Abstract

The purpose of this study is to establish an accounting standards for the local campus of foreign educational institutions in Korea. In accordance with the Special Act on Establishment and Management of Foreign Educational Institutions in the Free Economic Zones in the Republic of Korea, the central and local governments are both aiming for normalization of operation through financial support for these foreign educational institutions such as funding for buildings, school sites. Also, in the long run, securing a stable system which enables these institutions to make reliable financial reporting is perceived as a key success factor for maintaining financial durability and management. At present, five foreign educational institutions are in operation in the Free Economic Zones in Korea. Ghent University (Belgium) and the University of Utah (U.S.) are planning to open branch campus in Korea and are currently undergoing evaluation. In accordance to this research, we met foreign educational institution’s main campus and financial accounting manager to obtain implications concerned with developing financial standards. The importance of transparency of educational organization today can’t be overemphasized. One of the measures of securing transparency is that an foreign educational institution in Korea makes public announcement of its accounting information prepared by high quality accounting standards with it’s unique aspects of educational institution and private company. When making public announcement of accounting information, one should consider understandability which is an important quality of information that permits its users to make reasonable decisions. Therefore, it is recommended that the basic financial statements are included with statement of financial positions, statement of activities, statement of cash flow almost same as the basic statement of private company. Bur their contents, chart of accounts and terms need to represent the unique character of educational organization. Also it should be differentiated with existing accounting standards for private educational institution in Korea. Because it can not properly represent the economic substance of foreign educational institution’s unique aspects relative to local private school. Based on this respect, hybrid type of accounting standards for the local campus of foreign educational institutions in Korea were proposed considering both aspects of private company and non－profit educational organization.

Keywords

• local campus of foreign educational institutions
• accounting standards for private school
• accounting for foreign educational institutions in Korea

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