Challenges Towards The Adoption Of International Public Sector Accounting Standards: The Case Of Foreign Charities Based In Addis Ababa, Ethiopia

Abstract

IPSAS is the international accounting standards applicable to public sectors which include not-for-profit organizations. It provides high-quality, independently produced accounting standards. Charities and Societies in Ethiopia are expected to adopt IPSAS by July 2017. The main objective of this study was to assess the adoption of international Public Sector Accounting standards in Ethiopia, Addis Ababa. Both qualitative and quantitative methods were employed during the research. Survey method was used to gather the opinions of respondents on the issues and challenges of adopting IPSAS in Ethiopia. A selfadministered questionnaire was used to collect data from 200 sample organizations whereby either one Finance head or deputy finance head was responded from each organization. Data entry and analysis was done using SPSS version 20 software packages. The result showed that 36(72%) of the respondents strongly agreed on the fact that government policy such as hasty government decisions, lack of policy and lack of clarity (improper definitions) affect the adoption of IPSAS.Moreover, the same number of the respondents strongly believe that shortage of qualified individuals, cost of engaging qualified individuals and lack of enough training materials affect the adoption process. According to the findings, it can be concluded that the adoption of IPSAS is in a promising stage and requires only a refresher trainings, capacity building and strong follow-up by the supervisory bodies. This does not mean that IPSAS is free from challenges. Few experiences of challenges in adopting and implementing IPSAS include; scarcity of highly qualified professionals and trained human resources; lack of proper guidelines from regulatory bodies on the adoption process and increase administrative, compliance or other costs are the key challenges of IPSAS adoption in Ethiopia. AABE has to continue its effort to raise the level of awareness of the foreign charities by organizing familiarization workshops, producing communication materials, etc. regarding the new proclamation to improve the acceptability and implementation of IPSAS.