RESTRICTED
WORLD TRADE S/WPPS/W/7/Add.3
10July1996
ORGANIZATION
(96-2675)
Working Party onProfessional Services Original: English
COMMUNICATION FROM KOREA
Response tothequestionnaire ontheaccountancy sector
Thefollowing communication iscirculated attherequest ofKorea.
________
I. GENERAL
1. What aretheprofessional titlesofaccountants inyourcountry? Arethese professional titles
protected? Please specify how.
Theprofessional titleofaccountants inKorea isCertified Public Accountants (CPA).
Thetitleisprotected bylaw.
2. Howistheaccountancy sector regulated inyourcountry: bylaw,professional self-regulation,
acombination ofboth?
Theaccountancy sector isregulated byacombination oflaw(theCPAAct)andprofessional
self-regulation.
Seetheresponse toIFAC survey*B.1,B.2andB.3.
3. Arethere anyprovisions toprotect company names, whether national orforeign, inyour
country?
Ifregistered withthegovernment registry office, company names areprotected under the
Commercial Code.
4. What aretheprofessional bodies inyourcountry? Aretheyrecognised bylawasaregulatory
ordisciplinary bodyfortheaccountancy profession inyourcountry, orarethese functions
fulfilled byother institutions (please specify)?
Theprofessional body inKorea isthe"Korean Institute ofCertified Public Accountants
(KICPA) ”.
*SeetheIFAC questionnaire onissues related tointernational trade inaccountancy services:
summary ofresponses -1July1995.S/WPPS/W/7/Add.3
Page2
TheKICPA isrecognized bylawasaself-regulatory bodyforcertain aspects oftheaccountancy
profession (such asprofessional ethics, independence intheperformance ofprofessional
responsibilities, education, quality control andsome involvement insetting ofstandards, etc.).
Seetheresponse toIFAC survey A.2andB.2.
5. Howmany members dothese professional bodies have? What istheestimated proportion
ofthose:
Number ofKICPA members 3,610
Percentage ofmembers
- Public practice 78%
- Industry orcommerce 13%
- Public sector 2%
- Education 2%
- Unoccupied andother 5%
6. What isthescope ofactivities regularly practised byaccountants inyourcountry?
Auditing (statutory audit, non-statutory audit andaudit ofmergers), taxservices (taxadvice
andtaxrepresentation), accounting andmanagement consulting services areactivities regularly
practised bytheCPA.
Seetheresponse toIFAC survey B.9.
7. Which ofthese activities areregulated inyourcountry?
Among theabove activities, statutory audit, audit ofmergers andtaxrepresentation services
areregulated.
Seetheresponse toIFAC survey B.4.
8. Which oftheseactivities arereserved bylawtoaccountants, shared byaccountants withother
professions (please specify), orevenforbidden toaccountants inyourcountry, e.g.byfull
prohibition orbynotallowing cumulation ofcertain activities which areconsidered
incompatible ormutually exclusive?
Statutory andnon-statutory audit andaudit ofmergers arereserved bylawtotheCPA.
Taxadvice andtaxrepresentation services areshared bytheCPA withtheLicensed Tax
Accountants andlegalattorney.
Seetheresponse toIFAC survey B.8andG.6.S/WPPS/W/ 7/Add.3
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II. QUALIFICATION REQUIREMENTS
9. What arethequalification requirements forthese activities inyour country interms of
university/higher education degree, practice andprofessional exam? Specify thenumber
ofyears required foreach element, andthedifferences according totheactivities (audit,
insolvency, tax,etc.)covered bythequalification.
Nouniversity/higher education degree isrequired.
Topractice theregulated services asaCPA, anindividual mustpassprofessional examinations,
complete around 200hours ofeducation programs offered bytheKICPA andhave2years
accountancy experience intheKICPA, SEC(Korea Securities andExchange Commission)
orincorporated partnerships.
Asforincorporated partnership, seetheresponse toquestion no.21.
10. Arethere anypre-conditions tomeet tostarttheprofessional education: minimum age,
particular diploma ortitle,prior education, registration withaprofessional body, payment
ofafee,other (please specify)?
