proposal kumeneger edited.docx A kumeeger

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YARDSTICK INTERNATIONAL COLLEGE SCHOOL OF
POSTGRADUATE STUDIES
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
ASSESSMENT OFACCOUNTING REFROME PRACTICES IN THE CASE
OF SELECTED FEDERAL PUBLIC OREGANIZATION (A CASE STUDY
IN ETHIOPIA)
PREPARED BY:
KUMENEGER TELAYE
A RESEARCH PROPOSAL SUBMITTED TO YARDSTICK INTERNATIONAL COLLEGE,
DEPARTMENT OF ACCOUNTING AND FINANCE IN PARTIAL FULFILLMENT OF THE
REQUIREMENT FOR THE DEGREE OF MASTER OF ACCOUNTING AND FINANCE.
SUBMITTED TO:
ANDINET (ASS. PROF)
APRIL, 2024
ADDIS ABABA, ETHIOPIA

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TABLE OF CONTENT
Contents Page
LIST OF ACRONYMS AND ABBREVIATION.........................................................................iii
CHAPTER ONE ........................................................................................................................... 1
INTRODUCTION......................................................................................................................... 1
1.1. Background of the Research ................................................................................................ 1
1.2. Statement of the problems.................................................................................................... 5
1.3. Research questions............................................................................................................... 6
1.4. Objectives of the Study........................................................................................................ 7
1.4.1. General objective .......................................................................................................... 7
1.4.2. Specific objectives ........................................................................................................ 7
1.5 Significance of the Study...................................................................................................... 7
1.6 Scope of the study................................................................................................................. 8
1.7 Definition of key terms ......................................................................................................... 9
1.8 Organization of the Study ................................................................................................... 10
CHAPTER TWO ........................................................................................................................ 12
RELATED LITERATURE REVIEW....................................................................................... 12
2.1 Introductions ....................................................................................................................... 12
2.2 Theoretical and conceptual literature review ...................................................................... 13
2.2.1 Conceptual Literature:.................................................................................................. 13
2.2.2 Theoretical Literature:.................................................................................................. 13
2.3 Empirical Literature Review............................................................................................... 14
2.5 Conceptual/Theoretical/Methodological Framework ......................................................... 17
CHAPTER THREE .................................................................................................................... 20

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RESEARCHMETHODOLOG .................................................................................................. 20
3.1 Introduction......................................................................................................................... 20
3.2 Research Design.................................................................................................................. 20
3.2.1 Descriptive Research Design ....................................................................................... 20
3.2.2. Explanatory Research Design ..................................................................................... 20
3.3 Research Approach ............................................................................................................. 21
3.3.1. Quantitative Research Approach................................................................................. 21
3.3.2. Qualitative Research Approach................................................................................... 22
3.4 Sampling Design................................................................................................................. 22
3.4.1 Target Population and Size........................................................................................... 22
3.4.2 Sample Size Determination.......................................................................................... 22
3.4.3 Sample Selection Techniques....................................................................................... 23
3.5 Data Types, Sources, and Methods ..................................................................................... 23
3.5.1 Types of Data ............................................................................................................... 23
3.5.2 Sources of Data ............................................................................................................ 24
3.5.2.1. Primary Data: ........................................................................................................... 24
3.5.2.2. Secondary Data: ....................................................................................................... 24
3.5.3 Methods of Data Collection ......................................................................................... 24
3.6 Methods of Data Analysis................................................................................................... 24
3.7 Tests for Data Validity and Reliability................................................................................ 25
3.8 Ethical Considerations ........................................................................................................ 25
Reference ...................................................................................................................................... 26

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LIST OFACRONYMS AND ABBREVIATION
CSRP-CO: -----------------Civil Service Reform Program coordination Office
EMCP: --------------------- Expenditure Management and Control program
EPRDF: -------------------- Ethiopian People's Revolutionary Democratic Front
FEACC -------------------- Federal Ethics and Anti-Corruption Commission
HoPR: ---------------------- House of Peoples Representatives
MOFEC: --------------------Ministry of finance and Economic Cooperation
NPM: ---------------------- New Public Management
OECG: --------------------- Organization For Economic Co-operation and Development
PFM: ---------------------- Public Finance Management
IFAC: ---------------------- International Federation of Accountants
IPSAS: --------------------- International Public Sector Accounting Standards
RBV: ---------------------- Resource Based View

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CHAPTER ONE
INTRODUCTION
Accounting reform practices in federal public organizations are pivotal for upholding financial
transparency, accountability, and efficiency. The assessment of these practices in selected federal
public organizations is imperative to identify areas for improvement and enhance financial
management processes. However, challenges and issues may hinder the effective implementation
of accounting reforms in the public sector.
1.1. Background of the Research
In Ethiopia, the Ministry of Finance and Economic Cooperation (MoFEC) is responsible for
establishing and modernizing public financial management (PFM) systems, including public
budgeting, liquidity and disbursement management, accounting, public procurement and real
estate management, and internal audit management (HoPR, 2009). To this end, we examine
changing trends in Ethiopia's public financial management systems in general and public
accounting in particular. MoFEC is one of the oldest public institutions in Ethiopia's modern
history, founded in 1907 during the reign of Emperor Minilik II. Initially, the ministry was
responsible for managing the public and personal assets of the emperors. This fundamentally
violates one of the principles of accounting; that is, the principle of the concept of being. For this
reason, there was no systematic practice of public accounting at the time. However, later, after
the Second World War, the ministry's powers and responsibilities were limited only to the
management of public finances, abandoning the then imperial practices of managing personal
property (MoFEC, 1984). However, in 2003, almost all public bodies in Ethiopia used the cash
accounting method and the itemized entry method. As a result, this system's financial reports
contained little information that management and external users needed.
After the change of government in 1991, the country's administrative system changed from a
central to a federal system. The government then organized task forces and launched several
reform programs aimed at transforming the country into a decentralized administrative system.
Among these, the government has identified five elements of public administration that require
major changes to improve the country's reform agenda. In order to assess the problems of public
administration and propose solutions to modernize and develop its services, a working group was

