Possible Instances of Earnings Management in SOEs: Case of Fiji Electricity Authority

Earnings management practices lead to inferior quality of financial reporting as they make true performance of the business ambiguous. Developed and developing counties face the possible instances of earnings management despite of the huge availability of regulations and accounting standards governing the entities. This study analyses the possible instances of earnings management in one of the State owned Enterprise namely Fiji Electricity Authority over the period of 2000-2015. Results suggest Fiji Electricity Authority practice earnings management through amortization and depreciation, capitalisation and misclassification of government grants. The results are due to the professional judgment of the entities management and also though the flexibility in the accounting standards followed by SOEs. The number of economic incentives is basically derived from the agency relationship to misreport the outcome of the financial figures.