K-IFRS

K-IFRS (한국형 국제회계기준/韓國採擇 國際會計基準) is the abbreviation of the Korean version of International Financial Reporting Standards (IFRS).

International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries.

Key words
International Financial Reporting Standards, accounting principle, external audit, consolidated financial statement, harmonization of laws

Brief history of IFRS
IFRS began as an attempt to harmonise accounting across the European Union (EU) but the value of harmonization quickly made the concept attractive around the world. They are sometimes still called by the original name of International Accounting Standards (IAS). IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On April 1, 2001, the new International Accounting Standards Board took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS and Standing Interpretations Committee standards (SICs). The IASB has continued to develop standards calling the new standards International Financial Reporting Standards (IFRS).

Preparation for IFRS in Korea
Korea has prepared for the voluntary adoption of the Korean version of IRFS since 2007 and it began to mandatorily apply K-IFRS to listed corporations and selected unlisted financial institutions in the year of 2011. This kind of 'accounting big bang' was accompanied by the amendment to the Act on External Audit of Stock Companies (주식회사의 외부감사에 관한 법률, abbreviated External Audit Act).

The IFRS are consisted of principles-based standards, and require corporations to measure their assets and liabilities at fair value and present the consolidated financial statement when they have subsidiaries.

K-IFRS being implemented in Korea
In 2011, Korea revised the Commercial Code in order to reflect global standards.

However, the Code still uses the terms of a "balance sheet," an "income statement," and a “statement of appropriations of retained earnings." For the harmonization of the Code with the External Audit Act, the former should be revised to introduce new terms which are used in the latter and provide the definition of the consolidated financial statement (연결재무제표/連結財務諸表).

Since the management of the controlling corporation has the responsibility to produce the consolidated financial statement, the representative director of the controlling corporation should be granted to investigate affairs and financial status of its subsidiary corporations.

In addition, more time and efforts are needed to prepare the consolidated financial statement than the individual financial statement and thus the deadline for the submission and the audit of the consolidated financial statement should be extended.