IFRS Adoption Progress in Ethiopia

Abstract

International Financial Reporting Standards (IFRSs) have been adopted by more than 100 countries across the globe. The main objective of IFRSs is to converge the diverse business language being used by the business communities all over the world. However, its adoption and implementation bring opportunities and pose challenges to the adopter(s).  Accordingly, as Ethiopia is moving toward implementing IFRS within the next five years, this paper, therefore, aims, inter alia, to assess the IFRS adoption progress in Ethiopia and investigate factors that motivate Ethiopia to adopt IFRS, and advantages and challenges ahead of IFRS adoption in Ethiopia to provide an input for stakeholders and serve as stepping stone for future researches on this field of study.   Both primary and secondary sources of data have been used for the study. Primary data were collected through open-ended interview whereas secondary data were collected using document analysis techniques from the annual reports of companies reporting under IFRS, and proclamations and regulations that deal with financial reporting issues in Ethiopia. The study found that some companies in Ethiopia have started using IFRS voluntarily for the preparation of their financial statements since 2002/03 without making necessary preparedness but nationally; IFRS is adopted officially in December, 2014 through enactment of Proclamation. The result of the study will provide a good lesson for other developing countries that are on the way to join or will join the IFRS network.

Keywords: IFRS, Ethiopia, Adoption, Opportunities, Challenges, Progress.