[EDITORIALS]Accounting fraud no joke

Accounting scandals in the United States are far from over and the epidemic is spreading elsewhere in the world. The impact on the international financial markets is being felt, and we in this part of the world have not escaped the ripple effects.

Investors disappointed in corporate America are leaving the U.S. stock market, which is sending markets into declines. The development has not spared the European and Asian markets, and confusion in the foreign exchange markets is not abating.

But it is how we are watching the situation that concerns us even more. Korea remembers the arrogant scorn by the United States in the wake of the 1997 financial crisis toward the opacity of our economy in general and at corporations and financial institutions specifically. There are more than a few here who are enjoying the blow that has struck trust in the U.S.-style of capitalism and its financial accounting practices. And because of that, there is also a rise in cynicism toward the market system, which is largely dependent on keeping a low debt ratio, autonomous decision-making and transparency. All are attributes that Korean corporations have been emphasized to attain.

But it would do well for us to look back whether we are completely free of the risk of accounting fraud. Do we have the kind of accounting standards and audits that ensure transparency so that we can stand by and enjoy the cynicism? If we are proud of our accounting system and practices, then why were the auditors not able to catch the billions of won in political donations uncovered by prosecutors? Can we really regard accounting fraud as somebody else's business when, after a decline following the financial crisis, the number of accounting fraud cases began to rise again? If our accounting was really born again, then how did Korea end up last on an evaluation of accounting practices last year?

The United States is making an all-out effort to its reform accounting. The new and better accounting systems there will one day become the basis of our own reform. We should spend the meantime preparing for our reform.