Board of Audit and Inspection

The council of commissioners is composed of seven commissioners including the chair, the council makes decisions on the following matters:

1. Policies for audit and inspection and major audit and inspection plans
2. Confirmation of the final accounts of revenues and expenditures of the State
3. Disposition of audit and inspection results
4. Reconsideration
5. Reporting on the Annual Report on the Examination of the Final Accounts of the State
6. Review of Claims
7. The rendering of opinions on the enactment, revision, abolition, interpretation, and application of laws to accounting, audit and inspection
8. Enactment, revision, and abolition of the BAI's regulations
9. BAI's budget requests and the closing of its accounts
10. Exemption from audit and inspection
11. Delegation of audit and inspection
12. Other matters chosen and forwarded by the Chair.

In accordance with Article 97 of the Constitution and Article 20 of the BAI Act, BAI examines the final accounts of revenues and expenditures of the State, audits the accounts of the State and such organizations as prescribed by law, and inspects the work performed by government agencies and the duties of their employees in order to improve the quality of administrative services. BAI is a constitutional agency established under the President, but retains an independent status in terms of its duties and functions.

Duties and functions of BAI in detail are as follows:

BAI examines the final accounts of revenues and expenditures of the State every year and reports the results of such examinations to the President and the National Assembly in the next year.

BAI regularly audits the accounts of the State and other agencies prescribed by other laws in order to ensure proper and fair accounting. The matters subject to BAI’s audit can be classified into two categories: matters subject to mandatory audit; and matters subject to discretionary audit which would be conducted when BAI deems it necessary, or upon the request of the Prime Minister.

BAI inspects the works performed by government agencies and the duties of their employees in order to improve the operation and quality of government services.

Judgment on liability for reparation, BAI examines and adjudicates whether an accounting official or any other person is liable for reparation, in accordance with the Act on Liability of Accounting Personnel, Etc.

• Request for disciplinary action

BAI may request the responsible Minister or the appointing authorities to take disciplinary action on public officials who fall under causes for disciplinary action as provided for in the State Public Officials Act or other statutes, or who refuse audit and inspection or neglect the submission of documents under the BAI Act without proper reason. Among the requests for disciplinary action, if a request for dismissal has been rejected, BAI may, on its own initiative, request deliberation or review thereof by the disciplinary committee which is established at the immediately higher-level agency, and the chair of the disciplinary committee concerned shall, without delay, notify BAI of the results thereof. For a person to whom the provisions of statutes relating to the disciplinary measures are not applied, or who is deemed to have committed serious irregularities, BAI may request the authorities who appoint or recommend the appointment to dismiss the person concerned. Also, a person who has refused an audit and inspection or neglected submission of documents without proper reason shall be subject to a penal servitude for not exceeding one year or a fine not exceeding KRW 5 million.

• Request for correction

In case BAI has found what seems to be illegal or improper as a result of audit and inspection, it may request the responsible Minister, the chief of the pertinent supervisory agency or the chief of the agency concerned to correct or pay more attention to it. When the request is made, the competent Minister, the chief of the pertinent supervisory agency, or the chief of the agency concerned shall comply with such request within a period specified by BAI.

• Request for improvement

Should BAI identify inconsistencies or possible improvements in laws and decrees, institutions or administration, as a result of audit and inspection, it may request the Prime Minister, responsible Minister, the chief of pertinent supervisory agency or the chief of the agency concerned to take measures necessary for enactment, revision or abolition of laws and decrees or the improvement of institutions or administration. The head of the agency concerned that receives the request shall notify BAI of the results of the measures taken or the improvement made.

• Recommendations

When the results of audit and inspection show that it is inappropriate for BAI to make requests for disciplinary actions, correction, warning, and improvement, or it seems necessary for the chief of the relevant agency to handle the matter on his own initiative or if it is needed for the economy, efficiency, and fairness of administration, BAI may make recommendations or provide advice for improvement to the responsible Minister, the supervisory agency, or the chief of the agency concerned. The competent Minister, the chief of the competent supervisory agency or the head of the agency concerned who has received the recommendation or notification shall notify BAI of the results of the actions taken.

