Abstract

This study was conducted with a basis on practical background that the full adoption of IFRS and XBRL will contribute to the enhancement of Korea's accounting transparency, which results in greater synergy effect. To this end, focusing on previously conducted studies, this study covers expected effects of the full adoption of IFRS and effects of creation, application, and adoption of XBRL. Based on these effects, it analyzed to see whether accounting transparency is relevant with adoption of IFRS and XBRL, and drew a conclusion from the analysis, and the results are as follows. It is possible to say that a nation’s accounting transparency can be enhanced by full adoption of IFRS, which yields an opportunity to eradicate misunderstanding about the nation’s overall accounting reliability and transparency. In other words, the nation’s accounting transparency in wider sense is greatly heightened. For businesses facing a new environment for accounting and IFRS aiming for principle－based accounting, however, it is still difficult to be convinced that adoption of IFRS will lead to enhancement of reliability of accounting information, with a high possibility that inter－company comparability can be lowered. That is to say, enhancement of accounting transparency for businesses in a narrow sense is difficult to be guaranteed within a short period thus can be expected in the long－term period. Adoption of XBRL will improve compatibility through standardization, reduce time and costs for providing information, offers an opportunity to secure more transparency in accounting by circulating standardized information. But this is not adequately backed by empirical studies in Korea, which is assumed so because the subject of analyses were companies that have not yet fully adopted XBRL but publicly disclosed XBRL voluntarily. This study has its meaning in that it analyzed concurrently IFRS and XBRL that may affect the enhancement of accounting transparency in Korea, and ideas and suggestions made in this study will provide validity for the adoption of IFRS and XBRL. The limits for this study is that its results are not supported by analyses on empirical results since so far only 11 companies have adopted IFRS as of 2009. This will be further studied when all of the publicly－held companies in Korea have fully adopted IFRS by 2011.

Keywords

• accounting transparency
• IFRS
• XBRL

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