The Applicability Of The Kingdom Of Tonga Adopting International Financial Reporting Standards

Using the Kingdom of Tonga (hereafter referred to as Tonga) as a case study, this paperseeks to examine the influential factors that lead to the adoption of the InternationalFinancial Reporting Standards (IFRS) and the relevancy of the IFRSs to emergingeconomies particularly the case of Tonga.There is evidence that the globalization of the world’s capital markets has sparked amovement away from local standards and benchmarks to global ones. Most countries in theworld have revolutionized their accounting practices especially during the last few decadesof the last21stcentury. Such revolutions encompass the adoption and adaption of localaccounting practices and converging it with that of International Financial ReportingStandards (IFRS).In order to analyze how the IFRS was adopted and to better understand the benefits ofadopting of IFRS thus reflecting the relevance of IFRS to an emerging economy basicallythe case of Tonga, this study utilizes DiMaggio and Powell’s (1983) theory of institutionalIsomorphism. External environments that also affect the adoption of IFRS in developingcountries are also examined in this study to identify the specific needs for accountinginformation in the domestic economy of Tonga.Both Quantitative and Qualitative Research approach were utilized, by usingsemi-structured interviews and archival data analysis. Professor Konai Helu Thaman’sKakala Research Framework was also utilized, which is Talanoa, one of the research,which is very useful to understand research in our Tongan context.