1.1 the development of a market economy, especially

Statement of the Problem

From article of the Factors that affect the quality
of Financial Statements Audit in Vietnam business (2015) the development of a market economy,
especially the financial markets is asking for transparency and truthfulness of
the financial information with high quality. The information in the financial
statements will impact directly and indirectly to the rights and decisions of
investors. Independent auditors play a role of evaluating truthfulness and
reasonable financial information in enterprises, however there are still risks

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It is the fact that, rapidly diversification of the
companies on the earth implies us timely growing of the world financial transactions.
Yet even if the numbers of the companies in every countries are rapidly
increasing at increasing rate, international accounting standard board(IASB,2008)
recommend that as all of them that have to prepare their financial report just
within in line of updated standard, conceptual framework and follow the same
accounting principles(IASB paragraph13).

to Heidi Vander Bauwhede article what factors influence financial Statement quality(2001),the
Potential factors that influence
financial reporting are the following: management’s decisions (which are
influenced by various relations with stakeholders to the company), quality of
external governance mechanisms (i.e. audit quality), quality of internal
governance mechanisms (i.e. quality of the board of directors), regulation as
to financial reporting and external and internal governance mechanisms.

governance is a clean, respectable government a corruption free. (Minister of
State for Administrative Reform, Taufiq Effendi, 2007). Implementation of good
governance, including through the obligation for all local governments to
prepare Local Government Finance Report (LKPD). Survey of transparency International Indonesia(
2010) in the Annual  Report
Reported that corruption triggering factors ( driver  corruption ) 
to  speed  up 
process bureaucratic , is very prominent in Indonesia. Booz Allen
Hamilton (TII,
2010) states that the higher the level of corruption shows accountability is
not completely finished.

When we come to
Ethiopia, according to  Kirubel(2016), IMF ranked Ethiopia as among one the five
fastest growing economies signifying 11th consecutive year economic growth posting
10.3% growth in 2013/2014(AEO, 2015).Currently the government is promoting
private investment and the economy is expected to shift from being agrarian to
industrial at the end of the second GTP. In 2013/14 the industrial sector
contributed 14% of the country’s GDP, signifying the highest (21.2%) growth
from other sectors (MoFED, 2014).

when we refer  World Bank on the Report
like Observance of Standards and Codes, there is no specific set of accounting
regulations in Ethiopia and therefore accounting practices vary across
institutions (World Bank, 2007). But now the first financial reporting Federal
state regulatory body is established for the first time in Ethiopia by
regulation entitled Council of Ministers Regulation to provide for the establishment
and to determine the procedure of the Accounting and Auditing Board of Ethiopia
(Council of Ministers Regulation No. 332/2014) pursuant to 3 Article 4(1) of
the Financial Reporting Proclamation No. 847/2014. Accordingly, provision of
Article 3(1) of this regulation describes that “The Accounting and auditing
Board of Ethiopia (AABE) is hereby established as an autonomous government
organ having its own legal personality.” AABE consists of 12 members which
includes one representative from each of various Ministries Melese Hailemariam

there were rare studies done on financial reporting qualities of Ethiopian
commercial banks(public and private sectors) that gave emphasis on newly
adopted conceptual frameworks and standards that are respected by accounting
standards so that the current researcher is motivated to fill this highly
existed knowledge gap by giving attention to factors that are affecting
qualities of financial reporting qualities like that of professional competency
of banks employees, ownership right, governmental law and degree of
relationship between common standards and actual standards through benchmark of
fundamental qualitative characteristics 
and the enhancing qualitative characteristics and timeliness) as defined
in ‘an improved Conceptual framework for financial Reporting’ of the FASB and
the IASB (2008), on Commercial banks of Ethiopia (Comparative Study On Public  And private Sectors).


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