IFRS, Adoption and Implementation in Public Enterprises in Ethiopia with the Assessment of Key Issues and Challenges
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Date
2018-02
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Addis Ababa University
Abstract
The goal of financial reporting is to make information available for decision making. Historically, there is
diversity of financial reporting in different countries due to culture, legal systems, tax systems and business
structures. International Financial Reporting Standards (IFRS) harmonizes diversity by making information
more comparable and easier for analysis, promoting efficient allocation of resources and reduction in capital
cost. Both primary and secondary data were collected and studied by the researcher to confirm these
assumptions. Lessons from already adopters of IFRS show that there are enabling framework for the
imminent transition and challenges. Based on all these facts; the benefits and challenges together with the
roadmap of its adoption and implementation with key issues of IFRS in public Enterprise, Ethiopia were
studied. To answer research objectives the researcher use exploratory research design. The data were
analyzed qualitatively and data from interview, focused group discussion and document reviews were
interpreted qualitatively. The results show that IFRS adoption in Public Enterprises in Ethiopia will result in a
number of important benefits to the enterprise and stakeholders. Among the listed benefits are: - increase the
quality of financial statements, reliable and comparable financial statements ,improved management
information system, get the best information out of the financial statements and increase confidence to relay
on the financial statement, ease to manage risk, increase external financer reliance on financial statement,
and make easier to oversight. On the other hand, high cost of adopting, the complex nature of IFRS, need
strong support from AABE and other stakeholders for implementing IFRS, as well as IFRS emphasis on fair
value accounting are listed among the most important challenges of IFRS adoption. The study also finds that
those: - which are Government policy and support, commitment of the enterprise, support from professional
bodies, sufficient period for adoption and implementation, capital market, timely revision of accounting
curriculum, IFRS based accounting procedure manual for each enterprise/industry, better educational level
and intensive training are some of the factors which are significantly influence the adoption of IFRS in public
Enterprises in Ethiopia. Finally, the thesis displayed practical implications for the efficient and effective
adoption and implementation of IFRS, in following the proper application of all the adopted standards. The
findings also suggests that a rigorous IFRS capacity building program should be embarked by the government,
all regulatory bodies, enterprises and training institutions in order to provide the needed manpower for IFRS
implementation.
Description
A thesis submitted in the partial fulfillment of the
Requirements for the degree of masters of Science in
Accounting and finance
Keywords
Adoption, Benefits, Challenges, Roadmaps