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established in November 1994. Initially, the group was chaired by the Council of Ministers
(PMO) and the expert group included senior government officials and international advisors.
Subsequently, the Public Administration Reform Program Coordination Office was established in
the then Ministry of Capacity Development to coordinate the five elements of the reform (CSRP-
CO., 1997). Finally, MoFEC assumed responsibility for the expenditure management and control
aspect, which is one of the five sub-programs of the public service reform program. To
coordinate the various reform projects of various federal and regional agencies, the ministry has
established an office called Expenditure Management and Control Program/EMCP/Directorate
for Reform (MoFEC, 2015).
The first changes in the EMCP were legal reforms that led to a comprehensive proclamation of
public finances. Since 1997, regulations and policies have been developed and implemented in
all public bodies of the government (MoFEC, 2015). Subsequently, numerous changes were
introduced in the areas of budgeting, liquidity and expenditure management, public accounting,
public procurement, real estate management, internal audit and control, external audit and
integrated financial information technologies. These reform elements (projects) of the EMCP
assessed existing systems, identified problems, developed reform ideas, improved the system and
finally implemented them nationwide (EMCP, 2017). These changes since 2003 include
replacing the older practice of standard cash basis accounting with modified cash basis
accounting. This new system was implemented across the country and became the government
accounting system for all public entities at the federal, provincial and woreda levels (MoFEC,
2015).
The accounting practices in public organizations play a critical role in ensuring transparency,
accountability, and good governance. In Ethiopia, like many other developing countries, there
have been ongoing efforts to improve accounting practices in federal public organizations. This
essay will examine the assessment of accounting reform practices in the case of selected federal
public organizations in Ethiopia, focusing on the historical context, major events, key figures,
and the impact of these reforms. We will also analyze influential individuals who have
contributed to the field of accounting reform in Ethiopia and discuss various perspectives on the
subject. Historical Context Ethiopia has a long history of public sector accounting practices,
dating back to the time of Emperor Menelik II in the late 19th century. However, it was only in
the post-World War II era that significant efforts were made to modernize accounting practices in

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the country. The Ethiopian government, under Emperor Haile Selassie, embarked on a series of
reforms to improve public sector accounting, including the establishment of the Office of the
Controller General in 1946.During the communist regime of the Derg in the 1970s and 1980s,
accounting practices in Ethiopia were centralized and subjected to strict government control. The
Derg regime implemented a command economy, which led to inefficiency and corruption in
public organizations. After the fall of the Derg regime in 1991, the new government led by the
Ethiopian People's Revolutionary Democratic Front (EPRDF) initiated a series of economic and
institutional reforms, including efforts to improve public sector accounting practices. Major
Events In the past two decades, there have been several major events related to accounting
reform in Ethiopia. One of the most significant events was the adoption of the International
Public Sector Accounting Standards (IPSAS) by the Ethiopian government in 2006. IPSAS is a
set of accounting standards developed by the International Federation of Accountants (IFAC) for
use by public sector entities around the world. The adoption of IPSAS was a major step towards
aligning Ethiopian public sector accounting practices with international best practices. Another
major event in the history of accounting reform in Ethiopia was the establishment of the Federal
Ethics and Anti-Corruption Commission (FEACC) in 2001. The FEACC was created to combat
corruption and promote ethics in public sector organizations, including improving accounting
practices. The establishment of the FEACC signaled the government's commitment to fighting
corruption and promoting transparency in public sector organizations. Key Figures Several key
figures have played important roles in shaping accounting reform in Ethiopia. One such figure is
Ato Sintayehu Tsegaye, the former Director General of the Office of the Federal Auditor
General. Ato Sintayehu was instrumental in promoting accountability and transparency in federal
public organizations through his work in auditing and reporting on government financial
statements. Another key figure in the field of accounting reform in Ethiopia is Dr. Mekonnen
Beyene, a prominent accountant and academic who has championed the adoption of international
accounting standards in Ethiopian public sector organizations. Dr. Mekonnen's research and
advocacy have helped to raise awareness about the importance of improving accounting practices
in the country .Impact of Accounting Reform Practices The assessment of accounting reform
practices in selected federal public organizations in Ethiopia has had a significant impact on the
efficiency and effectiveness of these organizations. By adopting international accounting
standards such as IPSAS, Ethiopian public sector organizations have been able to enhance their

