Challenges and Prospects of International Financial Reporting Standards (IFRS) Implementation in Ethiopia

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Addis Ababa University


One of the foremost requirements to operate a Business successfully is to have a good financial reporting system in place. This study examines implementation of International Financial Reporting Standards (IFRS) In Ethiopia in accordance with financial reporting proclamation # 847/2014. The study investigates the challenges faced in implementing, International Financial Reporting Standards (IFRS) by Ethiopian firms The paper provides insight into the IFRS adoption process based on a questionnaire sent to Authorised Accounting and Auditing professionals in Ethiopia. 95 responses received out of 116 and it indicate: (1) a majority of respondents have indicated IFRS Enforcement capacity will be a key challenge for transition; (2) the process is costly, complex, and burdensome; (3) Institutional readiness require more attention for transition to IFRS; (4) the more comprehensive the approach to conversion, the more respondents tend to agree with the factors influencing the transition; (5) the complexity of IFRS as well as the lack of Implementation guidance and uniform interpretation are also key challenges in technical capacity area; the results of the questionnaire and interviews confirmed that, the transition to IFRS in Ethiopia will be challenging. The study also discusses the prospect of IFRS implementation in Ethiopia and the result showed that the transition plan to IFRS and its implications for preparers, users, educators and other stakeholder has to be effectively coordinated and communicated. In the conclusion part, the study brings out the ways through which these challenges can be addressed. Keywords: IFRS; Proclamation; Challenge; Enforcement Capacity, Institutional readiness; Technical Capacity



IFRS; Proclamation; challenge; enforcement capacity; institutional readiness; technical capacity