earticle

영어

Accrual basis accounting in Government Accounting in Korea was completed in 2007 enacting Government Accounting Act. Nevertheless accounting standard for pension by government or public sector is not prepared yet. This study tries to set a draft accounting standard for pension as reviewing various generally accepted accounting principles(GAAP) on pensions. Principal issues on pension accounting involve three aspects; characteristics of pension, recognition and measurement of future benefit obligation, and required supplementary information on pension.
As a result of reviewing the above three aspects through various GAAP to set pension accounting standard, the followings are summaries of this study.
At first, pensions can be classified into exchange transaction pensions and non-exchange transaction pensions in the light of characteristics of pensions.
The basic principle of pension accounting is that a different accounting standard should be applied to a pension with different characteristic.
Second, liability for exchange transaction pension shall recognize when participants provides their services and measure their future benefit obligation through projected benefit obligation(PBO). Liability for non-exchange transaction pension shall recognize when participants satisfies certain condition to receive entitlement for benefits and measure their future benefit obligation through projected benefit obligation. At initial adopting accounting standard for pension, initial future benefit obligation shall be measured by accumulated benefit obligation(ABO) and difference between projected benefit obligation(PBO) and accumulated benefit obligation(ABO) amortized over average service period.
Third, since sustainability of pension is critical factor in pension plan, the informations on sustainability of pension should be presented in the form of required supplementary information(RSI). This RSI includes long term cash flows of pension, participants and dependency ratio of pension, and present value of future contributions and future benefit obligation.