The Accounting & Auditing Board of Ethiopia (AABE) has issued a warning to audit firms, stating that failure to comply with disclosure requirements in international partnerships could trigger legal action, underscoring rising scrutiny in the country’s audit sector. The Board signalled both encouragement and enforcement, urging domestic firms to integrate with global audit networks but under strict regulatory oversight. The intervention comes as the country’s audit industry remains fragmented, with around 234 firms operating across the country, though only a small number are formally registered under international audit networks and associations. Fekadu Agonafer, deputy director of the Board, framed the policy as a necessary push toward global standards. “We encourage local audit firms to partner with international networks and associations, because their technological advancement and systems significantly elevate audit quality and financial reporting,” he said. Tilahun Girma, a financial consultant at PKF Ethiopia, said the lack of a clear directive in the past had contributed to weak reporting of international affiliations. He noted that the new requirement now obliges firms to clearly disclose the extent of their partnerships with global networks. Tilahun added that the measure is expected to reduce misleading market perceptions, where some firms previously presented limited or informal relationships as broader partnerships without formal agreements. The Board stressed that compliance with reporting requirements is mandatory. It stated that firms failing to provide complete and timely information on international partnerships would face legal measures, and that international networks engaging with non-compliant Ethiopian firms could also face restrictions and enforcement action. The directive also sets out key requirements, including formal agreements, clarity on brand usage, strengthened quality assurance systems, and data protection procedures aligned with international standards.

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