Challenges and Prospects of International Finance Reporting Standards (IFRS) Adoption in Ethiopia
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Date
2018-02
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Addis Ababa University
Abstract
Globally, users of financial statements need harmonized, transparent international
financial reporting standardized (IFRS) to help them make economic decisions and to
enable them to invest in across the globe their capital resources. Ethiopia has recognized
the need for accepting those financial reporting standards that were set out by IASB and
started implementing it by selecting 78 companies on the first phase as set out by
Accounting and Auditing Board of Ethiopia (AABE) strategic plan of action. Therefore,
the objective of this research paper is to identity the benefits would be obtained and
challenges encountered during the implementation process which was started from July
8, 2017 in 78 entities in Ethiopia. This study deployed descriptive survey research design
and applied quantitative research method or approach. The researcher distributed
questionnaires to 180 employees selected using purposive sampling of the selected 60
sample entities using stratified sampling technique which were adopting IFRS in their
company. The study used both stratified and purposive sampling techniques to select the
entity and each respondent from their company. Primary data were collected through
structured questionnaires from chief executive officers (CEOs), Chief Finance Officers
(CFOs) and Chief Internal Audit Function. The quantitative data were entered by using
SPSS version 22, analyzed and results were presented in figure, tables, percent and
frequency. Out of the total questionnaire distributed to 180 respondents 165
questionnaire returned to which is 91.67% response rate. The research analysis and
finding indicted the following results: IFRS adaption in Ethiopian was positively
influenced by economic growth rate, existence of financial markets even if it is in its
infant phase, weakness of previews accounting system, enforcements of new legal systems
and others factors such as external factors including influence of the world bank and IMF
which forced government to adopt IFRS. The analysis also identified problems related to
IFRS adoption such as complexity and difficulty of the standards, minimum number of the
professionals, lack of technically competent staffs, non,- existence of professional
association ,cost associated with IFRS.
Description
A Thesis Submitted to Addis Ababa University College of Business and
Economics Department in partial fulfillment of the requirements for the
Degree of Masters in Accounting and Finance
Keywords
Ethiopia, IFRS