Government Financial Accounting Division

Ministry of Strategy and Finance

Accrual Accounting System of Korea Government

Kyoung Sook Lee Deputy Director

1

Achievement and Future Challenges

Ⅰ

Ⅱ

Ⅲ

Ⅳ

Ⅴ

Financial Statements preparation process

Standards Setting Process

Regulatory Framework of National Accounting

History of Accrual Accounting Reform

Table of Contents

2

I. History of Accrual Accounting Reforms

1998

• National Finance Act was enacted

2006

• Announce adoption of Accrual Accounting system(The Ministry of Finance and Economy)

2007

• National Accounting Act was promulgate(enforce in 2009) • dBrain(IT system launched)

2009~2010 2011~

• F/S was submitted to the National Assembly

• National Accounting

Standards enacted in

March 2009

• dBrain system reform

• Trial period of F/S preparation

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I. History of Accrual Accounting Reforms

3-Years Roadmap for new national accounting system

Accounting Standards for Provision

Due Diligence of Infrastructure Asset

Financial Analysis Method

Accounting Operating

System

Infrastructure

Assistance of CPAs for F/S

preparation

Newly Added Accounting Position

Training for Accrual Accounting

Incentive for related Officials

Capacity & Expertise

4

National Accounting Act

Enforcement Decree of National Accounting Act

National Accounting Standards

Technical Releases

Structure and composition of the Consolidated Financial Report

Information to be presented in Revenue and Expenditure Reports, preparation and submission of supplementary documents

F/S preparation (Statement of Financial Position, Statement of Financial Operations, Statement of Changes in net assets)

Definition and measurement of assets and liabilities

Technical Releases on Accounts of the Financial Statements, Lease, BTO, Pensions, etc.

II. Regulatory Framework of National Accounting

National Finance Act Guideline for closing process(preparation, Audit inspection, Submission to National Assembly)

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II. Regulatory Framework of National Accounting

Composition of F/S

KNAS

Presentation of

statement of

financial operations

Measurement of PP&E

Cash Flow Statement is not included, but Revenue and Expenditure report included

Cash Flow Statement included

Recognition of

provisions

IPSAS

Recognition of

BTO usage right

Net Operating Costs-Non exchange Revenues = Fiscal

Operating Results

Revenue – Expenses = Surplus or deficit

Mandatory application of Revaluation model

Cost Model or Revaluation Model

Certain Probable

Deduction from Asset Liability

6

Ⅲ. Standards Setting Process

Government Accounting and Finance Statistics

Center(GAFSC)

Ministry of Strategy

and Finance(MOSF)

Consultation Paper

Exposure Drafts

Legislation of National Accounting Standards, Technical Release

National Accounting System Deliberation Committee(NASDC)

Pre-announce ment of

legislation

7

F/S by accounts and

funds

Agency F/S Consolidated F/S

Eliminating intra-governmental transactions between accounts and funds

•Eliminating intra-governmental transactions between agencies

• Integrating of the national fund account

•Adjusting tax revenues

•Deduction of intra-governmental holdings of national and public bonds

Central Gov. Agencies MOSF

Nat’l Assembly

Audit by BAI

Pursuant to National Accounting Act,

Ministry of Strategy and Finance(MOSF) consolidates agency

financial reports to produce the Consolidated Financial Report.

After having it audited by Board of Audit & Inspection, MOSF

submits the Consolidated Financial Report to the National Assembly.

Ⅳ. Financial Statements preparation process

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Statement of Financial Position as of FY 2013

Statement of Financial Operations

Current Assets

Investments

Property, Plant and Equipment

Infrastructure Assets

Intangible Assets

Other Non-Current Assets

291.1

563.1

508.6

294.4

1.2

7.9

Current liabilities

Long-Term Debts

Provisions for Pension

Other Provisions

Other Non-Current Liabilities

108.6

347.8

596.3

37.5

27.7

Total Liabilities 1,117.9

Total Assets 1,666.3 Net Assets 548.4

(in trillions of won)

(in trillions of won)

Net Operating Costs

Non-Exchange Revenues

275.3

246.5

Fiscal Operating Results 28.8

V. Achievement and Future Challenges

V. Achievement and Future Challenges

9

On-spot inspection and evaluation on SOC such as

roads, dams, and ports Asset Revaluation of Fixed Asset

Infrastructure Asset

Phase-in adoption of Recognition for Pension Liability (VBO -> ABO -> PBO)

Pension Provision

FY 2011 FY 2012

342.1

436.9

94.8

FY FY 2013

596.3

159.4

Investment

34%

Others18%

Fixed Asset30%

SOC18%

V. Achievement and Future Challenges

10

Improvement of Financial Statement Reporting

Informal

Intuitive

Enhancement of effectiveness of financial

information

Enhance effective usage in cost management

Better link financial information with fiscal

system

Promote cooperation between central and local

governments