ASSESSMENT OF THE PERCEPTION OF FOREIGN CHARITIES IN ADDIS ABABA ON THE BENEFITS AND CHALLENGES OF ADOPTING INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS (IPSAS) IN ETHIOPIA

Abstract

IPSAS are the international accounting standards applicable to public sector which include not-for-profit organizations. The objective of this study is to investigate the perception of foreign charities in Ethiopia on the benefits and challenges of IPSAS adoption. Charities and Societies in Ethiopia are expected to adopt IPSAS by July 2017. A descriptive survey design is used to collect data for this study from 29 sample organizations. The study depicts that, the envisaged benefits of IPSAS are transparency; enhanced internal control; understandability; accountability; comparability; credibility and better interpretation and acceptability of financial reports. Few experience in adopting and implementing IPSAS; scarcity of qualified professionals and trained human resources; lack of proper guidelines from regulatory bodies on the adoption process and increased administrative, compliance or other costs are the key challenges of IPSAS adoption in Ethiopia. The adoption of IPSAS in Ethiopia in the expected deadline is not feasible. Despite the acknowledged benefits, the foreign charities in Ethiopia do not seem to endorse that the benefits of IPSAS outweigh its challenges in this study. Adoption of IPSAS by the foreign charities in Ethiopia is not because the benefits outweigh the challenges but because it is a mandatory requirement by the government. Revising the timeframe for adoption and full engagement to IPSAS transition by foreign charities are recommended.