Accounting and Auditing in Free Economic Zones: Factors for Change and Perspectives of Improvement

Abstract

The last three decade is marked with the convergence of large scale practices in cross-border capital mobility and benchmarking of international best practices in business, finance and trade. Enhancements in global investment environment and expansion of open economies in number led to a highly competitive global investment climate, in which both developed and developing economies interact to boost economic growth and strengthen stability. Free economic zones became a widespread tool of attracting investment and creating new production capacities, despite structural differences and systemic barriers in regulatory and supervisory procedures. Existing gap in taxation and reporting practices is widening as foreign direct investment is penetrating the business environment of all economies. Therefore, a growing body of need for uniformity and coordination of accounting and auditing policies has become visible and easily identifiable. This article examines the investment policy changes and proposes the recommendations in matching accounting and auditing practices in free economic zones deriving from internationally recognized and prioritized rules.

Keywords: accounting and auditing, free economic zone, foreign direct investment, investment policy.