THE SIGNIFICANCE OF ADOPTING INTERNATIONAL FINANCIALREPORTING STANDARDS IN ETHIOPIA

Abstract

The study aimed to assess the benefits of various stockholders of using and IFRS compliance and conformity to norms of acceptable behavior or accounting practices in Ethiopia. It applied both qualitative and quantitative research approach and descriptive research design. Both probability and non-probability sampling methods were used (purposive sampling for companies, accountants and probability method used for selection individuals from regulatory body). This study attended 78 % of responses rate as a total of 265 questionnaires were distributed and only 207 of them were filled and returned properly. The study found that IFRS in Ethiopia less contributed on greater access to capital, adaptability to changes in economic environment, information for control, robustness against manipulations, promotion of cross-border investment and lower cost of capital. IFRS in Ethiopia provided to enhance efficient capital allocation, easier access to financial reporting, strengthened and more effective capital market, understanding of risk and return, attract investors and having better access to the global markets. The overall benefit is the highest mean and legitimate and policy maker benefit are the lowest mean scores; the country are not effectively harvested the benefits of IFRS but investors, business organizations and regulatory bodies are being benefited through IFRS in Ethiopia. Thus, the study suggests that IFRS awareness creation campaign should be prepared for companies, auditors, professionals and others. In addition, much work should be done to effectively implement IFRS in Ethiopia to get best result in greater access to capital, adaptability to changes in economic environment, information for control, robustness against manipulations, and promotion of cross-border investment and lower cost of capital.