The Korea Local Administration Review

Currently the Korean government is creating the new Korean local government accounting standard, which introduce an accrual-basis and double-entry accounting system. However, still there are debates on the definition of assets. The definition of assets is important because it establishes what types of economic events will appear in the balance sheet. The asset definition of a statement of government accounting standards emphasizes legal ownership rather than control of assets. It seems to be defined by the political process. This more narrow definition of an asset would reduce variation in the asset group concerning the realization of future benefits. Yet because of this narrow asset definition there is a weakness in the logic of the accounting standards, such as lease accounting by fully accepting the corporate accounting system. This study suggests that the standard-setting regarding asset definition should be established outside the political process. Even though standard-setting is a political process it provides a logical and unified structure to the standard-setting process.