Benefits and Challenges of International Financial Reporting Standard (IFRS) Transition in Ethiopia (Case Study on Some Selected Organizations in Ethiopia)

Netsanet Shiferaw

doi:10.7176/rhss/10-11-03

Abstract

The purpose of this study is to assess the transition of International Financial Reporting Standards (IFRS) in Ethiopia: the benefits, prospects and challenges of its adoption and implementation in the case of 13 significant PIEs. The study employs both quantitative and qualitative methods (mixed) research approach. Both primary and secondary data sources were used for the study. The respondents are selected by using judgmental sampling technique. Then, the collected data from those organizations is analyzed by descriptive and econometric analysis by using SPSS software. The results revealed that the adoption of the IFRSs has improves the efficiency and effectiveness of financial reporting, provides better information for decision making, enhanced the accuracy; reliability and comparability of accounting information, simplify the process of Merger/Acquisition , enables greater effectiveness of the internal audit, brings better corporate governance, reduce cost of capital , better access to capital market , harmonize the reporting standard , better risk management, promotes cross border investments and provide timely financial report. However, there is serious educational, technical and institutional challenges that the country need to overcome in order to benefit fully from the adoption of IFRS. Index Terms - International Financial Reporting Standards, Benefits, prospect, Challenge, implementing. DOI: 10.7176/RHSS/10-11-03 Publication date: June 30th 2020

Highlights

Knowledge Evaluation The findings show that the level of awareness about Pros/Cons of applying International Financial Reporting Standard (IFRS) have the mean value of 4.5455 and standard deviation of 1.01413 which indicate that the respondent have a good understanding about the Pros/Cons of applying IFRS
The results show that the introduction of IFRS in Ethiopia will result in a number of important benefits for a wide range of stakeholders
The financial information originating from developing countries is still difficult to trust, Herbert et al (2013), despite the urgent need for countries to attract foreign investment and foreign capital

Summary

Introduction

Background of the study As of the beginning of 2005, by having variation in accounting practices and financial information asymmetry, the global corporate financial reporting landscape has been transformed. A single global accounting standard all over the world established. International financial reporting standards (here after IFRS) is designed as a common global language for business affairs. Adoption of IFRS is more than accounting exercise. Conversion to IFRS does not end with the publication of the first set of IFRS compliant financial statements. IFRS refers to a series of accounting pronouncements published by the International Accounting Standards Board in order to produce reliable and relevance information throughout the world, produce and present high quality, transparent and comparable financial information. 1. Background information of the respondents Variable.

Objectives

Methods

Conclusion