Abstract
The main purpose of this study is to analyze International Financial Reporting Standard (IFRS) adoption and quality of financial reporting by commercial banks in Ethiopia using qualitative characteristics of accounting information such as: Relevance, Understandability, Comparability, and Faith Representation. The study used the perceptions of preparers of banks financial reports (accounting & finance officer, finance managers as well as IFRS implementation team members) to analyze about IFRS adoption in commercial banks. The study adopted mixed research approach and descriptive research design. More specifically, the study used purposive sampling technique to collect a data; the data was collected through primary and secondary source of data. The primary data was collected through questionnaire and secondary data was from different source of documents. The data was analyzed using descriptive statistics. The finding of the study reveals that; the quality of financial report which is measured through (relevance, understandability, comparability and faith representation) was improved after adoption of international financial reporting standards. Keywords: IFRS adoption, financial reporting quality, relevance, understandability, comparability, faith representation , commercial bank , Ethiopia. DOI: 10.7176/RJFA/11-7-03 Publication date: April 30 th 2020
Highlights
Accounting Standard is a rule or sets of rules, which prescribes the methods by which financial records should be prepared and presented
International Financial Reporting Standards (IFRS) are a set of international accounting standards stating and reporting rules that defines how business transactions should be recorded and reported and what information a company should disclose in its financial statements
This study set out to examine whether the adoption of IFRS in Ethiopia improve the quality of financial reporting with regarding to commercial banks
Summary
Accounting Standard is a rule or sets of rules, which prescribes the methods by which financial records should be prepared and presented. IASB states that the general purpose financial reporting (communication of financial information to user) is to provide financial information about the entity reported that are useful for potential investors, lenders other creditors in making decisions about providing resources to the entity. IFRS will have a profound impact on the country’s growth potential because www.iiste.org nationally supported IFRS will increase stability, stewardship, accountability and transparency both at institutional and government level It will increase the general level of professional education of accountants and standards setting bodies and improve their policies and decision making. Implementation of IFRS contributes to Government efforts of improving good governance and reducing the level of corruption and rent seeking behaviors All of these will in turn help to remove major impediments to growth that are common in emerging economies like Ethiopia (AABE, 2015). The general objective of this study is to assess the International Financial Reporting Standards (IFRS) adoption and financial reporting quality of commercial banks in Ethiopia
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