Critical Review on the Intrinsic Weakness of the Internal Audit System in Local Government of Korea and Japan
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Though the internal audit practices in Korea began since the 1960s by copying exactly the similar institutional settings of Japan’s local government, the Korean Central Government and Board of Audit and Inspection have been making significant efforts to develop Local Government Internal Audit (IA) system in newly rearranging the self-audit scheme of Jeju Special Island into a new audit committee system and legislating the Public Audit Act (PAA) effective since 2010. But the IA does not function as well as it was expected in both countries. In that administrative circumstance, this paper aims, by exploring similarities and differences of two countries’ similar internal audit regimes, at finding out the main causes of the malfunction, in terms of the generally accepted international internal audit standards, principles and practices. And, in the final section, this research suggests some alternatives to ensure the internal audit values of ‘independence and objectivity’ in order to root out the intrinsic characteristics derived from the traditional and bureaucratic organizational cultures in Korea and Japan.
Abstract
Though the internal audit practices in Korea began since the 1960s by copying exactly the similar institutional settings of Japan’s local government, the Korean Central Government and Board of Audit and Inspection have been making significant efforts to develop Local Government Internal Audit (IA) system in newly rearranging the self-audit scheme of Jeju Special Island into a new audit committee system and legislating the Public Audit Act (PAA) effective since 2010. But the IA does not function as well as it was expected in both countries. In that administrative circumstance, this paper aims, by exploring similarities and differences of two countries’ similar internal audit regimes, at finding out the main causes of the malfunction, in terms of the generally accepted international internal audit standards, principles and practices. And, in the final section, this research suggests some alternatives to ensure the internal audit values of ‘independence and objectivity’ in order to root out the intrinsic characteristics derived from the traditional and bureaucratic organizational cultures in Korea and Japan.
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