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S. Korean firms at joint park fail to meet North's accounting deadline
By Kim Hyun
SEOUL, May 22 (Yonhap) -- Scores of South Korean firms operating at an industrial complex in North Korea failed to submit their yearly accounting reports to the North by the March deadline due to procedural restrictions, officials said Friday.
Such a delay has been a regular annual occurrence, given a regulation that allows only two South Korean accounting agencies to audit more than 100 factories at the joint complex in the North's border town of Kaesong, said Unification Ministry spokeswoman Lee Jong-joo.
North Korea is pressing for the submission so as to grasp the firms' business performances for the 2008 fiscal year, and inter-Korean discussions are underway to smoothen the process, Lee said.
"For the North, it has to get the reports to know how the firms are doing," Lee told reporters.
According to North Korea's Code of the Act and Regulations for the Kaesong Industrial Zone, South Korean firms that have invested more than US$1 million in the joint park or whose yearly sales revenue has surpassed $3 million have to submit their accounting reports to North Korea by the end of March.
Only two South Korean auditors -- currently Deloitte Anjin LLC and Fine Management & Accounting Corp. -- are commissioned to cross the border to audit the firms according to the North Korean law, which was set up at the outset of the park development in 2002.
The traffic restrictions North Korea imposed in March have hampered the firms' ability to meet the deadline, Lee said. The North sealed the inter-Korean border three times that month in protest at South Korea's military exercise with the United States.
"With the traffic blockage and so forth, the businesses say their accounting inspection process has been delayed," she said.
Among the 106 firms operating at the park, 62 are subject to the accounting reporting, and only about a third of them have done so, Lee said. Last year, the reporting was completed in September.
Those who fail to present their audit results are subject to a $10,000 fine, and those file falsified report report can be fined up to $5,000. No firms have faced such charges yet, Lee said.
Officials say the two Koreas may consider increasing the number of commissioned South Korean auditors to meet the deadline when government-level talks are held.
Seoul wants official talks with Pyongyang, but earlier negotiations to set them up broke down due to an agenda difference.
South Korea calls on the North to release its fellow countryman who was detained at the Kaesong park in March on charges of criticizing the North's political system.
North Korea refuses to discuss the detained worker, saying official talks should deal with operational issues, such as wages and land fees.
Pyongyang sent a letter to Seoul last week, saying it has scrapped all inter-Korean accords on the joint park and would unilaterally set new terms.
The Kaesong park, just an hour's drive from Seoul, is the last surviving reconciliatory project between the two Koreas, with other ventures -- tourism programs to the North's attractions -- all suspended last year due to unraveling political relations.
More than 40,000 North Koreans work at Kaesong for the South Korean firms producing clothes, utensils, electronic equipment and other labor-intensive goods. Their output reached $250 million last year.
hkim@yna.co.kr
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