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AAAJ
25,7 Accounting professionalization
amidst alternating state ideology
in Ethiopia
1206
Dessalegn Getie Mihret
School of Business, Economics and Public Policy, Armidale, Australia, and
Kieran James and Joseph M. Mula
School of Accounting, Economics and Finance,
University of Southern Queensland, Toowoomba, Australia

Abstract
Purpose – This study aims to examine accounting professionalization in Ethiopia focusing on how
the state, occupational group struggle and transnational accountancy bodies influence the realization
of closure.
Design/methodology/approach – A qualitative research approach is employed. Data were
collected using document review and oral history approaches.
Findings – Accounting professionalization in Ethiopia was initiated by the state to strengthen the
country’s financial system. Owing to a change of state ideology to communism in 1974, a strategy of
developing accounting professionals as government-employed experts was pursued. The return to a
market-oriented economy in 1991 has seen a trend towards a more autonomous accountancy
profession. Inflow of UK capital in the early twentieth century and activities of the UK-based
Association of Chartered Certified Accountants (ACCA) in recent decades have influenced Ethiopia’s
accountancy. Its professional and financial power has enabled ACCA to make arrangements with
Ethiopian Professional Association of Accountants and Auditors (EPAAA) and consolidate its
position in Ethiopia’s accountancy by controlling EPAAA’s member training and certification.
Originality/value – The literature on accounting professional projects in developing countries has
focused on imperialistic influence in former British colonies. The present study extends this literature
by illustrating how British influence has continued to extend beyond Britain’s former colonial
possessions. This enables an understanding of the dynamics of accounting professional projects in the
developing world with analytical dimensions building on the hitherto dominant lens of “formal”
colonial connection.
Keywords Accounting profession, Closure, Critical perspective, Ethiopia, Functionalist perspective,
Interactionist perspective, Accounting, Developing countries
Paper type Research paper

Introduction
Diverse political, economic, and social dynamics influence accounting
professionalization processes in general (Carnegie and Edwards, 2001; Goddard,
2002; Uche, 2002). Such processes were examined under the sociology of professions
literature (Uche, 2002; Walker, 1991, 2004; Willmott, 1986; Yapa, 1999) mainly using
Accounting, Auditing Western autonomous professional associations as units of analyses. This literature
& Accountability Journal shows that professional accounting associations employ occupational closure
Vol. 25 No. 7, 2012
pp. 1206-1233 strategies by setting membership criteria to exclude non-members from providing
q Emerald Group Publishing Limited professional services. While occupational group struggle for jurisdictional control
0951-3574
DOI 10.1108/09513571211263248 drives professionalization, the state plays a role by enacting legislation that grants
rights of monopoly to professional associations (Abbott, 1988, pp. 59-85; Annisette, Accounting
1999, 2000; Annisette, 2003; Willmott, 1986). This process results in market closure, professionalization
whereby professional association members exercise exclusive rights to provide
professional services. The relative influences of the state and occupational group in Ethiopia
mobility on the professionalization dynamics have varied among countries. Western
European professional models have been, for example, characterized by a greater
intensity of state influence than their Anglo-American counterparts (Krause, 1991). 1207
The state was a central actor in accounting professionalization processes in Europe
(Caramanis, 2002; Ramirez, 2001), whereas it is generally considered to have been
neutral in Anglo-American cases (Sian, 2006).
Accounting professionalization in Western societies has generally been
well-documented (Hao, 1999); however, it remains largely neglected in the context of
developing nations (Uche, 2002; Yapa, 1999, 2006). The exception is the growing body of
literature on former British colonies (e.g. Annisette, 2010; Bakre, 2010; Poullaos and Sian,
2010; Sian, 2010; Sian and Poullaos, 2010; Susela, 2010; Uche, 2010; Verma, 2010; Yapa,
2010), which indicates the influence of the British Empire on professional accountancy in
the developing world that was under formal British imperial dominions (Parker, 2005).
This imperial influence on accountancy development in developing countries was
sustained in many former British colonies through international membership
development strategies of UK accountancy bodies like the ACCA (Association of
Chartered Certified Accountants) (Annisette, 1999; Poullaos and Sian, 2010; Sian and
Poullaos, 2010). After independence of non-settler British colonies, the states played an
active role in accounting professionalization by moderating tensions between indigenous
professional associations and UK-based professional accountancy bodies. The influence
of UK accountancy on the developing world extends beyond Britain’s former imperial
precincts (Annisette, 2010; Sian and Poullaos, 2010). Therefore, there is a need to examine
this influence with further evidence across the world (Sian and Poullaos, 2010).
Ethiopia[1] provides a suitable local context to examine this issue of British influence.
Ethiopia’s accounting practice and professional organization are influenced by UK
practices and the UK-based ACCA although Ethiopia has existed as an independent
nation throughout its recorded history. An indigenous Ethiopian Professional
Association of Accountants and Auditors (EPAAA) exercises only partial closure of
external audit services from non-chartered/certified accountants having failed to
control entry into the profession due to its dependence on the ACCA for member
training and certification. This works through an arrangement whereby ACCA
qualified professionals obtain automatic membership of the EPAAA, thus giving the
ACCA the power to control member training and certification of EPAAA. Influence of
the state on accounting professionalization processes is another dimension worth
investigating in the context of Ethiopia because the state played a major role in
establishing EPAAA and continues to be a vital employer of professional accounting
labor by virtue of state dominance in the economy. Unlike the experiences that
followed independence of former British colonies, neither the Ethiopian state nor the
EPAAA promoted the idea of localizing accounting education and certification,
thereby giving the ACCA wider authority to expand its membership base. The state
did not issue legislation to grant EPAAA a monopoly in the market and this has
enabled the ACCA to, de facto, fill the jurisdictional vacancy for professional
accountancy in Ethiopia.
AAAJ This study examines accounting professionalization in Ethiopia over the past
25,7 century by analyzing: closure moves of indigenous professional accounting
associations; the influence of UK accountancy in general and the ACCA in
particular, on the professional project; and the role of the state in the professional
project in this country. It extends the literature by illustrating how British influence on
accountancy in the developing world continues to extend beyond Britain’s erstwhile
1208 formal imperial boundaries. This enhances our understanding of professional project
dynamics in the developing world by taking into account analytical dimensions that
build on previous studies that employed the lens of formal imperial connection.
The remainder of this paper is structured as follows. The next section develops an
analytical framework for the study based on a review of relevant literature. Section 3
outlines the research methods employed, followed by an historical account of the
development of accounting in Ethiopia from the early 1900s to the 2000s. This
historical description is then analyzed and discussed in the succeeding section. Section
6 concludes the paper.

