Opportunities and Challenges of International Financial Reporting Standards (IFRS) Implementation in the Case of Commercial Banks in Ethiopia
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Date
2019-05
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Addis Ababa University
Abstract
The aim of the study is to identify the opportunities and challenges of International Financial
Reporting Standards (IFRS) Implementation in the case of Commercial Banks in Ethiopia.
The study focuses on assessing the opportunities and challenges of IFRS including the factors
that could influence its adoption and post implementation challenges. To achieve these
objectives, both primary and secondary data were collected from Accountants, Auditors and
IFRS implementation who are working in the commercial Banks in Ethiopia who were
selected purposively based on their role and involvement in the implementation Process.
Primary data were collected through questionnaire and interview whereas secondary based
were collected through documentary evidence and analyzed by using descriptive analysis.
The findings suggest that IFRS has cumbersome requirements, difficult to understand
apparent technical complexities in IFRS, lack of implementation guidance, difficulty in
determining fair value of assets and liabilities, lack of personnel with necessary knowledge
and expertise of IFRS, scarcity of experts for consulting, limited access to IFRS education
and training program, limited experiences in applying IFRS, lack of top management’s
commitment and support, lack of trained Auditors to audit under IFRS environment, lack of
cooperation among departments , resistance to change, lack of IFRS compatible software
packages, difficulty of integrating IFRS with the current accounting system, and IFRS,
limited time for preparation and transition before full convergence , high cost of IFRS
consulting and auditing, insufficient Availability of Internal data for IFRS conversion are the
clearly outstanding challenges encountered by firms upon the mandatory adoption and
compliance with IFRS.
The finding of open ended questionnaires also suggest that there are weak post IFRS
implementation follow up, IFRS is not incorporated in day to day activities since the last
reporting date, IFRS-9 not yet implemented by Commercial Banks in Ethiopia except CBE,
NBE and Ministry of Revenue were not yet revised its laws in line with the requirement of
IFRS
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Keywords
Adoption, Challenge, Commercial Banks, Implementation