Challenges and Prospects of Adopting International Financial Reporting Standard (IFRS) in Manufacturing Sector of Ethiopia
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Date
2018-06
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Addis Ababa University
Abstract
International Financial Reporting Standards (IFRS) becomes internationally accepted standard
which is adopted and implemented in many jurisdictions to harmonize financial reporting
throughout the globe. As Ethiopia is also one of those countries which accept this standard starts
adopting it. Therefore, this study aims to assess the challenges and prospects of International
Financial Reporting Standards (IFRS) adoption in Manufacturing sector of Ethiopia. The study
employed mixed research approach to achieve the research objectives. The questionnaire data
were analyzed using descriptive statistics and data from interview and document review were
interpreted qualitatively. The results of the study show that IFRS adoption in Manufacturing
sector of Ethiopia will provide benefits to this sector such as attraction of more foreign direct
investment and financial support, bridging the communication gap with stakeholders and will
bring uniformity of accounting languages. On the other hand this study also finds different
challenges of adopting IFRS in Manufacturing sector of Ethiopia such as conversion cost of
adoption, required training and education, legal and enforcement mechanisms, employee’s
resistance to change, asset valuation and availability of professional bodies. Finally the study
recommended that employees should be aware of how to reduce costs in adoption process and
the government must amend regulations to fit with IFRS requirements. Professional bodies
should encouraged and do consult to facilitate successful IFRS adoption in this sector. In
addition to that, academic courses regarding IFRS should be incorporated in colleges and
universities levels so that the new generation will be knowledgeable about IFRS.
Description
A Thesis submitted to the Department of Accounting and Finance presented in
partial fulfillment of the requirement for the degree of Master of Science in
Accounting and Finance
Keywords
International Financial Reporting Standards(IFRS), Manufacturing sector and financial reporting, Prospects