstances, the KICPA has carried out its own surveys since 2011. It carries 12 detailed assessment items, including the two standards of the IMD and the WEF, along with those for measuring the appropriateness of accounting standards and the degree of corporate compliance with the standards. In the institute’s survey, Korea took 31st place among 61 countries.