"Informing the Public About Future National Fiscal Information... Accrual Basis Double-Entry Bookkeeping Needed"

National Accounting and Fiscal Statistics Center, Korea Accounting Institute, and Korean Accounting Association Joint Seminar
Lecture and Discussion on "How Can Accounting Save Democracy?"

A forum was held to address the government's long-term fiscal challenges caused by climate change and aging, and to discuss the importance of accrual accounting for enhancing the fiscal sustainability of democratic nations.

The National Accounting and Fiscal Statistics Center, the Korea Accounting Research Institute, and the Korean Accounting Association jointly held a seminar titled "How Can Accounting Save Democracy?" on the 13th at the FKI Tower in Seoul.

The seminar featured a keynote lecture by Jacob Soll, a professor at the University of Southern California and an expert in political and economic history as well as accounting, and author of the book Public net worth? Accounting, Government, Democracy.

Professor Soll delivered a lecture on the impact of accounting on national finances in democratic countries, including its effects on fiscal efficiency, sustainability, and transparency.

On the 13th, Professor Jacob Sol is giving a lecture at the discussion forum titled "How Can Accounting Save Democracy?" held at the Korea Economic Federation. Photo by Younghan Heo younghan@

He emphasized, "Governments worldwide are under tremendous pressure due to limited resources," adding, "In a situation where the snowballing debt is becoming increasingly unsustainable, it is necessary to create accurate public financial balance sheets."

Professor Soll, who teaches history, philosophy, and accounting at the University of Southern California, was recognized as a "brilliant young scholar" in academia after receiving the MacArthur Genius Fellowship in 2011. He has advised the governments of Spain and Portugal on economic policies and served as an advisor to the Greek government on financial reform and debt management in 2017.

He stated, "When establishing and implementing government policies, using accrual accounting as a standard allows for accurate future predictions. The Korean government performs well in accounting but still faces challenges. While each government ministry has produced accrual-based financial statements, the integration of these has yet to be achieved."

Accounting methods are broadly divided into cash basis and accrual basis. Accrual accounting recognizes revenues and expenses when they occur (delivery of goods or provision of services), regardless of cash transactions, whereas cash basis accounting recognizes related revenues and expenses based on the actual timing of cash flows.

Professor Soll reiterated, "New Zealand has produced accrual-based financial statements, and Canada has almost completed this as well. It would be beneficial if many Korean politicians and administrators recognized this potential. To accurately understand the state of national finances and manage debt, this must be accomplished."

In the subsequent discussion, experts in accounting, administration, and finance gathered to discuss policy directions and measures for efficient national fiscal management and long-term sustainability enhancement based on accrual accounting centered on net assets.

Professor Kim Bong-hwan of Seoul National University said, "I have always argued that government accounting is important and questioned whether the management of the national budget of 2,800 trillion won could be done without double-entry bookkeeping information, and I gained strength from Professor Soll's remarks." He added, "Double-entry financial information currently includes only the central government, excluding local governments and public institutions. It is necessary to transparently show the financial status of pensions, health insurance, and others to the public based on double-entry bookkeeping."

Oh Seok-tae, an economist at SG Securities, commented, "Double-entry bookkeeping is one of humanity's greatest inventions. I have often felt frustrated that national fiscal accounting is done using cash basis single-entry bookkeeping." He added, "If the government clearly presents the fiscal situation using double-entry accounting, it will be easier for the public to understand."

The seminar fostered consensus on the importance of accrual accounting centered on net assets for national fiscal efficiency, sustainability, and transparency. Experts continued to share their views on the utilization of accrual accounting for long-term national fiscal management.

Professor Jeong Do-jin of Chung-Ang University stated, "The importance of understanding national debt and financial information based on accrual accounting has been proven through research results," emphasizing, "The advantage of cash basis accounting is that it conveys current information well, but it is difficult to provide information about the future. Politicians and administrators should not hesitate to provide the public with information about the future."

This content was produced with the assistance of AI translation services.