• Accusation, etc.

In case where BAI considers that there is a suspicion of crime as a result of audit and inspection, it shall institute an accusation with the public prosecutions authorities. An accusation should be decided by the Council of Commissioners. However, it can request the public prosecutions authorities to investigate without going through the decision process by the Council of Commissioners in case there are apprehension about destruction of evidence or runaway. If it is difficult to directly institute an accusation or an investigation with the public prosecution authorities because of limits on time or place, BAI can request the responsible organizations to take appropriate measures.

If audited entities, pertinent Ministers, appointing authorities, appointment recommending authorities, head of the supervisory agency, or an individual (who has been ordered to make reparation) believe that the BAI’s decisions against them are illegal or unjust, they can submit a request for reconsideration to BAI. Furthermore, BAI may initiate the reconsideration process on its own authority if it finds its decisions inappropriate or unjust due to error or omission of evidence, or its requests and recommendations illegal or unjust as long as such a finding has been made within two years after the decision. If the BAI’s rulings of reconsideration are not acceptable, the parties concerned can file an administrative litigation against BAI.

Any person who has an interest in a disposition concerning the duties of a person subject to BAI’s audit and inspection or other activities prescribed by BAI regulations may request BAI to review it. BAI will review the case and communicate the results of its review to the individual who has made the claim and the head of the relevant agency. The head of the relevant agency must take measures in accordance with the BAI’s decision. The individual can file an administrative litigation against the relevant agency by reason of his dissatisfaction with the agency’s measures.

BAI examines at firsthand or consigns the internal audit and inspection institutions to examine civil affairs handed out by petitioners or sent from other agencies, or illegal or improper matters reported through 188 hot lines. As a result of audit and inspection, BAI may request the responsible organizations correction or appropriate measures and notify the result of audit and inspection to the petitioner or the 188 reporters.

Government agencies should ask for BAI’s opinions when the enacting, revising or abolishing relevant laws concern accounting, powers of BAI or internal audit and inspection. Should accounting officials of entities subject to BAI’s audit and inspection request advisory opinions concerning the interpretation of accounting laws, BAI will provide its authoritative interpretation.

The audit and inspection system of Korea has a 1,300 year-old history. During the times of the dynasties, it focused on uncovering wrongdoings of government officials. After the government of the Republic of Korea was established, and pursuant to the provisions of the Constitution of 1948, the Board of Audit was founded under the President of the Republic as the supreme audit institution (SAn. In accordance with the provisions of the Government Organization Act of 1948, the Commission of Inspection was also established under the President to supervise and inspect the duties of the employees of central and local governments, government-invested organizations, and other organizations prescribed by law.

Because the work of the Board of Audit and the Commission of Inspection was in many cases so closely related, the revised Constitution of 1962 prescribed that these two organizations be merged. The Board of Audit and Inspection Act of 1963 established the current Board of Audit and Inspection (BAI) on March 20,1963.

In recent years, the Korean people have had high expectations for economic revitalization, national competitiveness, and transparent government. In response, the Korean government has been demanding both a bold restructuring in the public sector and the eradication of corrupt practices. Within this environment, the BAI has identified three directions for its audit operations: audits to promote reform, productivity audits, and open audits. The BAI expects that its efforts will increase the effectiveness of government reform measures, help eradicate an environment that nurtures corrupt practices, promote creativity and responsiveness in public service, and encourage popular participation in audits and prompt responses to the interests of the public at large.

