ASSESSMENT OF FINANCIAL REPORTING QUALITY OF FOREIGN CHARITY/ NON GOVERNMENTAL ORGANIZATIONS IN ETHIOPIA

Abstract

This study assessed the Ethiopian foreign charities financial reports quality and its level of compliance with guidelines of charities and society agency. The researcher adopted descriptive cross sectional research method. Quantitative methods of data collection were used while carrying out the study. In this study a sample size of 80 foreign charities was taken to represent the population of 396 Foreign Charities. Annual audited financial reports of the foreign charities were also used as a secondary data source. Ethiopia’s Charities and Societies Agency(ChSA) has shut down some NGOs due to noncompliance with civil society and charity law. The closing of NGOs will affect the contribution of NGOs towards the vision of Ethiopia. High quality financial reporting by NGOs is essential to securing sustained support from donors and from the wider public and to continue in the business. The assessment identified that most of the foreign charities in Ethiopia did not comply with guide lines of ChSA guidelines and on the other hand the assessment identified that most of the foreign charities financial reports are relevant, faithful representation, understandable and timeliness for decision making and this information assist user to reliable and good decision making. However, most of the foreign Charities financial reports were not Comparable. It is, therefore, recommended that, all foreign charities in Ethiopia are required to comply with guide lines of ChSA guidelines and prepare high quality financial reports. To this effect the foreign charities are required to strength their accounting and financial reporting system to prepare high quality financial reports to offer adequate accountability for the resources entrusted to their stewards to address information needs, reduce fraud opportunities, improve use of donor funds, create uniformity of financial reports, increase donor confidence and funding, and consequently improve service delivery to the intended beneficiaries.