Accounting and financial reporting practices in Pakistan

The center of our world’s economic activity has shifted to Asia over the last few decades, as many Asian countries have shown impressive economic growth.

 Colourbox photo - finance

Illustrationphoto: Colourbox

Investment opportunities in Asia, a region with massive populations and brisk growth potential, have attracted the attention and the funds of international actors of all kinds. This has focused attention on accounting practices in Asia, as accounting not only documents the proverbial money trail, but also forms a common language of the business world and organizations in general. 

This paper pursues the following research question: How has accounting developed in Pakistan?

In answering this question one must take into account that Pakistan is a predominantly Muslim country and that studying the development of accounting has to address the relation between religion and accounting. Islam is official state religion and Pakistan’s constitution states that no law can be made that violates the teachings of Islam. Therefore, this study incorporates religious and cultural perspectives in tracing the development of accounting in Pakistan.

Pakistan adopted accounting from Britain in 1947. Several institutions were established to strengthen accounting in the country over time. In this development process, various contextual factors played a crucial role. These factors include the role of the government and private-sector accounting organizations, the culture, religion, and institutional set-up of the country and the role of international organizations. As a result, hybrid accounting developed in Pakistan.  This meant that country-specific accounting and reporting processes emerged, despite a global trend toward standardization of accounting practices. Such accounting changes happened because the country’s institutional set-up would not support the International Financial Reporting Standards (IFRS) in their original shape. This shows that accounting rules coming from ‘developed’ countries may not be applicable to ‘developing’ countries in their exact form, as ‘developing’ countries may not have the necessary supporting institutional arrangements for their implementation. This can lead to a change in the process of accounting standards to meet local institutional requirements – or more colloquially: one size does not fit all.

Link to articleBadshah, Imtiaz & Mellemvik, Frode (2018). “Development of Accounting and financial reporting practices in the Islamic Republic of Pakistan”, In Zhijun Lin (ed.), The Routledge handbook of accounting in Asia.  Routledge.  ISBN 978-1-138-18903-4.  Chapter 4.  pp. 67 – 82.


Imtiaz Badshah
Associate Professor 
Faculty of Business, Languages and Social Sciences.

Published Feb. 14, 2019 1:25 PM - Last modified Feb. 14, 2019 1:30 PM