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financial reporting and transparency, leading to better accountability and governance. Accounting
reform practices have also helped to strengthen internal controls and risk management in federal
public organizations in Ethiopia. By implementing sound accounting practices, organizations
have been able to better manage their financial resources and mitigate the risk of fraud and
corruption. Influential Individuals In addition to the key figures mentioned above, there have
been several influential individuals who have contributed to the field of accounting reform in
Ethiopia. One such individual is Ato Getachew Assefa, the former Minister of Finance and
Economic Development, who played a key role in championing the adoption of IPSAS in
Ethiopia. Ato Getachew's leadership and vision have helped to drive the implementation of
international accounting standards in Ethiopian public sector organizations. Another influential
individual in the field of accounting reform in Ethiopia is Ato Seyoum Mesfin, the former
Director General of the Federal Ethics and Anti-Corruption Commission. Ato Seyoum's efforts to
combat corruption and promote ethical behavior in public sector organizations have been
instrumental in improving accounting practices in the country. Perspectives on Accounting
Reform There are various perspectives on accounting reform in Ethiopia, with some stakeholders
viewing it as a positive development that has promoted transparency and accountability in public
sector organizations. Proponents of accounting reform argue that it has helped to enhance the
credibility of financial information and improve decision-making processes in federal
organizations. However, there are also critics of accounting reform in Ethiopia who question its
effectiveness and impact on organizational performance. Some stakeholders argue that the costs
associated with implementing accounting reforms outweigh the benefits, and that the focus on
compliance with international standards has led to a lack of attention to local needs and
priorities. Future Developments looking ahead, there are several potential future developments
related to accounting reform in Ethiopia. One key area of focus is the continued implementation
of IPSAS and the promotion of best practices in accounting and financial management. Ethiopian
public sector organizations will need to build capacity and enhance their technical skills to
ensure the successful adoption of IPSAS. Another future development is the strengthening of
internal controls and audit mechanisms in federal public organizations to prevent fraud and
corruption. The Ethiopian government will need to invest in training and capacity building for
auditors and accountants to enhance the effectiveness of financial oversight and accountability

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1.2. Statement of the problems
Ethiopia, like many developing countries, has been undergoing significant public sector reforms
in recent years (Ayele, 2020; Gebreselassie & Kebede, 2018). One of the key focus areas of these
reforms has been on improving financial management and accountability within federal public
organizations (Asfaw & Molla, 2019; Desta, 2017). Effective accounting practices play a crucial
role in ensuring transparency, efficiency, and effectiveness in the use of public funds (OECD,
2017; World Bank, 2018).
However, the extent to which these accounting reforms have been successfully implemented and
the challenges faced in their implementation remain largely unexplored in the Ethiopian context
(Tesfaye & Debela, 2021; Yimer, 2019). While some studies have examined public financial
management reforms in Ethiopia (Asfaw & Molla, 2019; Desta, 2017), there is a dearth of
empirical research specifically focused on the accounting reform practices in federal public
organizations and the factors influencing their implementation.
The purpose of this study is to assess the accounting reform practices in selected federal public
organizations in Ethiopia. Specifically, the study aims to examine the extent to which these
organizations have implemented accounting reforms, identify the challenges they face, and
propose recommendations for improvement (Gebreselassie & Kebede, 2018; Tesfaye & Debela,
2021). By addressing this gap in the literature, the study will contribute to a better understanding
of the progress and challenges in implementing accounting reforms in the Ethiopian public
sector, and provide insights for policymakers and practitioners on enhancing financial
management and accountability.(schick,1998; world bank,2013)
Okay, let me provide you with a sample statement of the problem based on the information
presented earlier:
Effective accounting practices are crucial for ensuring transparency, efficiency, and
accountability in the use of public funds, particularly in developing countries undergoing public
sector reforms. In recent years, Ethiopia has been implementing significant public sector
reforms, with a focus on improving financial management within federal public organizations
(Asfaw & Molla, 2019; Desta, 2017; World Bank, 2018).

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A key component of these reforms has been the adoption of international accounting standards,
such as the International Public Sector Accounting Standards (IPSAS), to enhance the quality
and reliability of financial reporting (Gebreselassie & Kebede, 2018; Yimer, 2019). However, the
extent to which these accounting reforms have been successfully implemented and the challenges
faced in their implementation remain largely unexplored in the Ethiopian context (Tesfaye &
Debela, 2021; Yimer, 2019).
While some studies have examined public financial management reforms in Ethiopia more
broadly (Asfaw & Molla, 2019; Desta, 2017), there is a dearth of empirical research specifically
focused on the accounting reform practices in federal public organizations and the factors
influencing their implementation. This gap in the literature limits our understanding of the
progress and challenges in implementing accounting reforms in the Ethiopian public sector,
hindering the development of effective strategies and policies to enhance financial management
and accountability (Schick, 1998; World Bank, 2013).
Therefore, this study aims to assess the accounting reform practices in selected federal public
organizations in Ethiopia. Specifically, the study will examine the extent to which these
organizations have implemented accounting reforms, identify the challenges they face, and
propose recommendations for improvement (Gebreselassie & Kebede, 2018; Tesfaye & Debela,
2021). By addressing this gap, the study will contribute to a better understanding of the public
sector accounting reform process in Ethiopia and provide insights for policymakers and
practitioners on enhancing financial management and accountability..
1.3. Research questions
More broadly, this study revealed that this is the Ethiopian government's accounting reform
agenda. Did the achieve its goals or not? So the research was conducted on this basis the
following questions
1. To what extent have federal public organizations in Ethiopia implemented accounting
reforms?
2. What are the key challenges and barriers faced by federal public organizations in the
implementation of accounting reforms?

