The International Accounting Standards Board (IASB), in its objectives, supposes that thernbeneficial effects from IFRS adoption include transparency, accounting quality and reduced costrnof capital. In the year 2014, the Ethiopian government decided to adopt International FinancialrnReporting Standard for small and medium enterprises (IFRS for SMEs). This study examinesrnfactors that affect the adoption of International Financial Reporting Standard for Small andrnMedium Enterprises (IFRS for SMEs): The Case of SMEs in Addis Ababa, Ethiopia. The studyrnemployed explanatory survey design incorporating mixed research approach. The stratifiedrnrandom sampling technique across five sectors was used. To obtain answers to the researchrnquestions, questionnaires were distributed seeking the opinion of respondents. A total of 375rnquestionnaires were distributed. Out of which 232 was returned. The questionnaire data werernanalyzed using descriptive statistics and inferential statistics. Data from interviews wererninterpreted qualitatively. Quantitative data collected was analyzed with STATA Version 14.0 andrnlogistic regression analysis was employed. The results of the study showed that most SMEsrnemployees lacked awareness about IFRS for SMEs. The study results also revealed that size of arnfirm, lack of accounting education and inefficient practical training are among the factors thatrninfluences the adoption of IFRS for SMEs. Little or no effort is being made by regulatory body tornmonitor, review and enforce SMEs to adopt the standard in the SMEs sector. Overall, thernfindings of the study showed that the majority of SMEs in Addis Ababa are not ready to adoptrnthis standard yet. The study recommends SMEs to do their best in developing awareness of theirrnemployees towards the standard through organizing the necessary training, accessing materialsrnfrom internet and made available them in the working environment and also AABE should dornenforcement activities through onsite inspection and other mechanisms such as collaboratingrnwith banks and Ethiopian Ministry of Revenue to ensure successful adoption of the standard.