South Korea’s Journey towards ifrs a study from historical perspective



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tarix12.12.2017
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South Korea’s Journey towards IFRS

  • A study from historical perspective

  • By Qiong Qin


Map of Korea Today

  • Area - Total 99,646 km² (108th)

  • Capital: Seoul

  • Population: 49,024,737   (25th)

  • GDP: $1.180 trillion (11th)

  • Per capita: $24,200 (34th)

  • Currency: South Korean won



From Nobody to a World Leader

  • Korea was one of the least developed countries in terms of industrial development in early 60s.

  • It has been transformed into one of leading industrial countries in the world during the last 40 years.



A poor country just after Korea war (1950~53)



Korea’s Economic Miracle



Miracle that make Korea an Asian Tiger



Overview of the talk

  • Three Milestones towards Miracle

  • Implication on current translation

  • Prospective and Challenges

  • Conclusion



Export-Oriented Economy

  • Korea's industrial development has been achieved through export-oriented strategies.

  • During 1960s and 1970s, the period when Korea accomplished the development of major industries, export growth outpaced GDP growth.



South Korea's GNP vs. Export Growth Rates



IT Flattener through Globalization

  • At the start of the 21st century, South Korea predicted that the IT industry would boom and become very important in the 21st century.



Korean’s commitment to R&D



Success Story of IT in Korean



IFRS: Opportunities and Challenges



Brief introduction of IFRS in Korea

  • Korea Accounting Standards Board (KASB) is largely consistent with IFRS.

  • The Korean Financial Accounting Standards (KFAS) are largely consistent with IFRS.

  • The accounting standard-setters need to make further efforts to remove discrepancies between the local accounting standards and the IFRS.



Efforts towards IFRS (briefly)

  • In light of the 1997 Asian financial crisis, South Korea's corporate culture increases the transparency

  • The government is realizing that partial adoption of the IFRS standard is inadequate to ensure confidence in South Korea’s system

  • Financial reporting under IFRS will be made mandatory for all listed companies, annouced on March 15, 2007



Implication on Currency Translation

  • Money is called Won

  • Exchange rate is about 1000 to 1



Implication of Appreciation

  • Won appreciated 15% against the USD in 2004, followed by 2.3 percent in 2005

  • Appreciation in currency is a good sign of competitiveness and strength.



Prospects for Harmonization

  • To embrace the globally accepted accounting standard, South Korea should establish comparable, reliable and the transparent corporate financial reporting.

  • The IFRS also requires fully-aligned, harmonized and consistent rules for consolidated financial reporting accounting.



Final Remark

  • Korea emerges as a “tiger” of Asia

  • Three milestones cultivate the need for IFRS adoption in Korean.

  • Influence of current translation amplifies with globalization and flattening



Acknowledgment



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