Abstract:
This study aims to examine the adoption of International Financial Reporting Standard (IFRS) in
Ethiopia. The study focuses on examining the benefits and challenges of IFRS including the factor
that could influence its adoption. To answer research questions and tests the hypotheses the study
adopted the mixed research approach. The questionnaire data were analyzed using descriptive
statistics, correlations and multiple linear regression analysis and multiple linear regression
analysis and data from interview and document reviews were interpreted qualitatively. The results
show that IFRS adoption in Ethiopia will result in a number of stakeholders. High cost of adopting,
the complex nature, lack of proper instruction from regulatory bodies for implementing IFRS, as
well as IFRS‘s emphasis on fair value accounting, are listed among the most important challenges
of IFSR adoption. The study also finds that with the exception of government policy the other four
variables which are professional bodies, capital market, educational level and company size
significantly influence the adoption of IFSR in Ethiopia. Finally, the thesis displayed practical
implication 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 finding
also suggests 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