Among all these years development of society was made by the government and some of them are listed below-

• Audit on Imposition and Collection of Major Charges Audit on the Smart City Development Project
• Audit on the Demographic Crisis II - Focusing on Old-age Income Security Audit on the Management of Consumer Chemical Products
• Audit on the Demographic Crisis I - Focusing on Regional Areas
• Audit on Personal Information Protection
• Audit on the Status of Taxation Data Processing and Utilization
• Mid-and Long-Term Fiscal Management II
• Mid and Long-term Fiscal Management I
• Audit on Status of National Safety Diagnosis Program
• Development of Pohang Enhanced Geothermal System (EGS) Project.
• Safety Management of Chemical Handling Facilities Safety Management of Nuclear Power Plants
• Operation of Emergency Medical Centers
• Fine Dust Management
• Prevention and Control of Quarantinable Infectious Diseases
• Status of Efficiency and Soundness of Local Education Finance
• Safety Management of Power Supply Facilities Status of Operation and Management of Long-Term Care Institutions
• Insufficient Information Sharing Between National Fire Agency (NFA) and Korea Centers for
• Disease Control and Prevention (KCDC)
• Insufficient Utilization of Standard Analysis Models for Public Big Data / Insufficient Utilization of
• Data on Crime Hot Spots When Analyzing and Designating New CCTV Locations
• Direct Job Creation Programs for Vulnerable Groups
• MERS Prevention and Response
• Promotion of Data-based Administration
• Implementation Status of Projects for Improving the Environment for Elementary, Middle and
• High Schools
• Safety and Quality Management of Fishery Products
• Status of Education and Support for Protected Juveniles
• Establishment and Use of Information System for Land and Environment
• Management of Weather Forecast and Earthquake Notification Systems Supply Management of Public Housings for Vulnerable People.

MISSION - Strengthening accountability & improving performance through examination of government accounts and specially of government official

VISION - maintaining commitment to duty while preparing for the future for the perspective of the people

STRATEGIC OBJECTIVE- Fiscal soundness, Economic Vitality, Public Welfare Stability, discipline in public service

AUDIT DIRECTION- audit responsive to external needs, Audit enhancing public sector performance, focus audits of quality, effective audits prepared in advance.

CORE VALUES - independence, accountability, fairness, trust

1.Constitution of the Republic of Korea.

2. Board of order audit inspection act.

3. Enforcement decree of the atom public sector audits

4. act on liability of accounting personal.

5. National finance act

6. National accounting act

7. National assembly act

8. From the prevention of corruption and establishment and management of anti corruption civil right Commission

9. Act on public sector audits

10. Enforcement decree of act on liability of accounting personnel.

The timeline below delineates historical information about BAI from 1948, when the Board of Audit and the Commission of Inspection were merged into the current Board of Audit and Inspection, until the present day.

The Article 92 of the Third Republic Constitution was amended to provide the legal foundation for BAI.

The first BAI Chair was appointed and four regulations including the Regulation on the Organization of BAI Secretariat were promulgated.

The BAI Act was enacted and promulgated. -"BAI shall be established under the President of the National Rebuilding Supreme Assembly, but shall retain an independent status in regard to its duties.

Three regulations including the Regulation on Audit and Inspection Activities were promulgated.

The BAI Act was newly enacted and promulgated. -"BAI shall be established under the President, but shall retain an independent status in regard to its duties."

The BAI joined the INTOSAI (International Organization of Supreme Audit Institutions) as a member.

The construction of BAI’s present headquarter building in Seoul was completed and BAI moved to the building.

Computer terminals for audit work activated.

The BAI joined the ASOSAI (Asian Organization of Supreme Audit Institutions) as a member.

The Audit and Inspection Training Building was opened.

The construction of BAI’s annex building was completed.

Petitions Reception Center was established within the BAI.

The Committee for the Prevention of Corruption as BAI Chair’s advisory body was established.

The 188 Hotline Center was established within the BAI.

The Public Sector Auditing Standards were enacted.

BAI served as INTOSAI Chair.

The Civil and Business Petition Center was founded.

The Audit and Inspection Research Institute (AIRI) was established.

BAI was elected as the Secretary General of ASOSAI in 2009.

The Act on Public Sector Audits was enacted.

The BAI's 4th annex building construction was completed.

Standards for Exemption from Disciplinary Measures for Proactive Actions were developed.

Bureau of IT Audit was newly created.

Audit Innovation Committee was formed.

The BAI Exhibition Hall was opened.