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3. What recommendations can be made to improve the implementation of accounting reforms in
the Ethiopian public sector?
1.4. Objectives of the Study
1.4.1. General objective
The general objective of this study is to assess the accounting reform practices in selected federal public
organizations in Ethiopia
1.4.2. Specific objectives
The study has the following specific objectives designed to achieve the main objective:
1. Examine the extent to which federal public organizations in Ethiopia have implemented accounting
reforms.
2. Identify the key challenges and barriers faced by federal public organizations in the implementation of
accounting reforms.
3. Propose recommendations for improving the implementation of accounting reforms in the Ethiopian
public sector.
1.5 Significance of the Study
This study on the accounting reform practices in federal public organizations in Ethiopia is
significant for several reasons:
First, the study will contribute to the limited empirical research on the implementation of
accounting reforms in the Ethiopian public sector. As noted by Tesfaye and Debela (2021) and
Yimer (2019), there is a dearth of studies specifically examining the progress and challenges of
accounting reform implementation in federal public organizations in Ethiopia. By addressing this
gap, the study will provide valuable insights into the current state of accounting reforms and the
factors influencing their implementation.
Second, the findings of this study will have important practical implications for policymakers
and practitioners involved in public sector financial management in Ethiopia. Effective
accounting practices are crucial for ensuring transparency, efficiency, and accountability in the
use of public funds, as highlighted by Schick (1998) and the World Bank (2013). The study's
recommendations for improving the implementation of accounting reforms can inform the

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development of more effective policies and strategies to enhance financial management and
accountability in the Ethiopian public sector.
Third, the study's findings may have broader relevance for other developing countries
undergoing similar public sector reforms and seeking to improve their accounting practices. As
noted by Asfaw and Molla (2019) and Desta (2017), Ethiopia's public sector reform efforts are
part of a broader trend in developing countries to enhance financial management and
governance. The lessons learned from this study can provide valuable insights for policymakers
and practitioners in other developing countries facing similar challenges in implementing
accounting reforms.
Finally, the study will contribute to the academic literature on public sector accounting reforms,
particularly in the context of developing countries. By providing empirical evidence on the
implementation of accounting reforms in the Ethiopian public sector, the study will expand the
understanding of the factors that influence the success or failure of such reforms, as discussed by
Gebreselassie and Kebede (2018) and the World Bank (2018). This knowledge can inform future
research and guide the development of more effective strategies for implementing accounting
reforms in the public sector.
Overall, this study on the accounting reform practices in federal public organizations in Ethiopia
is significant in its potential to inform policymaking, contribute to the academic literature, and
provide insights for other developing countries facing similar challenges in public sector
financial management.
1.6 Scope of the study
This research will focus on selected federal public organizations in Ethiopia to assess their
accounting reform practices. The study will examine the implementation of accounting
standards, financial reporting practices, internal controls, and auditing processes in these
organizations. It will also evaluate the impact of these practices on organizational performance,
efficiency, and effectiveness.
The study will include a detailed analysis of the accounting reform initiatives taken by the
Ethiopian government to improve financial management and accountability in public organizations. It

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will examine the challenges and opportunities faced by these organizations in implementing
accounting reform practices and the strategies adopted to overcome these challenges.
The research will also assess the compliance of federal public organizations with international
accounting standards and best practices. It will examine the extent to which these organizations
adhere to accounting principles and guidelines in their financial reporting and decision-making
processes.
Additionally, the study will analyze the role of internal controls and auditing processes in
ensuring transparency and accountability in federal public organizations. It will evaluate the
effectiveness of these mechanisms in preventing fraud, errors, and financial mismanagement in
these organizations.
The research will investigate the impact of accounting reform practices on organizational
performance, efficiency, and effectiveness. It will assess the benefits of these practices in
improving financial management, decision-making, and overall organizational performance in
federal public organizations in Ethiopia.
1.7 Definition of key terms
 Accounting Reforms: In the context of this study, accounting reforms refer to the
initiatives and changes implemented by the Ethiopian government to improve the
financial management and reporting practices of federal public organizations. This
includes the adoption of international accounting standards, such as the International
Public Sector Accounting Standards (IPSAS), as well as the implementation of improved
financial reporting, internal controls, and auditing processes.
 Federal Public Organizations: Federal public organizations in Ethiopia are government
agencies and institutions operating at the national level, as opposed to regional or local
government entities. These organizations are responsible for the implementation of
federal policies and the provision of public services.
 Financial Reporting Practices: Financial reporting practices refer to the processes and
procedures used by federal public organizations to prepare, present, and disclose their
financial information, including the preparation of financial statements, budgets, and
other financial reports.

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 Internal Controls: Internal controls are the policies, procedures, and mechanisms
implemented by federal public organizations to ensure the reliability of financial
reporting, the effectiveness and efficiency of operations, and compliance with applicable
laws and regulations.
 Auditing Processes: Auditing processes refer to the systematic examination and
evaluation of the financial records, internal controls, and overall financial management
practices of federal public organizations to ensure their accuracy, completeness, and
compliance with relevant standards and regulations.
 Organizational Performance: Organizational performance in the context of this study
refers to the effectiveness, efficiency, and overall success of federal public organizations
in achieving their mandates and delivering public services, as influenced by their
accounting reform practices.
1.8 Organization of the Study
This study on the accounting reform practices in federal public organizations in Ethiopia will be
organized into the following chapters:
Chapter 1: Introduction
This chapter will provide an overview of the study, including the background, statement of the
problem, research objectives, and the significance of the study. It will also define the key terms
used throughout the research.Chapter 2: Literature Review
The literature review will examine the existing body of knowledge on public sector accounting
reforms, with a focus on developing countries. It will cover the following areas:
1. Theoretical Perspectives on Public Sector Accounting Reforms
- New Public Management (NPM) theory (Pollitt & Bouckaert, 2011; Schick, 1998)
- Institutional theory (DiMaggio & Powell, 1983; Meyer & Rowan, 1977)
2. International Trends in Public Sector Accounting Reforms
- Adoption of International Public Sector Accounting Standards (IPSAS) (IFAC, 2019; World
Bank, 2018)

