South Korea’s two mid-sized accounting companies BDO E-Hyun Accounting Corp. and Seoil & Co. will merge their businesses together, a move that is expected to spur mergers among local peers amid the government’s efforts to reform the country’s audit industry.
According to sources from the accounting industry on Monday, the two firms will become one starting March 20 after convening a general meeting to vote for the merger plan on Friday. The merged entity to be led by Kang Sung-won, former chairman of the Korea Institute of Certified Public Accountants, is expected to become the country’s 8th largest accounting firm with combined revenue reaching 40 billion won ($37.5 million).
The two firms aim to groom the new organization as the nation’s top five accounting company that could compete against the country’s current top four - Samil PricewaterhouseCoopers, Samjong KMPG Accounting Corp., Deloitte Anjin LLC and Ernst & Young.
Market observers expect that the marriage of the two firms would trigger other small and mid-sized local auditors to merge their businesses to become competitive in a scale of economy under the government’s policy to reform the nation’s audit industry that is mainly controlled by the country’s top four.
The government focuses to enhance the country’s audit competitiveness as part of efforts to fight against accounting frauds. Earlier last year, Korean financial authorities slapped Deloitte Anjin with punitive actions banning it from signing new contracts on conclusion that the auditor assisted Daewoo Shipbuilding & Marine Engineering Co. in cooking up its financial figures.
Founded 2007, E-Hyun Accounting is the Korean subsidiary of the world’s fifth largest audit and accounting firm BDO International. It has grown more than 20 percent every year since its foundation and has been recognized its expertise in tax accounting services. The Belgium-based BDO International has overseas operations in 162 countries with more than 74,000 people working out of 1,500 offices worldwide. Seoil & Co. established in 1999 is a mid-sized accounting firm with sales reaching 10 billion won.
By Jin Young-tae and Choi Mira
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]