Challenges of Implementing International Financial Reporting Standards (IFRS): A Case of Private Insurance Companies in Ethiopia
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Date
2019-02
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Addis Ababa University
Abstract
International Financial Reporting Standard (IFRS) is designed to serve as a common
global language for business affairs so that company accounts are understandable and
comparable across the globe. Its relative importance attracted different companies to
make IFRS as their corporate financial reporting standard. Despite this widespread
acceptance of IFRS, there are serious managerial, education and training, cost,
institutional, and technical challenges that companies need to overcome in order to
benefit fully from the implementation of IFRS in their jurisdictions. This study is intended
to identify the practical challenges of IFRS implementation; the case of private insurance
companies in Ethiopia. To achieve this objective, both primary and secondary data were
collected from IFRS implementation team members of 16 insurance companies 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 different
descriptive statistical tools such as mean and exploratory factor analysis by using SPSS
version 23. Finally, the result of the study revealed that lack of attention and commitment
of management, poor contribution of education and training, lack of supports from
accountancy professional bodies, weak enforcements of regulatory body, and high cost of
implementation and weak management support are the major challenges of IFRS
implementation by private insurance companies in Ethiopia. Therefore, the insurance
companies, regulatory organs and consultants are recommended to improve management
involvement, provide workplace trainings, to implement by customizing the standard, to
improve cost issues of the standard, and to improve the cooperation of the organs
involving in the implementation.
Description
A Research Submitted to Addis Ababa University School of Graduate Studies
in Partial Fulfillment of the Requirements for the Degree of Master of
Accounting and Finance (MSC).
Keywords
IFRS, Implementation, Insurance companies