IFRS, Adoption and Implementation in Public Enterprises in Ethiopia with the Assessment of Key Issues and Challenges

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Addis Ababa University


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.


A thesis submitted in the partial fulfillment of the Requirements for the degree of masters of Science in Accounting and finance


Adoption, Benefits, Challenges, Roadmaps