CHALLENGES AND OPPORTUNITIES OF ADOPTING IFRS AND ITS CONTRIBUTION TO QUALITY OF FINANCIAL REPORTING: A STUDY ON BANKING SECTOR IN ETHIOPIA

Abstract

The goals of IFRS is to develop, in the public interest, a single set of high-quality, understandable, enforceable and globally accepted financial reporting standards based upon clearly articulated principles. However, its adoption and implementation bring opportunities and create challenges to the adopter. The main objective of this study is to provide an input for banks, governmental and policy and to academics/researchers serve as for future researches on this field of study. Both primary and secondary sources of data have been used for the study from selected 11 banks. Primary data were collected through pre designed questioners whereas secondary data were collected from different banks annual reports, scientific papers and proceedings relevant to the study using document and regression analysis techniques, and proclamations and regulations that deal with financial reporting issues in Ethiopia. The study found that some banks in Ethiopia have started using IFRS voluntarily for the preparation of their financial statements without making necessary awareness, and from the analysis of survey dependent and independent variables has significant correlation with the transparency, comparability and accountability of IFRS on quality of financial reporting. There should be AABE to collaborate with the ministry of education and Professional association outside Ethiopia in order to spread the promulgate knowledge of IFRS, since adoption of IFRS could lead to increased foreign direct investment and access to finance, which in turn may lead to economic growth of Ethiopia.