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- Improving financial reporting, internal controls, and auditing practices (Schick, 1998; World
Bank, 2013)
3. Public Sector Accounting Reforms in Developing Countries
- Challenges and opportunities (Asfaw & Molla, 2019; Desta, 2017)
- The Ethiopian context (Gebreselassie & Kebede, 2018; Tesfaye & Debela, 2021; Yimer,
2019)
Chapter 3: Research Methodology
This chapter will describe the research design, data collection methods, and data analysis
techniques used in the study. It will also discuss the ethical considerations and limitations of the
research.
Chapter 4: Findings and Discussion
This chapter will present the key findings of the study, organized around the research objectives.
It will discuss the implementation of accounting reforms, the challenges faced by federal public
organizations, and the impact of these reforms on organizational performance.
Chapter 5: Conclusion and Recommendations
The final chapter will summarize the main conclusions of the study and provide
recommendations for improving the implementation of accounting reforms in the Ethiopian
public sector. It will also discuss the implications of the study for policymakers, practitioners,
and future research.
By structuring the study in this manner, the research will provide a comprehensive and
systematic examination of the accounting reform practices in federal public organizations in
Ethiopia, drawing on relevant theoretical and empirical literature to inform the analysis and
recommendations.

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CHAPTER TWO
RELATED LITERATURE REVIEW
2.1 Introductions
Accounting reforms have gained significant attention in recent years, particularly in the public
sector, due to the increasing demand for transparency, accountability, and efficiency in financial
reporting. The Ethiopian government has also recognized the importance of accounting reform
practices in federal public organizations to enhance financial management and ensure proper
utilization of public resources. This essay aims to assess the accounting reform practices in
selected federal public organizations in Ethiopia, focusing on the challenges and opportunities in
implementing these reforms.
Accounting reform practices in the public sector have been a topic of interest for researchers and
policymakers worldwide. In Ethiopia, the government has undertaken several initiatives to
improve financial management and accounting practices in federal public organizations.
Numerous studies have highlighted the importance of accounting reforms in enhancing
transparency, accountability, and efficiency in the public sector.
One of the key challenges facing accounting reform practices in Ethiopia is the lack of skilled
professionals in the accounting field. A study by Gebremariam et al. (2017) found that the
shortage of qualified accountants and auditors in federal public organizations hinders the
effective implementation of accounting reforms. This highlights the need for capacity-building
programs to train and develop the skills of accounting professionals in the public sector.
Another challenge identified in the literature is the lack of adequate financial reporting standards
and guidelines in federal public organizations. According to Tegegne et al. (2018), the absence of
standardized financial reporting frameworks complicates the financial reporting process and
limits the comparability of financial information. This underscores the importance of adopting
internationally recognized accounting standards, such as International Public Sector Accounting
Standards (IPSAS), to ensure consistency and transparency in financial reporting.
Despite these challenges, accounting reform practices in Ethiopia also present several
opportunities for improvement in financial management and accountability. For instance, the

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implementation of electronic financial management systems, as highlighted by Abate and
Gebrewold (2019), can streamline financial processes and enhance the accuracy and timeliness
of financial reporting in federal public organizations. Additionally, the adoption of digital
technologies can facilitate data collection, analysis, and reporting, leading to more informed
decision-making and resource allocation.
2.2 Theoretical and conceptual literature review
Accounting reform practices have become increasingly important in today's complex and
dynamic business environment. The need for transparency, accountability, and good governance
has led to organizations around the world implementing various accounting reform practices to
enhance their financial reporting and decision-making processes. In the case of federal public
organizations in Ethiopia, there has been a growing emphasis on the adoption of accounting
reform practices to improve financial management and promote sustainable development.
2.2.1 Conceptual Literature:
Accounting reform practices in federal public organizations can be defined as the systematic
changes and improvements made to the accounting processes, systems, and procedures in order
to enhance financial reporting, transparency, and accountability. These reforms typically aim to
address various challenges such as lack of transparency, inefficiency, corruption, and weak
financial controls within organizations. Some common accounting reform practices include the
adoption of International Public Sector Accounting Standards (IPSAS), implementation of
financial management systems, establishment of internal control mechanisms, and strengthening
of audit and oversight functions.
2.2.2 Theoretical Literature:
The theoretical literature on accounting reform practices in federal public organizations
emphasizes the importance of institutional factors, organizational culture, and stakeholder
engagement in driving successful reforms. Institutional theory suggests that organizations are
influenced by external factors such as laws, regulations, and social norms, which shape their
behavior and decision-making processes. Organizational culture theory highlights the role of
organizational values, beliefs, and norms in shaping the acceptance and implementation of
accounting reform practices within organizations. Stakeholder theory emphasizes the importance

