Many countries have driven a reform public sector in order to improve effectiveness, transparency and responsibilities as they have experienced financial difficulties due to oil crisis and an accumulated financial deficit caused by welfare policies. Within cash basis accounting and budget system, which has been applied to most countries, it was hard to evaluate performance, lay responsibilities and offer comprehensive information. In these contexts, many countries have adopted accrual basis accounting and budget system. Since Asian financial crisis, Korea has also prepared to introduce the system as a part of financial reform. Then the Government Accounting Law was passed in 2007 and will come into effect in January 1st, 2009.

Comparing with other countries where the accural basis accounting and budget system was applied, there are still some vulnerable points in Korea. In order to make up for theses weakness this research suggests several points; a link accrual basis accounting with other government reforms; strengthening the role of private accounting institutes in government accounting standards board; systematic government accounting education for public servants; introduction of the certified public accountant; improvement the digital budget and accounting system; preparation of consolidated financial statement; and introduction of accrual basis budget system.