The Adoption of International Financial Reporting Standards (IFRS) in Ethiopia: Benefits and Key Challenges
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Date
2012-05
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Addis Ababa University
Abstract
This study aims to examine the adoption of International Financial Reporting Standards
(IFRS) in Ethiopia. The study focuses on examining the benefits and challenges of IFRS
including the factors that could influence its adoption. To answer research questions and
test the hypotheses the study adopted the mixed research approach. The questionnaire
data were analyzed using descriptive statistics, correlations, and multiple linear
regression analysis and data from interview and document reviews were interpreted
qualitatively. The results show that IFRS adoption in Ethiopia will result in a number of
important benefits to a wide range of stakeholders. High cost of adopting, the complex
nature, lack of proper instructions from regulatory bodies for implementing IFRS, as well
as IFRS’s emphasis on fair value accounting, are listed among the most important
challenges of IFRS adoption. The study also find that with the exception of government
policy the other four variables which are professional bodies, capital market, educational
level and company size significantly influence the adoption of IFRS in Ethiopia. Finally,
the thesis displayed practical implications for the government of Ethiopia and regulatory
bodies in setting a firm deadline for the IFRS adoption and in following the proper
application of all the adopted standards. The findings also suggest that a rigorous IFRS
capacity building program should be embarked by the government, all regulatory bodies,
firms and training institutions in order to provide the needed manpower for IFRS
implementation.
Keywords: Adoption, International Financial Reporting Standards, Ethiopia
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Keywords
Adoption; international financial reporting standards; ethiopia