Ifrs Adoption In Ethiopia A Critical Analysis Of The Process Issues And Implications.

This study examines the IFRS adoption process in Ethiopia with a view to explaining howrnthe state, i.e., the Ethiopian government, other national actors and the transnationalrnforces interacted in establishing the Ethiopian financial regulatory landscape asrnantecedent to IFRS adoption and subsequent implementation. It employs a qualitativernresearch approach based on evidence collected through semi-structured interview andrnreview of documentary evidences produced in the process of IFRS adoption to explain thernoutcomes of accounting reforms in Ethiopia during the period 1991-2015. By drawing onrnActor Network Theory (ANT), this study theorizes IFRS adoption as a product of a seriesrnof translations in the context of interactions between supranational and national actors tornintegrate Ethiopia into the global economic system through IFRS-based financialrnreporting. Improved financial reporting environment supported by IFRS is theorized as arnkey Obligatory Passage Point (OPP) for Ethiopia’s access to external finance and this inrnturn led to the development of a streamlined national accounting regulatory systemrnthrough translation of institutions into a framework suitable for IFRS-based financialrnreporting. The country’s accounting infrastructures and regulatory environment werernthoroughly evaluated and examined in a transformation process through which thernglobalizing forces and Ethiopian actors built an actor-network that reconstructed thernEthiopian accounting regulatory set up by issuing financial reporting law andrnestablishing the regulatory body (AABE). Accordingly, the country has mandatedrnofficially the adoption of IFRS and designed and approved five years IFRSrnimplementation strategic plan for which its implementation is expected to be effected inrnthe years to come until 2019 deadline. This study illustrates that the IFRS adoption inrnEthiopia is the result of the translation processes involving the actor-networks of thernstate, accounting, professionals, the private sector and international financial institutionsrnwhile the state, i.e., the Ethiopian government, played a management and mediating rolernof the translation processes in the context of promoting macro-economic managementrnrationales of enhanced financial reporting supported by IFRS .The study shows thatrnwhile the Ethiopian IFRS adoption experience illustrates the macro-economic rationalerndriven nature of IFRS adoption, the rationales and the processes of translating the idearninto Ethiopian context illustrates the socially constructed nature of IFRS adoption. Thisrnstudy suggests that more resources and stakeholders need to be coordinated by AABE tornbuild the capacity of preparers in terms of IFRS reporting practices to achieve the IFRSrnimplementation strategic objectives. It suggests that self regulated, independent andrnstrong professional body needs to be established as soon as possible. It suggests that thernconcerned stakeholders need to design and incorporate IFRS education in the curriculumrnas soon as possible to meet the IFRS implementation strategic objectives.rnKeywords: Accounting; Developing countries; Ethiopia; IFRS adoption

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