Factors Affecting The Implementation Of International Financial Reporting Standards (IFRS) And Its Benefits In The Case Of Insurance Companies In Ethiopia.

Abstract

The goals of IFRS is to develop in the public interest a single set of high quality understandable, enforceable and globally accepted financial reporting standards based upon clearly articulated principles. However, its implementation brings opportunities and creates challenges to the insurance companies. The main objective of this study is to assess the benefits and factors which a affect the implementation of IFRS in insurance companies of Ethiopia. The study used both primary and secondary source of data. The primary data was collected through predesigned questioners and the secondary data was collected from the insurance companies profiles , journals and other related material to the study, annual financial reports, proclamation and regulation that deal with financial reporting issues by the insurance companies that deal with financial reporting issues in Ethiopia. To answer the research questions and test the hypotheses the study adopted the quantitative research approach with descriptive and explanatory research design. The questionnaire data were analyzed using descriptive statistics, and multiple linear regressions analysis. The population of the study consisted of all insurance companies of Ethiopia. In this research select a sample of 10 insurance companies were selected using purposive sampling to investigate benefits and factors that affect the implementation, and processed using both descriptive and inferential statistics like frequencies, percentages, means and regression analysis. The result show that IFRS implementation in insurance companies of Ethiopia result in a number of important benefits to a wide range of user of financial statements. The study also found that with the exception of IFRS knowledge gap the other four variables which are shortage of qualified professionals, resistance to change, management gap, and cost significantly influence the implementation of IFRS in insurance companies of Ethiopia. Based on the finding the research attempted to recommend the following: The government and other concerned body should work on resolving knowledge gap as the factors affecting the implementation of IFRS through training and development; work on resolving management gap to implementation of IFRS in Ethiopian insurance company. Through capacity building, training and development; work on to manage or handle change resistance to implementation IFRS in insurance company of Ethiopia through awareness creation and development; work .on the establishment of institute which supports the implementation of IFRS in insurance Ethiopia.