Globalization and Convergence of Accounting Standards in Fiji: A Critical Analysis

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A critique of the influence of globalization and convergence of accounting standards in Fiji
the globalization of the world’s economies has inevitably brought with it moves to establish a single set of financial reporting standards. Prima facie, the formulation and promulgation of International Financial Reporting Standards (IFRSs) is concealed behind reified icons of ‘relevance’.
The globalization of the world’s economies has inevitably brought with it moves to establish a single set of financial reporting standards. Prima facie, the formulation and promulgation of International Financial Reporting Standards (IFRSs) is concealed behind reified icons of ‘relevance’. This paper adds a new dimension to the international accounting debate by discussing themes of regulation, public and private interests, from a critical perspective. Specifically, this paper examines the reasons for the willingness to accept IFRSs in Fiji. A critical conception of ‘relevance’ and ‘accountability’ is developed to demonstrate how the needs of private interests are met in adopting the IFRSs. This paper demonstrates that in this process of convergence, the influence of these private interests – multinational enterprises and large international accounting firms – can lead to a transfer of economic resources in their Favour, wherein the public interests are usually ignored. The paper offers suggestions on how public interest might be best served within the current financial reporting system and how, in principle, the needs to report both globally and locally can be reconciled.
The globalization2 of the world’s economies has inevitably brought with it moves to establish a single set of financial reporting standards. Developing such financial reporting.
standards seem to be a legitimate role for the International Accounting Standards Board (IASB) and its forerunner the International Accounting Standards Committee (IASC).
Assuming that IFRSs are relevant to all societies, the factors causing the differences amongst the nations are regarded as too simplistic and are seen to be easily effaced. This view fails to acknowledge that even with the establishment of a single set of financial reports, institutional difference in infrastructure, culture, legal requirements, and socioeconomic and political systems between nations have contributed to the large scale of international differences in financial reporting.
adebaugh and Gray, 2002; Saudagaran, 2004; Schultz and Lopez, 2001). Given this ostensible disparity amidst nations, it would be naive to assume, as IASB does, that a single regulatory framework can be established that meets the financial reporting needs of all societies. While the forces of globalization and convergence are moving accounting practices towards a unified, or at least harmonized, regulatory framework for financial reporting, this is unlikely to best serve the diverse interests of the disparate user groups of financial reports.
Several studies have demonstrated that the work of the IASC/B is not related to the needs for accountability to an individual society, but to the needs for accountability by multinational enterprises to the world’s major capital markets.
with multiple stock exchange listings over different jurisdictions. Reporting under the same regulatory framework in all jurisdictions will certainly reduce costs and has the potential to ameliorate transparency. An entity that reports a profit under one set of regulations and a loss when applying another set of regulations will confuse rather than enlighten the reader as to the entity’s true state of financial affairs. Adoption of IFRSs by all jurisdictions resolves this problem. However, once the IFRSs are adopted by a particular country, both the multinational and domestic enterprises may be required to follow the standards.
To shed further light on this issue of convergence, this study has selected a developing country (Fiji) to provide insights into the factors that motivate movement towards global accounting practices and those which militate against it. The Fiji Institute of Accountants (FIA, the “Institute” hereon) undertook a comprehensive review of the International Accounting Standards (IASs) as they stood at the turn of the millennium, adopting all those it deemed universally practical to apply in Fiji’s economic context for reporting periods beginning on or after 1 July 2002.