Financial reporting proclamation under revision

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Photo: Anteneh Aklilu

The financial reporting proclamation is under revision aiming to divide the regulatory and capacity building duties of the Accounting and Auditing Board of Ethiopia (AABE). AABE also introduced a new scheme to achieve the International Financial Reporting Standards (IFRS) implementation, which was expected to be attained in the last budget year.
Hikmet Abdella, Chair of AABE, told Capital that the proclamation is under revision to form separate entity for the formation of an institute that would be engaged in capacity building and technology development.
She remembered that when the 2014 Financial Reporting Proclamation no. 847/2014 was drafted it divided the regulatory (AABE) but it was annulled on the ratification and included the formation of the institute under the regulatory body.

Photo: Anteneh Aklilu

“The responsibility is very wide and the board of AABE has accepted the separation of the institute,” Eyob Tekalign, State Minister and Board of AABE, said.
Capacity building of accountants and developing accounting software would be the responsibility of the institute, according to the State Minister.
He said that the board has identified one of the gaps for achieving the IFRS implementation is giving more responsibility for AABE. “It will focus on the regulatory and implementation of the IFRS under the new change,” he added.
One of the major challenges for the implementation of IFRS is lack of sufficient professionals particularly chartered accountants that are very limited even compared with peer countries in the region, according to the sector experts.
The institute would have a mission to fill this gap and even expand the chartered accountants. According to Hikmet, in Ethiopia there are about 500 accountants and may be half of them are on other duties or out of the country, “when we see the number of certified chartered accountants in Kenya or Tanzania they are in thousands, which is a big difference even compared with the number of population of Ethiopia.”
In the new change of the implementation of IFRS, AABE will follow another approach and divide companies and entities based on their responsibilities and capacities.
According to Hikmet, the existing proclamation sets out financial reporting frameworks applicable to different reporting entities and mandated AABE with the responsibility of regulating the accountancy profession.
In line with the proclamation, reporting entities were categorized in into such as reporting entities that use full IFRSs by public interest; IFRS for small and medium enterprises (SMEs) and International Public Sector Accounting Standards (IPSAS) by charities and societies that should be implemented in five years.
Now the Board has approved new time revisions for the implementation with two timeframe. Based on the new scheme public interest enterprises (PIEs) will apply fully by 2023 and others by 2024.