Transparent information is the most powerful infrastructure supporting a capitalist market economy and a healthy civil society. Among various forms of such information, accounting — which clearly reveals an organization's cash flows and financial position — serves as a compass that efficiently allocates society's resources and builds trust among economic actors. At present, Korea's accounting rules are scattered across multiple statutes, including the Act on External Audit of Stock Companies, the Private School Act, the Housing Act, and the Act on the Management of Public Institutions. This fragmentation creates serious structural limitations. The first problem worth noting is the severe imbalance and lack of consistency in accounting transparency standards. For-profit companies, private schools, and apartment complexes may have different detailed accounting items given their differing purposes and natures. Yet the essential responsibility to manage funds transparently and report to stakeholders remains the same. Even so, the principles of accounting treatment, the scope of disclosure, and the rigor of external audits and reviews currently vary depending on the applicable law.
Moreover, whenever an accounting scandal occurs, the relevant ministry patches the system as a stopgap measure, creating a vicious cycle. As ministries lacking expertise have managed the system in fragments without a consistent control tower, "regulatory arbitrage" and blind spots have inevitably emerged — allowing even large organizations with significant social impact to evade the audit net.
Fortunately, a bipartisan consensus has recently formed in the National Assembly on the need to overcome these structural limitations. Discussions gained momentum as Rep. Park Chan-dae of the Democratic Party of Korea took the lead in proposing a Framework Accounting Act last December, followed by Rep. Choi Eun-seok of the People Power Party in January. The core of the proposals is to establish comprehensive basic principles governing accounting treatment standards, disclosure, and audits applicable to all legal entities, and to create a control tower for accounting policy — such as a "National Accounting Committee" — under the central government. If the Framework Accounting Act integrates the principles governing the entire process from standard-setting to disclosure, external audit, and review, the national benefits are clear.
First, regulatory arbitrage and oversight blind spots would significantly shrink. Practices of evading transparency obligations by exploiting the absence of systematic rules — even while managing vast assets — would be curbed. Imposing minimum standards on every organization funded by taxpayers or investors would move the system beyond belated, reactive prescriptions and build a tight web of controls that prevents problems before they occur. Second, applying consistent principles to disclosure and external audits would enhance the reliability of the final information. Beyond mere bookkeeping, the entire process — including independent verification (external audit) and follow-up supervision (review) — would fall under unified rules, fundamentally dispelling concerns about "opaque accounting." Third, the consistency of data underpinning national policy decisions would improve. Economic and fiscal statistics, which have been compiled individually by each ministry, would be produced under unified principles, raising the reliability of macroeconomic indicators. Furthermore, the National Accounting Committee would enable consistent accounting policies to be formulated and implemented without being swayed by inter-ministerial rivalries or short-term issues.
Ultimately, modernizing accounting infrastructure through the enactment of a Framework Accounting Act is directly linked to improving governance across society. It would reduce unnecessary monitoring costs and conflicts and lay the foundation for accumulating the precious intangible asset of "social trust." I hope the current legislative discussion will become a historic turning point that completes a virtuous cycle in the accounting ecosystem — from information generation to disclosure, verification, and supervision — and establishes a firm framework to strengthen the fundamentals of the Korean economy.