Analytical framework
The sociology of professions literature has examined the process of accounting
professionalization from the functionalist, interactionist and/or critical perspectives.
The functionalist view regards the crux of professionalization as professional
associations’ abilities to produce experts with the competence and commitment to
serve society with altruistic motives. Thus, esoteric knowledge of a profession’s
members enabling them to provide honorable, high-skill services to society is
considered crucial for the recognition of professions in the wider society. The
interactionist perspective regards professional associations as interest groups created
to promote and defend their members’ interests by convincing society to grant them
recognition and utilize their services. Thus, under this view, professionalization is a
result of symbolic interactions where meanings are negotiated for professions to be
accorded the desired image in society (Sian, 2006; Uche, 2002; Walker, 2004; Willmott,
1986; Yapa, 1999). The functionalist and interactionist perspectives dominated the
literature before the 1970s, while the critical perspective remains dominant in more
recent decades (Willmott, 1986).
Accordingly, studies on accounting professionalization have taken a critical
perspective approach to examine professionalization processes within the wider
context of power relations employing Max Weber’s concept of closure. Proponents of
this perspective maintain that accounting occupational groups attempt to realize
closure by obtaining legislation that grants exclusive jurisdiction for the supply of
professional accountancy services to niche markets (Abbott, 1988, pp. 59-85; Sian, 2006;
Uche, 2002; Walker, 2004; Willmott, 1986; Yapa, 1999). The closure strategy is
operationalized by setting criteria for professional association membership, including
education and certification (Chua and Poullaos, 1998; Sian, 2007; Walker and
Shackleton, 1996). Thus, the formation of a professional association is an important
event in the professionalization process. “Signals of movement” (i.e. steps taken by
occupational groups) pre-formation of an association determine a profession’s ability to
establish closure, and such moves after association formation enable maintaining
closure (Carnegie and Edwards, 2001). The critical perspective extends the
interactionist view by putting the professionalization process into the broader
context of power structures where the state, the public and other stakeholders of the Accounting
professions promote or inhibit the occupational groups’ closure moves. Specifically, professionalization
the exercise of closure invokes major dynamics involving powerful players including
the state, clients, and other occupational groups that compete to occupy and control in Ethiopia
jurisdictions (Willmott, 1986).
Professional associations can occupy jurisdictions only when they find them vacant.
This jurisdictional occupation could take place when previous tenants of jurisdictions 1209
move to other jurisdictions; new tasks are created; and/or an occupational group
dislodges another in a struggle for turf. Relative power of clients, the state and
competing occupations determine a profession’s ability to realize closure. For instance,
jurisdictional claims are influenced by client choice. Thus, client power has the
potential to restrain professional power (Abbott, 1988, p. 140). Similarly, in contexts
where the market system is not well-developed and/or the state serves as a major
player in the economy, the state as a major client defines professional services and
shapes the development of professions (Krause, 1991).
The foregoing perspectives on professionalization have mainly been employed to
interpret accounting professionalization processes in Anglo-American settings, where
competition among occupational groups served as a major driver for
professionalization. Some studies on former British colonies – for example, Uche
(2002) on Nigeria, Sian (2006, 2007) on Kenya and Yapa (2006) on Sri Lanka – and other
developing countries, e.g. Seal et al. (1996) on the Czech Republic, obtained useful
insights by using the lens of the Anglo-American professionalization model. These
studies, as well as Yapa’s (1999) work on Brunei, highlight an additional dimension of
cross-border competition of professions whereby transnational professional
associations’ struggle for turf at a more global level. The studies suggest how such
a trend influenced indigenous professional associations’ struggles for jurisdiction in
developing nations at large.
Recent studies specifically explain the imperialistic character of this transnational
influence on accounting professionalization by illustrating that it is closely intertwined
with the role of the British Empire (Carnegie and Parker, 1999; Chua and Poullaos, 2002;
Parker, 2005). This literature covers British imperial influence on accounting
professionalization in several former British colonies (e.g. Annisette, 2010; Bakre,
2006, 2010; Parker, 2005; Poullaos, 2010; Poullaos and Sian, 2010; Sian, 2010; Sian and
Poullaos, 2010; Susela, 2010; Uche, 2010; Verma, 2010; Yapa, 2010), which include many
developing countries. Subsequent to the independence of several former British colonies
like Kenya (Sian, 2010), India (Verma, 2010), and Nigeria (Uche, 2002), the governments
of these states promoted indigenization of accountancy. Such moves moderated the
tensions between national and UK-based transnational bodies by protecting indigenous
accountancy bodies from encroachment of the former. On the other hand, in some
ex-colonies like Trinidad and Tobago (Annisette, 1999) and Jamaica (Bakre, 2005, 2006,
2010), the UK-based ACCA continued to control the market for professional accountancy
through indigenous professional associations’ co-optation.
The mechanisms which the British accounting practice and UK professional bodies
employed in the British Empire were not restricted to Britain’s colonial precincts
(Annisette, 2010; Sian and Poullaos, 2010). The role of the ACCA is considered an
illustration of this notion of imperial influence on accounting globally (Bush, 2010;
Johnson and Cargill, 1971). The ACCA promotes itself as a globally recognized
AAAJ accountancy body with a worldwide membership network (Association of Chartered
25,7 Certified Accountants, 2011). As control of membership of professional associations
and control of the market are closely linked (Parker, 2005), the ACCA’s strategy of
reaching agreements with national professional associations in some developing
countries provided it with firm grips on the professional accountancy markets in those
developing countries. Therefore, examining the dynamics of accounting
1210 professionalization in developing countries that remained outside the formal
boundaries of the British Empire could provide useful insights as to how British
accountancy influenced professionalization projects in developing countries apart from
the rationale of formal imperial connection. The following section outlines the research
methods employed for the study of accounting professionalization in Ethiopia.