Legal grounds and deliberation process were prepared for Auditee Rights Advocacy Officer System.

The BAI Rules on Processing Reports for Improper Solicitation and Graft was enacted.

E-Audit Management System (BEST) was introduced.

E-Conference System was introduced.

INTOSAI Working Group on IT Audit was held (May 22nd-23rd, Seoul).

BAI Innovation and Development Committee was launched with ToR being enacted.

The Advisory Committee on Proactive Governance and Disciplinary Action Exemption was created.

BAI officially announced its candidacy for the UN Board of Auditors (BoA).

BAI appointed as an External Auditor of the International Criminal Court.

The Audit Data Analysis System called BARON was established.

The ASOSAI Working Group on Crisis Management (WGCMA) was established upon the proposal of BAI.

BAI was elected as a Governing Board member of ASOSAI.

The global economy has experienced a significant transformation, becoming a data-driven economy with new value. The Internet of Things (IoT), artificial intelligence (AI), self-driving cars, smart factories, smart healthcare and bio-industry, and intelligent finance are just a few examples of the industrial sectors where data can be used as a source. The Board of Audit and Inspection (BAI) carried out an audit on the protection of personal information in order to examine procedures and create reforms for the existing system.

Legislation on the Personal Information Protection Act (PIPA) and launch of the Personal Information Protection Commission (PIPC)

Beginning in the year 2000, there was a rise in the number of cybercrimes like hacking that violated personal information. Hacking attacks in particular that target large web portals or online companies have increased. The personal data of 35 million users of Cyworld, the largest local social networking site at the moment and operated by SK communications, was compromised in a hack in July 2011.

Major incidents related to the leak of personal information

Leakage data was used for voice phishing, loan fraud, identity theft, and telemarketing, resulting in increased calls for mobile carriers and insurance companies. Due to certain blind spots that were not covered by individual laws, social interest and demand started growing, urging the government to increase the general level of personal information protection to be at par with other major advanced countries.  With this strong demand to enact general laws for personal information protection, the Personal Information Protection Act (PIPA) was legislated in 2011, and the Personal Information Protection Commission (PIPC) was launched on Sep. 30, 2011 as an independent administrative commission under the President, to serve as the control tower for personal information protection.

The Philippine Statistics Authority (PSA) recently passed a law that would protect personal information and ensure proper use of data for a data-driven economy. This law was met with criticism from the U.S., EU, and Japan, as it could undermine innovation in the digital-based economy. To address this, related organizations such as the PIPC, the Ministry of the Interior and Safety (MOIS), the Korea Communications Commission (KCC), and the Financial Services Commission (FSC) came up with new measures to improve related laws. In Jan. 2020, the National Assembly passed amendments to Korea's three main data privacy laws (PIPA, the Act on the Promotion of the Use of the Information Network and Information Protection ("Network Act"), and the Credit Information Use and Protection Act ("Credit Information Act). An integrated PIPCE was formed as the new central administrative agency which consisted of nine members including two standing members. The integrated PIPC assumed the role of supervising the protection of personal information.

The Integrated PIPC introduced an encrypted private number system in cooperation with the Ministry of Health and Welfare, allowing parents or guardians of children to have a prompt access to original footage of their children from CCTV recordings. This was due to privacy concerns over the potential leak and misuse of phone numbers from the hand-written entry logs recorded for the tracing of possible contacts of confirmed COVID-19 patients. The PIPA has played an active role in protecting and managing personal information.

The Philippine Intellectual Property Authority (PIPC) engages in deliberation and makes decisions on the scope of personal information when it is to be used beyond the consented purpose, or provided to a third party. The PIPC is supposed to conduct investigation on the status of personal data protection and provide education. BAI conducted a sample survey on the issuance of payment notice by public parking lots in the Gyeonggi province to check for personal information.

