Accounting policies play a crucial but often overlooked role in the management of any company. As a relatively new sector operating primarily in emerging markets, the PAYGo solar sector confronts this regularly. PAYGo solar companies have a challenge deciding which accounting policies they can or should use to manage their businesses and present them to the outside world. Investors in turn may find it difficult to understand what accounting standards a PAYGo company is using and how this affects its financial position or compares to its competitors.
The proliferation of accounting practices across PAYGo firms emerged as an important topic during the PAYGo PERFORM initiative–the different practices used could produce substantial impacts on the calculation of the PERFORM key performance indicators (KPIs), and in turn make comparison of the KPIs across companies more difficult. To help address this, IFC Lighting Global and GOGLA commissioned MFR to produce a review of accounting practices in the PAYGo sector, with the goal of increasing awareness and transparency of the different accounting treatments used in PAYGo firms and their impact on financial reporting.