Challenges of Practical Implementation of IFRS in Ethiopia, Evidence from Banking Sector
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Date
2018-12
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Addis Ababa University
Abstract
Since the turn of the century, there is an unprecedented appreciation of the usefulness of the
International Financial Reporting Standards (IFRS) across the globe. As a single set of globally
converged, high quality accounting standards, IFRS are designed to serve as a common global
language for business affairs so that company accounts are understandable and comparable
across the globe. As a result, by recognizing the relative importance of IFRS, over 150 countries
required or permitted IFRS as their corporate financial reporting standard. Despite this
widespread acceptance of IFRS, there are serious institutional, enforcement and technical
challenges that countries need to overcome in order to benefit fully from the introduction of IFRS
in their jurisdictions. Ethiopia is one of those countries that face serious challenges to implement
IFRS. Therefore, this research is intended to investigate the practical challenges of IFRS adoption
in Ethiopia, particularly in private commercial banks. To achieve this objective, both primary and
secondary data were collected from IFRS implementation team members of 12 private banks 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. Finally, the result of the study revealed that weak corporate governance, poor quality of
education and training, lack of supports from accountancy professional bodies, weak
enforcements of regulatory body, inadequacy of transition period, improper planning, nonavailability of transparent market information, high cost of implementation and weak management
support are the major challenges of adopting IFRS by private banks in Ethiopia
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Keywords
Adoption, Ethiopia, IFRS, Private Banks