High quality financial reporting is important to build trust in our capital market and economy.
Reporting entities are required for preparing annual financial statements in compliance with the prescribed financial reporting standards in Ethiopia as per proclamation no 847/2014, article 5 (1-3). A complete set of financial statements that complies with the financial reporting standards will provide reliable and comparable information to the users for decision-making.
under article 43(1)(2)(4) as the regulator body, AABE enquires reporting entity where the hearing examiners reach final decision to the effect that reporting entities as fail to comply with financial reporting standards through the Financial Reporting Review (FRR).
When material non-compliances with financial reporting standards are established, we may take the following actions:
1.Issue advisory letters to inform directors of the material non-compliances and encourage them to take note in the preparation of future financial statements; or
> The Hearing Examiners may either issue a warning to the reporting entity.
2.Seek remediation actions from the company, such as revision of past financial statements. This facilitates the communication of reliable and comparable financial information to users; or
> Serve a notice on the entity for an immediate restatement of its financial statements or report, or both.
3.Issue warning or impose composition sum against the directors to deter future offence(s); and/or
> Impose administrative penalty not exceeding Birr 10,000 on such Director. however, that the administrative penalties imposed on the director may not spare him from criminal or civil liability;
4. Prosecute directors in court to deter potential offender(s). or
> Suspend the Director for a period not less than a year or not more than five years or disqualify any such Director from serving in that capacity for that or any other public interest entity:
We also work with professional bodies to build the competency of directors and preparers of financial statements.
To enhance transparency, we publish reports summarizing the activities and findings of the FRR. These reports aim to help companies avoid the common misstatement and improve their financial reporting by enhancing their understanding of the application and interpretation of the financial reporting Standards and the requirements of the AABE. Read the FRR report
AABE runs the Financial Reporting (FRR), under which we review selected financial statements filed with AABE for compliance with the prescribed financial reporting Standards in Ethiopia.
The primary objective of the FRR is to guide reporting entities to meet the requirements in the financial reporting standards so as to provide investors with reliable and meaningful financial statements for decision-making. This will in turn increase investors and other stakeholders’ confidence in the transparency, integrity and quality of financial reporting in Ethiopia.
The FRR reports are available as follows:
🡢2024 FRR Third report
🡢2023 FRR Second report
🡢2022 FRR Inaugural report
