adoption of international financial reporting standards (IFRS) in Ethiopia

yichilal simegn filatie

Abstract


The purpose of this study is to assess the adoption of international financial reporting standards (IFRS) in Ethiopia: the benefits, challenges and critical factors affecting its adoption. The primary data was collected using questionnaire while the secondary data were collected from journal articles, manuals, books and websites then the collected data are analyzed using multiple linear regression analysis  then presented using tables, graphs, charts and descriptive statistics. The study found that Adoption of IFRS by Ethiopia would improve the quality of accounting so as to make judgemented decision among users of accounting information. However, Lack of proper financial reporting guidance, Lack of proper instructions from regulatory bodies, additional training for professionals and modernized IT system in handling the transitions to IFRS are the main challenges of IFRS adoption. This study  employed the mix of theory of planned behavior (TPB) and Choi and Meek’s (CM) frame work and found that the variables subjective norm, perceived control and level of education significantly and positively influence IFRS adoption while, legal system significantly and negatively affects its adoption. The variables attitude, economic development and capital market found have no significant contribution for the intent to adopt IFRS. Hence, among the behavioural factors subjective norm and perceived control significantly and positively affect the intention to adopt IFRS while attitude has no significant impact. On the other hand, among environmental factors level of education and legal system significantly affect the intention to adopt IFRS however, economic development and capital market have no significant impact. Thus, since, the benefits of IFRS adoption out ways its challenges the regulatory body should adopt IFRS as early as possible so as to strengthen the financial reporting system of the country and cop up with financial reporting standards used internationally.

Keywords: International Financial Reporting Standards (IFRS), Ethiopia, Theory of Planned Behaviour (TPB), Choi & Meek’s (CM’s) Framework


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ISSN : 2251-1555