Adoption of international financial reporting standards: a key tool for enhancing the development of business in Rwanda

Abstract

In the law 11/2008 of 06/05/2008 establishing the Institute of Certified Public Accountants of Rwanda and the company law 07/2009 of 27/08/2009, the legislator introduced the requirement to use International Financial Reporting Standards in Rwanda. The decision is a big leap forward to the international convergence but the implementation is not an easy process. So, the rationale of this paper was the implementation of IFRS in Rwanda. The paper is based on data gathered primarily from archived sources and secondly by means of seventeen semi-structured interviews with regulators, brokers, auditors, company finance managers and representatives of higher education institutions offering professional accounting. The attitude of key players preparing the implementation of IFRS in Rwanda accounting was assessed. All the interviewees were positive about the adoption of IFRS. The researcher found that, in implementing IFRS, Rwanda is facing challenges including reforms to overcome a culture of secrecy prevalent in countries where creditors are dominant to shareholders focus, availability of technical experts in IFRS, cost of paying experts and a high cost of implementing IFRS in small and medium companies. The frequency and volume of changes in international standards is also a challenge. Finally, we identified a pressing need to improve the professional education and training to acquire accounting skills meeting the needs of the Rwanda economy. Building the institutional capacity of ICPAR to provide support to its members and public and ensure the enforcement of accounting standards.