This study reviews new pension accounting with K-IFRS and empirical changes in liability for retirement allowances with adoption of K-IFRS. possess similar behaviors, meaning additional economic rules buy Myelin Basic Protein (68-82), guinea pig for pension accounting are suggested. 1. Launch Many created countries have presented various kinds pension system for income earners to decrease buy Myelin Basic Protein (68-82), guinea pig expected economic complications after their pension. Occupational pension system, which is normally presented in Korea lately, organizes 3-tier public security plan with nationwide pension and specific pension service. It could be differentiated from others by the actual fact that the duty of pension pension payment is normally on related firm. Historically, the problem of pension allowance in the workers’ view stage is the dependability of payment . Federal government tries to ensure retired workers the payment of predefined pension allowances, but there are plenty of overriding legal factors for the bankrupted businesses’ commitments. Besides, brand-new pension scheme being a pension allowance raises various other questions in the firm’s accounting watch point on how best to explain pension related liabilities in firm’s economic reports. Pension is a sort or sort of potential payment and its own exact quantity isn’t predictable. To boost above problems, Korean government presented important adjustments in pension allowance plan and related accounting criteria. First, Korean federal government needed that all shown businesses entrust predefined pension allowances to chosen economic organizations. The duty of pension allowance continues to be on each firm, but new policy ensures the minimum payment of it with the reserved money. Second, Korean government required that all outlined companies provide workers with several pension schemes as a retirement allowance and statement related liability based on K-IFRS in their financial reports. There are numerous researches on the effectiveness of new retirement allowance policy looking at if the policy actually helps retired workers to get their retirement allowance timely or if the external funds are properly operated by the financial organizations for payments. In addition to them, you will find arguments about the effects of new pension plan on individual financial reports. Logically, it may give no effects on the business results of firms. New policy just requires that companies transit internal reserves for retirement allowance into an external organization. However, new financial requirements with pension accounting make amazing changes in liability estimation method for retirement allowances. buy Myelin Basic Protein (68-82), guinea pig New financial standards, K-IFRS, take a principle-based approach without guidelines for operational details and allow firm’s alternation within given principles. Pension accounting needs complicated projection process for the expected liability Rabbit Polyclonal to CSFR (phospho-Tyr809) with several actuarial assumptions. The guideline for the required variables for the assumptions such as life expectancy or average wage increase is provided, but you will find no specific regulations yet in Korea. Experts reported that some firms try to increase or decrease their short-term income by changing required money for retirement allowance or by changing the actuarial assumptions to estimate pension related liability [2C4]. In that context, new estimation method for retirement related liability could be an interesting observation or checkpoint for the transparency of accounting information in Korea. Generally speaking, the adoption of IFRS is supposed to improve the principal qualitative characteristics of accounting information in relevance, reliability, understandability, and comparability [5, 6]. To review the changes in firm’s liability for retirement allowance, we select outlined companies in Korean stock market, which adopted K-IFRS early in 2009 2009 or 2010. We compare their liability for retirement allowance in financial reports after activation of new policy. Also we check related public announcements from the companies if they experienced provided proper explanations for their actuarial assumptions to estimate the liability. With the comparisons, we try to identify suspicious companies where the changes in financial report are hardly explained with the public announcements. The paper proceeds as follows: we review theories on pension accounting and the previous researches on K-IFRS’s adoption. This prospects to the different expectations for the effects of new pension policy with K-IFRS. Following that, we review reported estimation results on retirement related liability and data analysis. 2. Theoretical Background In 2005, Korean government launched occupational pension techniques as a retirement allowance by making a law called Employee Retirement Benefit Security Take action. After having grace periods for the new policy, Korean government requires that all outlined companies actually implement it from 2012. At the same time, new financial standards called K-IFRS are activated. 2.1. K-IFRS Adoption with Pension Accounting K-IFRS provides two different basic pension schemes based on how to decide on the total benefit of retirement and who will operate the reserved fund. Defined-contribution.