COMPARATIVE ASSESSMENT OF IFRS AND GAAP AS BASE OF ACCOUNTING IN SELECTED PRIVATE COMMERCIAL BANKS IN ETHIOPIA

Abstract

The study aim to examine the existing deference between IFRS and GAAP based financial statements of selected private commercial banks in Ethiopia. In order to accomplish the research purpose the study used mixed research approach. Secondary data were collected from selected banks financial statements and interview also conducted with selected banks finance managers and IFRS team members. The secondary data found in numeric form were analyzed using descriptive statistics analysis and data found from interview and financial statements in the form of notes were analyzed and interpreted qualitatively. The result shows that total assets, total expenses and shareholder’s equity figures increase under IFRS based financial statement, whereas total revenue, total liability and profitability figures decrease under IFRS based financial statement. Regarding applicable standards the study find that majority change occurred in the selected banks financial statement are because of applying three standards that are IAS 39, IAS 16 and IAS 19.The study also finds that IFRS has number of benefits and some challenges. Based on such findings the researcher conclude that value variation in IFRS based financial statement variables were result of remeasurement, reclassifications and recording of financial statement variables as per the IFRS requirements, IFRS increase comparability, transparency and accountability and can appreciate investments and create source of finance than the previous GAAP.IFRS has challenges concerning its contradiction from NBE & ERCA rule and intellectuality and active market problems exists in the country and system compatibility problem within the selected companies. Finally the researcher gives recommendation for the selected banks under study, central bank, tax authority and learning authority in order to make the appropriate amendment and inclusion.