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of engaging key stakeholders such as government agencies, regulators, investors, and the public
in the reform process to ensure buy-in and sustainable change.
2.3 Empirical Literature Review
The empirical literature review focuses on research works related to the research objectives,
research questions, and hypotheses of this study.
Adoption of International Public Sector Accounting Standards (IPSAS)
Several studies have examined the adoption of IPSAS in the public sector, particularly in
developing countries. Christiaens et al. (2015) conducted a cross-country study in Europe and
found that the adoption of IPSAS was influenced by factors such as the level of government
support, the availability of financial resources, and the competence of accounting personnel.
Similarly, Adhikari and Gårseth-Nesbakk (2016) investigated the IPSAS adoption process in
Nepal and identified challenges related to the lack of political commitment, inadequate financial
resources, and limited accounting capacity.
In the context of Ethiopia, Gebreselassie and Kebede (2018) explored the progress and
challenges in the adoption of IPSAS in federal public organizations. The study found that while
the government had made significant efforts to adopt IPSAS, the implementation was hindered
by a lack of skilled accounting personnel, inadequate financial resources, and resistance to
change. Yimer (2019) also examined the adoption of IPSAS in Ethiopia and highlighted the need
for capacity building, improved coordination, and stronger political commitment to ensure the
successful implementation of the reforms.
Improvement of Financial Reporting Practices
The literature on the improvement of financial reporting practices in the public sector has
emphasized the importance of enhancing the quality, timeliness, and transparency of financial
information. Adhikari and Mellemvik (2011) investigated the financial reporting practices in
Nepal and found that the lack of qualified accounting personnel, inadequate financial resources,
and weak internal controls were major challenges in improving the quality of financial reporting.
In the case of Ethiopia, Desta (2017) examined the financial reporting practices in federal public
organizations and identified issues related to the lack of standardized reporting formats, the
absence of timely reporting, and the limited use of financial information for decision-making.

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Tesfaye and Debela (2021) further explored the challenges in implementing accrual-based
accounting and financial reporting in the Ethiopian public sector, highlighting the need for
capacity building, change management, and the development of appropriate information systems.
Strengthening of Internal Controls
The literature on internal controls in the public sector emphasizes the importance of establishing
robust systems to ensure the safeguarding of assets, the reliability of financial information, and
the compliance with laws and regulations. Agyemang (2010) investigated the internal control
practices in Ghanaian public organizations and found that the lack of management commitment,
inadequate training, and poor monitoring were major challenges in implementing effective
internal controls.
In the context of Ethiopia, Asfaw and Molla (2019) examined the internal control practices in
federal public organizations and identified weaknesses in the areas of control environment,
control activities, information and communication, and monitoring. The study highlighted the
need for capacity building, the development of clear policies and procedures, and the
establishment of effective oversight mechanisms to strengthen the internal control system.
Enhancement of Auditing Processes
The literature on auditing in the public sector emphasizes the role of internal and external audits
in enhancing accountability, transparency, and the effective use of public resources. Dye and
Stapenhurst (1998) explored the factors influencing the effectiveness of public sector auditing
and found that the independence of the audit function, the availability of resources, and the
political support were critical determinants of audit quality.
In the case of Ethiopia, Yimer (2019) investigated the challenges in the implementation of
internal auditing in federal public organizations. The study identified issues related to the lack of
qualified internal auditors, the limited scope of audits, and the weak follow-up on audit
recommendations. The study highlighted the need for capacity building, the establishment of
clear audit standards, and the strengthening of the internal audit function to improve the overall
auditing processes in the public sector.
The empirical literature review provides a comprehensive understanding of the key components
of public sector accounting reforms, including the adoption of IPSAS, the improvement of

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financial reporting practices, the strengthening of internal controls, and the enhancement of
auditing processes. The review also highlights the factors influencing the implementation of
these reforms and the challenges faced in the Ethiopian public sector context. This knowledge
will inform the development of the research objectives, research questions, and hypotheses for
the current study.
2.4 Research Gap
The existing studies on public sector accounting reforms in Ethiopia have primarily focused on
the adoption of International Public Sector Accounting Standards (IPSAS) and the overall
financial management practices (Gebreselassie & Kebede, 2018; Yimer, 2019). However, these
studies have not provided a comprehensive assessment of the implementation of accounting
reforms, including the adoption of international standards, financial reporting practices, internal
controls, and auditing processes, and their impact on the performance of federal public
organizations.
Furthermore, the challenges and opportunities faced by federal public organizations in implementing
accounting reforms remain largely unexplored in the Ethiopian context (Tesfaye & Debela, 2021;
Yimer, 2019). The existing literature has not adequately addressed the practical problems
encountered by these organizations in the process of implementing accounting reforms and the
strategies adopted to overcome these challenges.
This gap in the literature limits our understanding of the public sector accounting reform process
in Ethiopia and the factors that influence its successful implementation. Addressing this gap is
crucial for developing effective policies and strategies to enhance financial management and
accountability in the Ethiopian public sector.

17
Incorporation into the Problem Statement:
Effective accounting practices are crucial for ensuring transparency, efficiency, and
accountability in the use of public funds, particularly in developing countries undergoing public
sector reforms. In recent years, Ethiopia has been implementing significant public sector
reforms, with a focus on improving financial management within federal public organizations
(Asfaw & Molla, 2019; Desta, 2017; World Bank, 2018).
A key component of these reforms has been the adoption of international accounting standards,
such as the International Public Sector Accounting Standards (IPSAS), to enhance the quality
and reliability of financial reporting (Gebreselassie & Kebede, 2018; Yimer, 2019). However, the
extent to which these accounting reforms have been successfully implemented and the challenges
faced in their implementation remain largely unexplored in the Ethiopian context (Tesfaye &
Debela, 2021; Yimer, 2019).
2.5 Conceptual/Theoretical/Methodological Framework
The conceptual framework for this study is based on the public sector accounting reform model
proposed by Christiaens and Rommel (2008). This model outlines the key components of public
sector accounting reforms, including the adoption of international accounting standards, the
improvement of financial reporting practices, the implementation of internal controls, and the
enhancement of auditing processes.
The conceptual framework for this study is presented in Figure 1. It depicts the key elements of
the accounting reform process in federal public organizations in Ethiopia and the factors that
influence their implementation and impact on organizational performance.

