Challenges and Prospects of International Financial Reporting Standards (IFRS) Implementation in Ethiopia
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Date
2017-01
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Addis Ababa University
Abstract
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
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Keywords
IFRS; Proclamation; challenge; enforcement capacity; institutional readiness; technical capacity