Assessment of the Challenges and Benefits of the Adoption and Implementation of IPSAS in some selected NGOs in Ethiopia

Abstract

This study assesses the benefits and challenges of adopting and implementing the International Public Sector Accounting Standards (IPSAS) in some selected NGOs working in Ethiopia. The objective of the study was to provide an insight on the contribution of adopting IPSAS in enhancing the level of accountability, transparency and taking educational and professional responsibilities. The population of the study was non-governmental organizations which have already adopted and started to implement IPSAS. Using purposive sampling five NGOs were selected for the study. 51 sample respondents, who understood IPSAS's objectives and were responsible for the adoption process, were taken from the above five institutions to fill the questionnaire. The methods used for the study were descriptive analysis and interview with concerned officials of accounting and auditing board of Ethiopia and professionals found in NGOs. The findings show that the adoption of IPSAS enhances level of accountability and transparency of managements by providing timely and clear financial reports. It was also found that IPSAS adoption is realistic target and clearer understanding of the standard leads to effective implementation. However, the adoption of IPSAS has challenges including additional cost, lack of training, unavailability of adequate staffs in the market, lack of wide participation in the organization, difficulty in recognition, measurement and valuation of assets, delay in amendment to local regulations and lack of coordination and communication. It was also observed that the government higher officials should be committed to implement IPSAS to enhance the quality and comparability of financial reports; the government should give emphasis to implement IPSAS to attract foreign direct investment; AABE should assist public sectors by providing training and consultancy in the adoption process; and universities and professionals need to take the educational and professional responsibilities qualifying for the standard. It was recommended that NGOs should adopt IPSAS for better management, accountability and transparency in financial reporting. And also, AABE should encourage the use of IPSAS that helps to attract more donors.