Chief financial officers (CFO) are displeased with the pace of conversion in corporate reporting standards to international financial reporting norms, as professionals blame a regulatory body for their dismay.

Parliament legislated in 2015 the establishment of a federal agency tasked with regulating and enforcing compliance with the International Financial Reporting Standards (IFRS). According to data from the industry regulatory body, nearly 1,000 public and private companies have complied to date. This represents not more than one percent of companies incorporated under the Ethiopian commercial code.

A survey conducted by a private audit firm revealed that Ethiopia’s IFRS implementation faces shortages of experts and inadequate disclosures. It is shrouded by weak corporate governance, inadequate training, weak enforcement of the regulatory body, and the high cost of migration from the traditional standard, the General Accepted Accounting Principles (GAAP). More than 120 countries have adopted IFRS, a global financial reporting framework adopted by the International Accounting Standards Board (IASB).

A global reporting framework is designed to harmonise national standards for shared understanding and comparability of financial statements.

IFRS is an international financial language for businesses worldwide. Ethiopia is moving towards full IFRS compliance at a snail’s pace; an initial deadline expired two years ago. The Accounting & Audit Board, chaired by State Minister Eyob Tekalegn (PhD), postponed the deadline to 2024.

The second deadline is unlikely to be met, according to CFOs who met at a forum held at the Sheraton Addis on Thursday, October 13, 2022.

“The introduction of IFRS is simply business as usual,” Tedros Solomon, who attended the first forum organised by HST, a private audit firm chaired by Solomon Gizaw, its CEO.

The firm conducted a survey where 49pc of the respondents wanted to see the Board work actively to reduce bureaucratic hurdles.

One of its directors at HST, Gobeze Dessalegne amplified this concern during his presentation of the survey’s results. He highlighted “bureaucratic hurdles” at the Board undermining the conversion pace.

Solomon attributed the slow pace and lack of progress to inadequate training and disclosure.