The audit found that the PIPC made a decision that the only personal information that city/ county/ district offices may provide to their affiliated public corporations was the name and address of vehicle owners, which applies to local public corporations. To analyze the cause of such problems, BAI conducted a survey on personal information controllers and officers in charge of personal information of 38 organizations, including 19 cities/ counties and their affiliated pub corporations. As a result, 34 personal information Controllers (90%) and 13 personal Information handlers (34%) reported that they had never seen any statement of decision from the PippC, suggesting that personal info controllers in local governments or local public Corporations had little understanding of deliberation and decision by the NIPC.

BAI examined how biometric data is managed in 22 university dormitories and 7 ski areas, and found that it is important to protect biometric information as it can be used to identify a specific individual and facilitate extraction of additional characteristics such as race, medical history, etc. According to the PIPA and the Biometric Data Protection Guideline, a personal information controller must collect and useBiometric data to the minimum extent necessary to confirm and verify an individual's identity, and notify users when additional consent, other than general consent for personal information, is obtained. Additionally, the controller must examine whether there are other means to fulfil the task while minimizing the risks of infringement on the user's privacy. Finally, users should be informed of types, protection measures, and processing methods of their biomet data that has been collected and used through the Personal Information Processing Policy.^[1]

In order to confirm the identity of students for issuing access to dormitories, colleges and universities were seen to use biometric data such as the back of hand vein patterns. The audit found that 8 (36.4%) out of 22 dormitories retain this biometric data beyond the necessary period, and even after the students’ residence period is over.

Moreover, 5 (22.7%) dormitories did not obtain consent from the students for the collection and use of their biometric data, while only 3 (13.6%) dormitories recorded over 5% of actual use of alternative means such as card keys.

Swist pass users were forced to give consent on the collection and use of biometric data, even after the season had ended, as no ski slopes provided alternative means. Biometric data was used to verify the identity of ski pass users.

The PIPC entrusts the Korea Internet and Security Agency (KISA) with detecting contents exposing personal information and posts^[2] illegally distributing personal information on domestic and foreign websites, and to request ICT service providers to delete and block such posts.  

The PIPA requires website operators to ensure that users' personal information is not exposed to the public through information and communications networks. The KISA is required to take steps to prevent the spread of exposed personal information by blocking it on search portals, but failed to take any measures to detect and delete it. As a result, 280-522 pages of personal information has been exposed through the internet every year, with personal information of 4,000 users from 3 websites exposed for over one year.

The Philippine Statistics Authority (PSA) and the Act on Promotion of Information and Communications Network Utilization and Information Protection prohibit the transfer of personal information from a third party or distribution through the information and communications network unless it has been obtained from the data subjects or other statutes. However, posts illegally distributing personal information are still being uploaded faster than being deleted, making it easy to search for malicious posts. Search portals are used to limit search results by popping messages from social campaigns to fight drugs or prevent prostitution, and provide contact numbers of administrative agencies to help provide assistance to users.

The Korean government has increased its spending to respond to the public health and economic crisis caused by the COVID-19 pandemic. According to the 2020-2024 National Fiscal Management Plan, fiscal expenditure is expected to reach $543.5 billion (increasing at an annual rate of 5.7%) by 2024, while government revenue is projected to be at $468.05 billion in 2024. The government has put various efforts to manage potential fiscal risks that may arise in the long term, such as introducing new fiscal rules and restructuring expenditure frameworks. To ensure fiscal sustainability, BAI conducted audits on the mid- and long-term fiscal management system with focus on government receivables, public funds, and national debts.

BAI focused on the operation and management status of fiscal management tools such as government receivables, bonds and public funds, auditing the Ministry of Economy and Finance (MOEF) and fund managing entities.

BAI identified potential risks to fiscal management and management status, and recommendations to strengthen fiscal sustainability.

The most important details of the phrases BAI, fund, fund balance, individual funds, and adequate level are that BAI used the Adjusted Fund Balance to analyze the soundness of individual funds and found that 27 out of 61 funds^[3] have balance deficits, and 13 funds are expected to recover the fund balance by expanding self-financing revenues and reducing expenditures. The other eleven funds are highly dependent on transfers from the General Account or loans from the Public Capital Management Fund, which is not easily possible due to the increasing program cost.