Pre-conditions tostartprofessional education aretosuccessfully passprofessional examinations,
registration withtheKICPA, payment ofafeeandtheabsence ofanycriminal record. There
arenoageordiploma requirements.
11. What arethesubjects tobecovered bytheeducation: accounting, audit, tax,general law,
economics, ethics, information technology, other (please specify)?
Theeducation programs offered bytheKICPA cover accounting, audit: tax,management
evaluation andethics.
III. TECHNICAL STANDARDS AND ETHICS
12. Inrelation towhich activities donational standards exist(audit, accounting, insolvency,
other)? Please specify theirmain policy objectives.
National standards existforaudit andaccounting.
Theobjective oftheAuditing Standards istoenumerate guidelines tobefollowed byanauditor
inconducting anauditofthefinancial statements ofabusiness enterprise subject tothestatutory
audit.
Theobjective oftheFinancial Accounting Standards istoestablish standards foraccounting
treatment andthefinancial reporting ofbusiness enterprises toensure uniformity andobjectivity
intheauditing ofauditors andaccounting ofcompanies subject tothestatutory audit.
13. Which bodyorinstitution develops thesestandards andmonitors theirimplementation? What
aretheconsequences ofabreach ofthestandards (fortheprofessional, forclients, etc.)?
TheAuditing Standards aredeveloped bytheSEC. Additional detailed provisions and
interpretations forimplementation oftheStandards maybedeveloped bytheKICPA, subject
toapproval fromtheSEC. Implementation oftheAuditing Standards ismonitored bytheSECS/WPPS/W/7/Add.3
Page4
andtheKICPA. TheSECalsohasanauthority todevelop theFinancial Accounting Standards
andtomonitor theirimplementation.
Abreach oftheAuditing Standards could subject auditors todisciplinary sanctions bytheSEC
andtheKICPA and/or legalactions bytheother interested parties. Abreach ofthefinancial
Accounting Standards willresult inqualified oradverse audit opinions.
14. Aretheinternational standards developed byIFAC (International Education Standards and
Guidelines, International Standards onAuditing) andIASC (International Accounting
Standards) recognised orusedinyourcountry? Ifyes,please explain how. Ifno,please
explain why.
TheIFAC andIASC standards arenotrecognized orusedinKorea. However, Korean GAAP
(GenerallyAcceptedAccountingPrinciples)andGAAS(GenerallyAcceptedAuditingStandards)
aresubstantially equivalent tointernational GAAP andGAAS, respectively.
15. Inrelation towhich activities does aparticular ethical code exist (audit, accounting,
insolvency, other)? Please specify itsmain policy objectives.
TheKICPA develops anethical codetoprovide guidance andrules toallmembers inthe
performanceoftheirprofessionalresponsibilities(audit,accounting,taxandalltheotherservices
aCPA provides).
Theobjective ofthecodeistomaintain andbroaden public confidence byrequiring allmembers
toobserve theprinciples ofindependence, integrity andduecareintheperformance oftheir
professional responsibilities.
16. Which bodyorinstitution develops thiscodeandmonitors itsimplementation? What are
theconsequences incaseofbreach oftheethical codebyaprofessional orafirm?
TheKICPA develops ethical codeandmonitors itsimplementation. Abreach oftheethical
codecould result indisciplinary sanctions suchaswarning notice andthesuspension oflicense.
17. Arethere restrictions onmarketing, solicitation, advertising?
There arenorestrictions. But,marketing, solicitation andadvertising should respect thedignity
ofprofession inaccordance withtheethical code.
Seetheresponse toIFAC survey F.1.
18. Arethere restrictions onfee-setting (minimum/maximum levels imposed, indicative scale,
etc.)?
Maximum feesforstatutory auditaresetbytheSECandmaximum feesforstatutory taxreturns
aresetbytheNational TaxAdministration.
Seetheresponse toIFAC survey F.2.S/WPPS/W/ 7/Add.3
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IV. LICENSING REQUIREMENTS AND PROCEDURES
19. Apart fromthequalification requirements, whatarethelicensing requirements forindividuals
inyourcountry?
