Abstract:
This study aims to examine the adoption of International Financial Reporting Standards (IFRS) in
Ethiopian financial institution, using descriptive research design. The study focuses on examining
the key benefits, opportunities, and challenges of IFRS including the factors that could influence its
adoption. To answer research questions and tes the hypotheses, the study adopted the mixed
research approach. The questionnaire data were analyzed using descriptive statistics, correlations,
and multiple linear regression analysis and data from interview and document reviews were
interpreted qualitatively. The research is founded on questionnaire survey of 132 accounting
professionals, IFRS Team, Auditors, and finance officers and applied purposive sampling technique
to assemble the data from target respondents from various financial institutions of Ethiopia. The
results shows that IFRS adoption in Ethiopian financial institutions, will result in a number of
important benefits to a wide range of stakeholders. High cost of adopting, the complex nature, lack
of proper instructions from regulatory bodies for implementing IFRS, as well as IFRS’s emphasis on
fair value accounting, are listed among the most important challenges of IFRS adoption. The study
also finds that five independent variables which are Governmental bodies, professional bodies,
capital market, educational level and company size significantly influence the adoption of IFRS in
Ethiopian financial institutions. Then the collected data were analyzed using descriptive statistics,
correlational and multiple regression analysis by Statistical Package for Social Sciences (SPSS) 25
version data analysis. Finally, the thesis displayed practical implications for the government of
Ethiopia and regulatory bodies in setting a firm deadline for the IFRS adoption and in following the
proper application of all the adopted standards. The findings also suggest that a rigorous IFRS
capacity building program should be embarked by the government, all regulatory bodies, firms and
training institutions in order to provide the needed manpower for IFRS implementation.
