Handbook of Accounting and Development
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Handbook of Accounting and Development

Edited by Trevor Hopper, Mathew Tsamenyi, Shahzad Uddin and Danture Wickramasinghe

The perspectives of the expert contributors reflect the strong growth of research on the topic, as accounting is increasingly recognised as an important factor in development. The book draws commentary and analyses together to inform future research, practice and policy and raises awareness of the actual and potential role of accounting in formulating and executing development policy.
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Chapter 6: Adoption of International Financial Reporting Standards in Developing Countries

Hector Perera


Hector Perera 1. INTRODUCTION The accounting systems of most developing countries (DCs) are largely extensions of those of industrialized countries, mainly Anglo-American (AA), imposed either through colonial influence or by powerful investors, multinational corporations, and international accounting firms and organizations. Perhaps the International Accounting Standards Board (IASB) has been one of the most effective vehicles that has extended AA accounting technology to DCs in recent years. The key role of the International Accounting Standards Committee (IASC), the predecessor to the IASB, was to develop and establish a uniform set of accounting standards (international accounting standards – IASs) harmonizing financial reporting across the world. The change of name of the IASC to IASB in 2001 was accompanied by a shift in focus from accounting harmonization to accounting convergence. For example, the objective of the IASB is ‘to bring about convergence of national accounting standards and international financial reporting standards to high quality solutions’ (http://www.iasb.org). Similar to harmonization, convergence is a process that takes place over a period of time. However, unlike harmonization, convergence implies the adoption of one set of financial reporting standards internationally. It means reducing international differences in financial reporting standards by developing a set of high-quality standards in partnership with national standard setters. According to IAS Plus (http://iasplus.com), currently over 100 countries, including many DCs such as Fiji, Iraq, Kenya, Mongolia, Nepal, Tanzania and the West Bank/Gaza, have adopted the international financial reporting standards (IFRSs) issued by the IASB for their domestic listed companies. Of these, 90...

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