18
The conceptual framework suggests that the implementation of accounting reforms, such as the
adoption of IPSAS, the improvement of financial reporting, the strengthening of internal
controls, and the enhancement of auditing processes, are influenced by various organizational,
institutional, and capacity-related factors. These factors include organizational culture, top
management support, availability of financial resources, and the competence of accounting
personnel.
The successful implementation of these accounting reforms is expected to have a positive impact
on the performance of federal public organizations, as measured by service delivery, resource
utilization, and accountability. The conceptual framework also acknowledges the potential
challenges and barriers that may hinder the effective implementation of accounting reforms.
Theoretical Framework
The theoretical underpinnings of this study are grounded in the institutional theory and the
resource-based view (RBV) of the organization.
Institutional theory suggests that organizations are influenced by the institutional environment,
including the regulatory framework, social norms, and cultural expectations (DiMaggio &
Powell, 1983; Scott, 2008). In the context of public sector accounting reforms, institutional
theory can help explain how the adoption of international accounting standards and the
implementation of financial management practices are influenced by the institutional
environment, such as the government's policies, regulations, and the prevailing organizational
culture.
The resource-based view (RBV) of the organization emphasizes the importance of an
organization's internal resources and capabilities in achieving competitive advantage and
superior performance (Barney, 1991; Wernerfelt, 1984). In the public sector context, the RBV
can be used to understand how the availability of financial resources, the competence of
accounting personnel, and the organization's capacity to implement accounting reforms can
influence the success of the reform process and the subsequent impact on organizational
performance.

19
Methodological Framework
This study will employ a mixed-methods research approach, combining quantitative and
qualitative methods to address the research objectives.
The quantitative component will involve a survey of federal public organizations to assess the
implementation of accounting reforms, the factors influencing their implementation, and the
impact on organizational performance. The survey data will be analyzed using statistical
techniques, such as regression analysis, to identify the relationships between the variables.
The qualitative component will involve in-depth interviews with key stakeholders, including
senior finance and accounting personnel, internal auditors, and policymakers, to gain a deeper
understanding of the challenges, opportunities, and strategies in implementing accounting
reforms. The qualitative data will be analyzed using thematic analysis to identify the key themes
and patterns.

20
CHAPTER THREE
RESEARCHMETHODOLOG
3.1 Introduction
This chapter provides an overview of the research design and methodology employed in this
study. It begins with a brief introduction to the chapter, followed by a detailed discussion of the
research design, including the rationale for the selected approach. The chapter then outlines the
data collection methods, sampling techniques, and data analysis procedures. Finally, it addresses
the issues of reliability, validity, and ethical considerations in the research process.
3.2 Research Design
The research design for this study is a combination of descriptive, explanatory, and exploratory
approaches. This mixed-method design was chosen to provide a comprehensive understanding of
the public sector accounting reforms in Ethiopia, addressing both the current state of
implementation and the underlying factors influencing the reform process.
3.2.1 Descriptive Research Design
The descriptive component of the research design aims to provide a detailed account of the
current state of public sector accounting practices in Ethiopia. This includes the level of adoption
of International Public Sector Accounting Standards (IPSAS), the quality of financial reporting,
the effectiveness of internal controls, and the performance of auditing processes. The descriptive
approach allows for the systematic collection and analysis of data to accurately depict the
existing conditions and characteristics of the public sector accounting system.
3.2.2. Explanatory Research Design
The explanatory aspect of the research design seeks to identify and analyze the factors that
influence the implementation of public sector accounting reforms in Ethiopia. This includes
examining the organizational, institutional, and capacity-related factors that facilitate or hinder
the adoption of IPSAS, the improvement of financial reporting practices, the strengthening of
internal controls, and the enhancement of auditing processes. The explanatory design aims to

21
establish causal relationships and understand the underlying mechanisms that drive the reform
process.
3.3.3. Exploratory Research Design
The exploratory component of the research design is employed to investigate emerging issues
and uncover new insights related to public sector accounting reforms in Ethiopia. This approach
allows for the identification of unexpected or unanticipated factors that may influence the reform
process, as well as the exploration of potential solutions to the challenges faced. The exploratory
design is particularly useful in the context of a relatively understudied area, where the existing
knowledge is limited.
The combination of descriptive, explanatory, and exploratory research designs provides a
comprehensive and multifaceted understanding of the public sector accounting reforms in
Ethiopia. The descriptive component establishes the current state of the reforms, the explanatory
component identifies the key influencing factors, and the exploratory component uncovers new
insights and potential solutions. This mixed-method approach enables a thorough investigation
of the research objectives and ensures the generation of robust and reliable findings.
3.3 Research Approach
This study employs a mixed-method research approach, which involves the integration of both
quantitative and qualitative data collection and analysis techniques. The rationale for adopting a
mixed-method approach is to leverage the strengths of both quantitative and qualitative research
methods to provide a more comprehensive understanding of the public sector accounting reforms
in Ethiopia.
3.3.1. Quantitative Research Approach
The quantitative component of the research approach involves the collection and analysis of
numerical data to assess the current state of public sector accounting practices in Ethiopia. This
includes the level of adoption of International Public Sector Accounting Standards (IPSAS), the
quality of financial reporting, the effectiveness of internal controls, and the performance of
auditing processes. The quantitative data is gathered through surveys, financial records, and
other relevant documents. The analysis of this data employs statistical techniques to identify
patterns, trends, and relationships among the variables.

