In 2007, Korea presented the introduction of IFRS (International Financial Reporting Standards) road map and prepared for full-blown globalization of the capital market. From 2011, all listed firms and some financial companies should apply IFRS.
Even though real estate funds are classified as financial institute under 'the capital market law' but it is not mandatory for real estate funds to apply IFRS, it matters to study how the introduction of IFRS influences the real estate fund accounting and what issues exist, because many of their investors to real estate funds are entities which should apply IFRS.
Specially, as samples for case study I selected two private real estate funds and six public real estate funds from disclosue system for funds of KOFIA (Korea Fianancial Investment Association).
The result of this study shows that there is not big difference between current real estate funds accouting and IFRS because real estate funds accounting aleady applied fair value evaluation. But under 'Guidline on collective investment organization accounting', real estates should be recognized as acquisition cost before 1 year from the purchase date and shoud be reevaluated every year from the acquisition date, so the book value of real estate on balance sheet may not reflect its fair value as of reporting date. Along with that, because market price index on daily basis can be changed sharply due to reevaluation of real estates, the guideline should be amended in accordance with IFRS.
Overall, our results suggest that related guidelines and procedures need to be amended to apply IFRS eventhough the difference might not be significant and further actions to protect information users should be taken.