The evolution of financial accounting in Portugal since the 1960s : a new institutional economics perspective

Abstract

Using a new institutional economics perspective, this article analyses the economic and political context that led to accounting standardisation in Portugal from 1977 onwards and to the recent adoption of the International Financial Reporting Standards (IFRS). The process of accounting standardisation was related to the tax reform of 1963. Additionally, evidence was found that there were also political pressures related to the need to improve the national systems of accounts. The lack of development of the accounting profession and the emphasis on legality substantiated the need for enforcement in the law in 1977 of a standardised accounting plan that was similar to other plans in Europe, namely the French Plan. In a legalist country like Portugal, the modelling of national standards on the international ones and the definitive adoption of adapted IFRS in 2010 by unlisted companies had to be complemented by the enactment in law of the accounting regulations.