Membership oftheKICPA.
Registration withtheMinistry ofFinance andEconomy (MOFE).
Absence ofcertain criminal record.
Minimum age(18).
Seetheresponse toIFAC survey C.3.
20. Arethere anyconditions imposed tobeeligible formembership oftherelevant professional
body(ies)? Please specify.
There arenomembership conditions fortheKICPA.
21. Arethere specific licensing requirements forprofessional firms?
Licensing requirements forincorporated partnership:
- 5ormore partners, 30ormore CPAs.
- Membership oftheKICPA.
- Approval byMOFE.
- Partners andstaffCPAs should beregistered CPAs withcurrent permit topractice.
Licensing requirements forjointaccounting office:
- 10ormore CPAs.
- Membership oftheKICPA.
- Registration withtheMOFE.
- CPAs should beregistered CPAs withcurrent permit topractice.
22. Cananapplication forlicensing befiledatanytimeoftheyearorarethere specific dates
torespect? Howlongdoesittaketocomplete thewhole licensing procedure? Please specify
incaseofdifferences between individuals andfirms.
Inthecases ofbothindividuals andfirms, anapplication canbefiledatanytimeoftheyear
andittakes lessthanonemonth tocomplete thewhole licensing procedure.
23. Arethere differences interms oflicensing requirements and/or procedures, according to
theactivities covered bythelicence (audit, insolvency, etc.)? Please specify. What kind
ofdocumentation isnecessary/accepted? Aredocuments issued inother countries acceptable?
Please specify.
Thesame licensing requirements andprocedures apply fortheregulated activities, except for
thetaxservices.S/WPPS/W/7/Add.3
Page6
Inorder foraCPAtoprovide taxservices, aseparate registration withtheMOFE isrequired.
Theregistration maybemade through KICPA. Nodocumentation, other thanaKorean CPA
license, isrequired fortheregistration.
24. What happens when thelicensing conditions arenolonger respected bytheindividual or
thefirm?
Thelicense willbeeither suspended orrevoked bytheMOFE.
V. RECOGNITION OFQUALIFICATIONS
25. Arethereanypossibilitiesfortakingaccountofqualificationsacquiredbyforeignprofessionals
inanother country? Arethere bilateral agreements withother countries inthisrespect?
Atpresent, there arenopossibilities fortaking account ofqualifications acquired byforeign
professionals inanother country.
There arenobilateral agreements withother countries inthisrespect.
Seetheresponses toIFAC survey C.6andC.7.
26. Arethere anyautomatic recognition ormutual recognition agreements between your
professional bodies andtheircounterparts inother countries? Ifso,please specify themain
characteristics ofsuchagreements; ifnot,please explain why.
No,therearenoautomatic recognition ormutual recognition agreements between theKICPA
anditscounterparts inother countries. Themain reason whywedonotrecognize other
countries CPAqualification isbecause wedonothaveanyreasonable international ordomestic
criteria forevaluating other countries ’CPA qualification against Korean CPA qualification,
given thattherearelanguage barriers anddifferences inaccounting standards among Members.
Seetheresponse toIFAC survey C.10.
27. Where possibilities oftaking account offoreign qualifications exist, isafulllocalexamination
oralocaltraining exceeding 12months required? Please specify. Isalocallicence always
necessary topractice aregulated accountancy activity? Please specify when thisisnotthe
case.
There arenopossibilities fortaking account offoreign qualifications. Alocallicense isalways
necessary topractice aregulated accountancy activity.
28. Whataretheaccreditation/licensingrequirementsimposedonforeignprofessionalsauthorised
topractice intheirhome country? Maycertain (regulated) activities becarried outonthe
basis ofaforeign licence?
There arenoadditional accreditation /licensing requirements imposed onforeign professionals
thatdonotapply tobedomestic professionals. Foreign professionals arerequired tomeet
thesame requirements asdomestic professionals.S/WPPS/W/ 7/Add.3
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Regulated accountancy activities cannot becarried outonthebasis ofaforeign license.
