This study aims to examine the adoption of International Financial Reporting Standardsrn(IFRS) in Ethiopia. The study focuses on examining the benefits and challenges of IFRSrnincluding the factors that could influence its adoption. To answer research questions andrntest the hypotheses the study adopted the mixed research approach. The questionnairerndata were analyzed using descriptive statistics, correlations, and multiple linearrnregression analysis and data from interview and document reviews were interpretedrnqualitatively. The results show that IFRS adoption in Ethiopia will result in a number ofrnimportant benefits to a wide range of stakeholders. High cost of adopting, the complexrnnature, lack of proper instructions from regulatory bodies for implementing IFRS, as wellrnas IFRSâ€™s emphasis on fair value accounting, are listed among the most importantrnchallenges of IFRS adoption. The study also find that with the exception of governmentrnpolicy the other four variables which are professional bodies, capital market, educationalrnlevel and company size significantly influence the adoption of IFRS in Ethiopia. Finally,rnthe thesis displayed practical implications for the government of Ethiopia and regulatoryrnbodies in setting a firm deadline for the IFRS adoption and in following the properrnapplication of all the adopted standards. The findings also suggest that a rigorous IFRSrncapacity building program should be embarked by the government, all regulatory bodies,rnfirms and training institutions in order to provide the needed manpower for IFRSrnimplementation.rnKeywords: Adoption, International Financial Reporting Standards, Ethiopia