DAEGU — South Korea's MG Community Credit Cooperatives will be able to appoint outside experts as full-time auditors, a change aimed at strengthening the independence of oversight at the mutual finance institutions.
The change follows the passage of a revision to the MG Community Credit Cooperatives Act at a recent plenary session of the National Assembly. The bill was sponsored by Rep. Lee Dal-hee of the People Power Party, a proportional representation lawmaker who sits on the National Assembly's Health and Welfare Committee.
Under the current law, local cooperatives whose assets exceed a certain threshold must appoint a full-time auditor, but anyone who is not a member of the cooperative is barred from holding the post.
That restriction has drawn criticism that it undermines the independence and expertise of auditors, because the position — meant to check how a cooperative conducts its business and handles its accounts from an independent standing — can be filled only by members.
The revision allows local cooperatives required to have a full-time auditor to appoint outside experts who are not members.
The bill also broadens how the cooperatives may use their statutory reserves. The current law limits their use to writing off bad debt or to cases of dissolution, while the revision permits them to be applied to covering losses, as at other mutual finance institutions.
"The MG Community Credit Cooperatives are the financial institutions closest to the daily lives of local residents," Lee said. "We will continue to review the auditing and financial management systems so that members can entrust their money with confidence."
