نقد تاثیر جهانی شدن و همگرایی استانداردهای حسابداری در فیجی

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 seems to be a legitimate role for the International Accounting Standards Board (IASB) and its forerunner the International Accounting Standards Committee (IASC). The primary argument for a single set of financial reports, premised on principles of economic rationality, is to achieve global harmonization (or convergence), thereby creating an open and accountable world (Lehman, 2005 and Roberts, 1991).3 Prima facie, the International Financial Reporting Standards (IFRSs) project an aura of objectivity by transcribing complex ‘local reality’ into universal recognizable and acceptable information (Saravanamuthu, 2004, p. 296). In this process of convergence, IFRSs are developed with the view of global ‘relevance’. 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 (Ampofo and Sellani, 2005, Nobes and Parker, 2004, Radebaugh and Gray, 2002, Saudagaran, 2004 and 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 (Chandler, 1992, Ngangan et al., 2005 and Saudagaran, 2004). Such accountability is clearly required for corporations 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. A suite of standards developed with the needs of international users of financial reports in mind, specifically those seeking international comparability, will not necessarily meet the needs of users in a particular jurisdiction. The IASB cannot take cognizance of the individual national, cultural and political factors of all its member nations while preparing IFRSs. Transporting IASB standards to developing countries – which have their own disparate group of external information users that operate within internationally diverse cultural, social, and political environments – should not be expected to have optimum results (Hopwood, 2000 and Ngangan et al., 2005). Therefore, of critical importance is the fundamental question, who gains the most from harmonization/convergence and their informal, discretionary and spatially diverse modes of co-ordination, and what are the roles of other international organizations in this process? (Arnold and Sikka, 2001, Cooper et al., 2003 and Lehman, 2005). The issue of harmonization/convergence and its relevance/irrelevance has of course been considered by a number of authors approaching the issue from a range of different perspectives (e.g. Briston, 1978, Chandler, 1992, Haswell and McKinnon, 2003, Hove, 1986, Hove, 1990, Perera, 1985, Perera, 1989a, Perera, 1989b and Samuels and Oliga, 1982). Hopwood (1994) called for “new vocabularies and new perspectives (which) might provide ways for more voices to enter the international accounting arena” (p. 251). 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 2002.4 The accounting profession in Fiji has been struggling to come to terms with further adoption of IFRSs developed since 2002. Nonetheless, the Institute has agreed in principle on wholesale adoption of IFRSs for reporting periods beginning on or after 1 January 2007.5 With only sixteen listed companies on the local stock market (South Pacific Stock Exchange) Fiji does not have the developed markets necessary to adopt fair value accounting that has become the hallmark of IFRSs post millennium. Developed nations are adopting IFRSs to reduce the cost of information and to facilitate capital flows particularly for multinational enterprises, with multiple stock exchange listings (Cooper et al., 2003 and Haswell and McKinnon, 2003). But then why would a developing country such as Fiji that does not have a well established capital market adopt the IFRSs? Questions concerning the effects of harmonized accounting standards on domestic users and local communities have largely been left unanswered. In harmonization/convergence, “accountability should be based on ethical foundations to provide direction to management who are torn between competing, yet interdependent, stakeholder need” (Saravanamuthu, 2004, p. 296). The tension between standardized accountability and satisfying the multiple stakeholder needs creates the confusion and the inability of the IFRSs to meet the needs of all the stakeholders. It is important to explore the convergence and harmonization process to determine whether those accounting structures satisfy the needs of all users, or whether they satisfy only a selected group of users, without consciously addressing the needs of others (Hopwood, 1994, Lehman, 2005 and Miller and O’Leary, 1994). This paper seeks to add a new dimension to the debate by discussing themes of regulation—public and private interests, from a critical perspective. This paper offers an analysis of forces driving the adoption of the IFRSs and seeks to identify the major stakeholders benefiting from this process. 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 can lead to a transfer of economic resources in favour of those private interests, wherein the public interests are usually ignored. Additionally, the paper demonstrates the ‘irrelevance’ of the IASs and IFRSs, which cannot be meaningfully applied in the context of Fiji's economy and society. To this end, the paper offers suggestions as to how public interest might be best served within the current system of financial reporting and how, in principle, the needs to report both globally and locally can be reconciled. We argue that the advocates of international convergence should realize the nexus of the economic and business functions which accounting serves differ across nations (Baskerville, 2003, p. 10) and their needs may not be met with a single set of standards that is concealed behind reified icons of ‘relevance’. This paper proceeds as follows. The first section critically evaluates the work of IASC/B, considering the implications and the inherent beneficiaries of this process. The second section traces the development of financial reporting in Fiji, outlining how the development of the financial reporting regime in Fiji has been influenced by public and private interests. In light of this, it briefly reviews the financial reporting systems and the needs of the users in determining what is practical and appropriate for Fiji to adopt as a set of accounting standards. The last section considers the implications of applying a reporting framework determined globally and supported by local private interests. Issues requiring further research that will help determine necessary and feasible changes in the system of financial reporting are also considered in the last section.