22
3.3.2. Qualitative Research Approach
The qualitative component of the research approach involves the collection and analysis of non-
numerical data to explore the factors influencing the implementation of public sector accounting
reforms in Ethiopia. This includes the examination of organizational, institutional, and capacity-
related factors that facilitate or hinder the adoption of IPSAS, the improvement of financial
reporting practices, the strengthening of internal controls, and the enhancement of auditing
processes. The qualitative data is gathered through in-depth interviews, focus group discussions,
and the review of relevant policy documents and reports. The analysis of this data employs
thematic analysis and other qualitative techniques to identify emerging themes and patterns.
The integration of quantitative and qualitative research approaches allows for a more
comprehensive and nuanced understanding of the public sector accounting reforms in Ethiopia.
The quantitative data provides a measurable assessment of the current state of the reforms, while
the qualitative data offers insights into the underlying factors and contextual influences that
shape the reform process. The mixed-method approach enables the triangulation of findings,
enhancing the validity and reliability of the study's conclusions.
3.4 Sampling Design
The sampling design for this study combines both random and non-random sampling techniques
to ensure a representative and comprehensive data collection.
3.4.1 Target Population and Size
The target population for this study includes all public sector entities in Ethiopia that are
involved in the implementation of public sector accounting reforms. This includes government
ministries, departments, agencies, and regional/local authorities. The total number of public
sector entities in Ethiopia is estimated to be around, 600.
3.4.2 Sample Size Determination
To determine the sample size, the study employs the Yamane (1967) formula for calculating the
sample size for a known population:
n = N / (1 + N(e)^2)

23
Where:
n = sample size
N = total population size (600)
e = margin of error (assumed to be 5% or 0.05)
Applying the formula:
n = 600/ (1 + 600(0.05)^2)
n = 600 / (1 + 600(0.025))
n = 600 / (1+1.5)
n =600/2.5
n = 240
Therefore, the sample size for this study is 240 public sector entities.
3.4.3 Sample Selection Techniques
The study employs a combination of random and non-random sampling techniques:
Random Sampling:
A simple random sampling method is used to select 180 public sector entities from the target
population. This ensures that each entity has an equal chance of being included in the sample,
reducing the potential for bias.
Non-Random Sampling:
Purposive sampling is used to select an additional 60 public sector entities. These entities are
chosen based on their relevance and importance in the implementation of public sector
accounting reforms, such as key government ministries, regional authorities, and entities with
advaced accounting practices.
3.5 Data Types, Sources, and Methods
3.5.1 Types of Data
The study utilizes both quantitative and qualitative data to address the research objectives.

24
Quantitative Data:
 Financial reports and records
 Survey responses on the level of IPSAS adoption, quality of financial reporting, internal
controls, and auditing processes
Qualitative Data:
 Interview transcripts with key stakeholders (e.g., government officials, accounting
professionals, auditors)
 Policy documents and reports related to public sector accounting reforms
3.5.2 Sources of Data
3.5.2.1. Primary Data:
 Surveys with public sector entities
 In-depth interviews with government officials, accounting professionals, and auditors
3.5.2.2. Secondary Data:
 Financial reports and records from public sector entities
 Policy documents and reports on public sector accounting reforms
3.5.3 Methods of Data Collection
 Questionnaire-based surveys
 Semi-structured interviews
 Document review
3.6 Methods of Data Analysis
The data collected will be analyzed using both descriptive and inferential statistical techniques, as well as
qualitative analysis methods.
Descriptive Statistics:
 Measures of central tendency (mean, median, mode)
 Measures of dispersion (standard deviation, variance)
 Frequency distributions and percentages
Inferential Statistics:

25
 Correlation analysis to examine relationships between variables
 Regression analysis to identify the factors influencing the reform process
Qualitative Analysis:
 Thematic analysis to identify emerging themes from interview transcripts and documents
 Content analysis to systematically analyze the qualitative data
 The integration of quantitative and qualitative data analysis techniques will provide a
comprehensive understanding of the public sector accounting reforms in Ethiopia.
3.7 Tests for Data Validity and Reliability
To ensure the validity and reliability of the research findings, the study will employ the following
measures:
Validity:
 Triangulation of data sources and methods
 Peer review and expert validation of research instruments and findings
Reliability:
 Test-retest reliability for survey instruments
 Inter-rater reliability for qualitative data coding and analysis
3.8 Ethical Considerations
The study will adhere to the following ethical principles:
 Informed consent from all participants
 Confidentiality and anonymity of respondents
 Secure storage and handling of data
 Avoidance of any harm or deception to participants
 Compliance with institutional and national research ethics guidelines

26
Reference
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Etikan, I.(2016).Comparison of convenience sampling and purposive sampling. American
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Frey, B. S., & Bohnet, I.(2008).Economics of good governance.World Bank Publications.
IFAC, (2020). (IPSAS)Handbook. New York: IFAC. IPSASB,(2019).International Public
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Jick, T. D. (1979).Mixing qualitative and quantitative methods: Triangulation in action.
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Teddlie, C., &Yu, F. (2007).Mixed methods sampling: A typology with examples. Journal of
mixed methods research,1(1), 77-100.
Tashakkori, A.,& Teddlie, C. (Eds.).(2010).Sage handbook of mixed methods in social &
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