Seetheresponses toIFAC survey C.7andC.8.
VI. REGULATIONS GOVERNING THE ESTABLISHMENT OFACOMMERCIAL
PRESENCE
29. Arethere anyrestrictions ontheform under which onecanestablish (partnership,
incorporation, other)? Please specify.
Only soleproprietorships, auditing teams (3ormore CPA), jointaccounting offices, (10or
more CPAs) andincorporated partnerships 30ormore CPAs) arepermitted.
Soleproprietorships, however, arenotallowed toprovide statutory auditing services.
30. Arethere restrictions onforeign direct investment andownership, including restrictions
applying tonotlocally qualified individuals orfirms? Please specify.
Foreign direct investment andownership ispermitted onlyiftheforeign individual isaCPA
licensed inKorea. Direct investment andownership byforeign firms arenotallowed.
31. Isthere arequirement ofaminimum number orpercentage oflocal directors, managers
orstaff(please specify)?
Norequirement.
32. Arethererestrictionsontheabilityoflocallyestablishedfirmstodevelopinternationalrelations
(membershipofaninternationalnetwork,associationwithforeignfirms,etc.)?Pleasespecify.
There arenorestrictions iftheinternational relations arelimited tooperational areas, such
as,membership inaninternational network, association withforeign firms, payment of
membership feesandtechnical assistance toalocalmember firminaccordance withamember
firmagreement, etc.
Nofinancial links areallowed.
Seetheresponse toIFAC survey D.9.
33. Istheuseofinternational orforeign names restricted forfirms?
Norestrictions.
VII. REGULATIONSGOVERNINGTHEENTRYANDTEMPORARYSTAYOFNATURAL
PERSONS FOR THE PURPOSE OFSUPPLYING ACCOUNTANCY SERVICES
34. Istheentry andstayofprofessionals subject tolabour market testsoranyother restrictions?
Please specify.
There arenorestrictions, except thatanindividual should beaCPAlicensed inKorea inorder
toprovide regulated accountancy services.S/WPPS/W/7/Add.3
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Toprovide regulated accountancy services, anindividual should beaCPAlicensed inKorea.
Ifforeign professionals belonging toaninternational network aretostayinKorea toprovide
technical assistance services totheirKorean member firm, employment visas arerequired.
35. Isthere anyprocedure facilitating thetemporary entry andstayofprofessionals tosupply
accountancy services? Please explain.
Employment visasfortheforeign professionals areissued ontherecommendation oftheMOFE.
Requestbyincorporatedpartnershipsorjointaccountingoffices,forlegitimatebusinessreasons,
areusually granted.
Seetheresponse toIFAC survey H.1.
36. Arethere anyrestrictions onhiring oflocalprofessionals byforeign firms andprofessionals?
Please explain.
Norestrictions apply tothehiring oflocalprofessionals byforeign firms.
VIII. NATIONALITY/RESIDENCY REQUIREMENTS
37. Isacondition ofnationality/citizenship imposed topractice certain activities, tostartan
education, toobtain alicence, tobecome member ofaprofessional body, etc.? Please specify.
Acondition ofnationality/citizenship isnotimposed.
Seetheresponse toIFAC survey C.3.
38. Isacondition ofestablishment, prior residency orresidency imposed topractice certain
activities, toobtain alicence, tobecome member ofaprofessional body, etc.? Please specify
theconditions andthedefinition ofestablishment, residency, etc.when relevant.
Isitpossible tohaveaprofessional establishment inmore thanonecountry?
There arenoresidency requirement.
Acondition ofestablishment must bemettopractice statutory audit asaCPA.
- Incorporatedpartnershipsshouldhavetheirestablishmentregisteredwiththegovernment
registry office andtheMOFE.
- Ajoint accounting office andasolepractitioner should have their establishment
registered withtheMOFE.
- Anauditing teamshould haveitsestablishment registered withtheKICPA inaddition
totheregistrations ofitsmembers assolepractitioners.
Itispossible tohaveaprofessional establishment inmore thanonecountry.
Seetheresponse toIFAC survey C.3.