International convergence of financial reporting primarily serves the interests of the nations represented on the IASB, their multinational enterprises and the international accounting firms. This paper has illustrated the ways in which these organizations and the accounting standards they employ serve to create and sustain the asymmetries and imbalances within and between countries. IFRSs, therefore, are implicated in the creation of and in sustaining these power imbalances and uneven distribution of wealth (Cooper et al., 2003 and Graham and Neu, 2003). Therefore, the net effect of convergence is likely to satisfy the needs of a few dominant stakeholders. The principal argument in this paper is that the professional accounting bodies and large multinational accounting firms prefer accounting standards to be determined according to the process of convergence. It was the multinational accounting firms who had culminated and been influential in establishing the IASC in the early 1970s (Rahman et al., 2002, p. 73) and our analysis demonstrates that they are still one of the main supporters of the convergence process. In Fiji, while the use of IFRSs may be beneficial for reporting entities engaged in the global economy, the prime beneficiaries of the use of IFRSs for all enterprises are the accounting profession in general and the “big four” accounting firms in particular. Fiji's accounting profession claims that global forces effectively determine Fiji's accounting regulatory processes and the Institute is obliged to acknowledge these forces. Our study demonstrates, as do other studies (for example, Brown, 2006, Brown and Shardlow, 2005 and Sikka, 2003) that the notion of public interest responsibilities is a subject of narrow concern for developing country accounting systems, where the ultimate aim is to keep up with structures of the developed countries. The public interest responsibilities of the Institute rest in satisfying the needs of all the stakeholders in Fiji rather than the selected few, but this is not explicated in financial reports drawn up employing IFRSs. Importantly, in adopting the IFRSs, it has been overlooked that the Institute as the national regulator has been subject to capture by the IASB. Events elsewhere in the world have shown that where the financial reporting standard setting process is taken away from the accounting profession, the profession often succeeds in capturing the regulation. However, it is abundantly clear that the public interest will definitely not be served by retaining the status quo. The Asian Development Bank, an agency favouring the global application of IFRSs, has already recommended that the Fiji Government set up an independent oversight body to review financial reports to ensure compliance with accounting standards (Asian Development Bank, 2002). Implementing this recommendation would undoubtedly be a step in the right direction. Given the accounting profession's preference for IFRS-based regulation this paper draws the conclusion that the government should also set up an independent agency to establish appropriate financial reporting standards to be applied within Fiji. A two-tier system of regulation would seem to be appropriate. Certain reporting entities would continue to be required to compile financial reports that are IFRS compliant, which at a minimum would include subsidiaries of overseas companies. The South Pacific Stock Exchange, a regional as opposed to a national entity though located in Fiji, may continue to require financial reporting that is IFRS compliant for listed companies. Other reporting entities, for example those that have significant international financial dealings, may choose to prepare IFRS compliant financial reports. These cases aside, other reporting entities would prepare financial reports on a basis of domestic as opposed to international relevance. Such a proposal obviates the issue of cost. The Institute in compiling a set of standards for Fiji has never considered the possibility of generating standards domestically, on the grounds that it does not have the resources to do so. The government, with its resource constraints and other more prominent agendas to serve, is also sensitive to the issue of cost and has shown no indication to take this role. However, development costs need not be substantial. The Institute solved the problem of developing standards by adoption of the IFRSs with minor modifications. The same approach can be adopted for the domestic tier of standards, but selection can be made from a far wider range of ready-made standards. This would include standards produced by national accounting bodies around the world, particularly those operating in cultural circumstances similar to Fiji's. The suite of IASs generated under the internationalization process initiated in 1987 may well provide a valuable source of reference. Statements from that generation of standards typically prescribed benchmark and alternative treatments, rather than requiring the exercise of professional judgments. Such standards are more likely to be attuned to cultural values found in Fiji. The development programme may go so far as to eliminate or reduce alternative treatments that appear in the original text. This paper has argued for the need to inject a degree of conservatism into Fiji's financial reporting system. Currently financial reporting processes in Fiji are anything but conservative, where accounting standards have provided reporting entities with options on accounting practices to be applied, the option that reports the desirable financial outcome is invariably employed (Pathik, 2000 and White, 2005). In eliminating alternatives a simple rule can be adopted, namely to approve the most conservative option. Particular needs could also be pursued. For example, in Fiji's small domestic economy, related parties situations are widespread. It is possible that in this instance IAS 24, Related Party Disclosures, does not require sufficient information to meet domestic user needs. Information on directors’ personal financial affairs may have to be developed, for example. This could readily be done by adopting for wider application the South Pacific Stock Exchange listing rules in regard to the disclosure of directors’ interests. As already noted, contractual arrangements between reporting entities and indigenous landowners have been subject to misinterpretation from time to time. The correct legal interpretation may have a material impact on an entity's financial position. Standard disclosure of such arrangements may serve to prevent misunderstandings among stakeholders and the economic dislocations they are apt to generate. It must be borne in mind that in general, compliance and oversight costs of this simpler alternative system of financial reporting will be lower than those incurred at present. Public interest can therefore be pursued at no greater public cost. In the limited cases where additional disclosures may be deemed relevant, the appropriate research will need to be undertaken to ensure that the benefits from disclosure outweigh the associated costs. This paper argues that application of the fair value model of accounting is impractical, at least in the domestic sector, in Fiji's economy. In establishing the domestic regulatory framework it will be necessary to determine the capabilities of the accounting profession. Also needed is further research on the ways in which standard setting bodies have been captured, and the development of strategies to forestall this happening in the future. This paper has demonstrated that the nature and consequences of adopting IFRSs is crucial to critical studies. With the process of convergence the standardization of accounting standards across international boundaries serves to decontextualize wealth accumulation practices on a global basis, where local communities that fail to comply face the wrath of the capital market (Saravanamuthu, 2004, p. 300). Having explored notions of globalization and relevance of accounting convergence, from the vantage point of accounting research, the ways in which the developing countries’ needs could be fulfilled become critical for future research. Additionally, accounting researchers can consider in various jurisdictions whether IFRSs serve to promote flows of capital that mitigate international differences in power, or those flows that preserves the status quo (Graham and Neu, 2003, p. 456).