The MOEF develops the 'Mid- and Long-term Fund Management Plan' for eleven pension, insurance and bond issuance funds such as National Pension Fund, Employment Insurance Fund, and National Housing and Urban Fund. BAI reviewed whether any more funds needed to be added to the Plan, such as the 'Micro Enterprise and Market Promotion Fund' and 'Korea Credit Guarantee Fund' due to their deteriorating financial condition.

BAI analyzed the government loan programs of the five funds that had large-scale programs and were financing them through external borrowing. It found that the financial burden percentage^[4] varied from fund to fund, with an average of 3.09% for Small Medium Enterprise's Start-up and Promotion Fund, 1.87% for Tourism Promotion and Development Fund, and 1.23% for Micro Enterprise and Market Promotion Fund. BAI also found that there is always a risk of borrower's default depending on the economic fluctuation, making the mid- and long-term management of government loans necessary to reduce financial risk burden.

MOEF manages excess fund balance of individual funds by allowing inter-fund transfers and interfund loans, which are flows of assets between funds without repayment. Inter-fund loans are beneficial if the fiscal health is in good condition, but must be chosen when the fund is facing a temporary shortage of capital. NBAI reviewed whether financing through intra-governmental transactions is being appropriately performed, and it was found that the National Health Promotion Fund was financing through inter-Fund loans despite its poor fiscal condition.

The Lottery Fund is one of the largest surplus funds that can be used for other funds in need, with 35% of the lottery sales revenue distributed to ten Funds and agencies such as Korea Sports Promotion Fund and Korean Veterans Health Services, and the remaining 65% to support public interest projects. BAI analyzed fiscal conditions of individual funds to assess if they need support from the Lottery fund and if the allocation ratio is reasonable. Currently, the Korea Sports Prevention Fund has a lottery fund allocation ratio of 10.3%, but this ratio needs to decrease due to increased self-financing sources.

BAI found that as of the end of FY 2019, $2.75 billion of spent nuclear fuel management cost was recorded as receivables in the Radioactive Waste Management Fund's statement of financial position, but was not recorded in the Report on Present Value of Receivables and in the Statement of Total Value of Receivables. The liquidation process for corporates is completed, so BAI's findings are not included in the report.

The National Receivables Act amended in 2014, allowing central government agencies to trust the Korea Asset Management Corporation (KAMCO) with the collection of overdue receivables (delinquent debt). BAI reviewed the debt collection activities of Central Government Agencies (BAI) to assess the effectiveness of KAMCO's arrear collection services. It was found that there was a lack of effective and efficient debt collection capabilities, and that some government agencies had no internal guidelines to select which delinquent debts to be outsourced. Those government agencies with the proposed internal guidelines had a higher receivable turnover ratio (average 4.0%) than those that did not (average 0.7%).

BAI found that as of the end of FY 2019, $2.75 billion of spent nuclear fuel management cost was recorded as receivables in the Radioactive Waste Management Fund's statement of financial position, but was not recorded in the Report on Present Value of Receivables and in the Statement of Total Value of Reivables. The liquidation process for corporates is completed, so BAI's findings are not included in the report.

The National Receivables Act amended in 2014, allowing central government agencies to trust the Korea Asset Management Corporation (KAMCO) with the collection of overdue receivables (delinquent debt). BAI reviewed the debt collection activities of Central Government Agencies (BAI) to assess the effectiveness of KAMCO's arrear collection services. It was found that there was a lack of effective and efficient debt collection capabilities, and that some government agencies had no internal guidelines to select which delinquent debts to be outsourced. Those government agencies with the proposed internal guidelines had a higher receivable turnover ratio (average 4.0%) than those that did not (average 0.7%).

BAI provided the MOEF with recommendations on supplementary measures necessary to enhance efficiency and transparency of fiscal management as well as to prepare mid-and long-term risks.

• Anti-Corruption and Civil Rights Commission
• Corruption Investigation Office for High-ranking Officials

• Official website (in Korean and English)