One of the foremost requirements to operate a Business successfully is to have a goodrnfinancial reporting system in place. This study examines implementation of InternationalrnFinancial Reporting Standards (IFRS) In Ethiopia in accordance with financialrnreporting proclamation # 847/2014. The study investigates the challenges faced inrnimplementing, International Financial Reporting Standards (IFRS) by Ethiopian firmsrnThe paper provides insight into the IFRS adoption process based on a questionnaire sentrnto Authorised Accounting and Auditing professionals in Ethiopia. 95 responses receivedrnout of 116 and it indicate: (1) a majority of respondents have indicated IFRSrnEnforcement capacity will be a key challenge for transition; (2) the process is costly,rncomplex, and burdensome; (3) Institutional readiness require more attention forrntransition to IFRS; (4) the more comprehensive the approach to conversion, the morernrespondents tend to agree with the factors influencing the transition; (5) the complexityrnof IFRS as well as the lack of Implementation guidance and uniform interpretation arernalso key challenges in technical capacity area; the results of the questionnaire andrninterviews confirmed that, the transition to IFRS in Ethiopia will be challenging. Thernstudy also discusses the prospect of IFRS implementation in Ethiopia and the resultrnshowed that the transition plan to IFRS and its implications for preparers, users,rneducators and other stakeholder has to be effectively coordinated and communicated. Inrnthe conclusion part, the study brings out the ways through which these challenges can bernaddressed.rnKeywords: IFRS; Proclamation; Challenge; Enforcement Capacity, Institutionalrnreadiness; Technical Capacity