Methods
The study uses a qualitative research approach. Evidence was mainly collected through
a review of documents. Relevant legislation, proclamations, government regulatory
requirements, professional association publications, and published as well as
unpublished academic materials pertinent to accounting professionalization projects in
Ethiopia were reviewed from 2008 to 2010. This was then enriched by oral histories of
nascent accounting and auditing associations in Ethiopia. An oral history approach
enables researchers to obtain firsthand information from persons involved in a historical
activity of interest (Carnegie and Napier, 1996; Parker, 1994, 1997) and the relative
closeness to the present time of the events covered in this study enables the use of this
approach (Sian, 2006). The oral history approach was operationalized by conducting
semi-structured interviews with individuals involved as founding members, board
members, or executive committee members of four professional associations in Ethiopia:
Ethiopian Professional Association of Accountants and Auditors (EPAAA), Ethiopian
Accounting and Finance Association (EAFA); Institute of Internal Auditors
(IIA)-Ethiopia; and Accounting Society of Ethiopia (ASE) (see Table I). Writings of
some of these individuals concerning the professional associations were also reviewed to:
enrich our interpretations where the individuals participated in interviews; and/or make
use of the individuals’ views when they were inaccessible for interviews.

Participant No. of interviews conducted

reference in this Total number of during
Professional associationa paper interviews Phase I Phase II

EPAAA 1, 6 2 1 1
EAFA 5, 8, 9 3 3
ASE 3, 7 2 1 1
IIA-Ethiopia 2, 4 2 1 1
9 3 6
Notes: While the identity of specific individuals interviewed is not disclosed in the interest of privacy,
we have indicated the profile of all potential candidates from publicly available sources. These profiles
are presented in Tables II-V. aEPAAA (Ethiopian Professional Association of Accountants and
Table I. Auditors); EAFA (Ethiopian Association of Accounting and Finance); ASE (Accounting Society of
Interviewed participants Ethiopia); IIA (Institute of Internal Auditors)
The four professional associations covered in the study had slightly differing Accounting
orientations in terms of the struggle for closure of professional accountancy. Thus,
interview questions presented to participants from each association were modified as
professionalization
researchers saw fit. Interviews were conducted in two phases: from September 2008 to in Ethiopia
January 2009, and from February to December 2010. The first phase of interviews was
conducted by one of the researchers and the second by a research assistant with
relevant research experience. The responses were tape-recorded and the researcher 1211
who conducted the first phase of the interviews transcribed these responses. An earlier
draft of the paper was then sent to each participant with a request to indicate if they
had concerns about any of the paper’s contents. None of the participants suggested
major changes to the content of the paper.

Accounting professionalization in Ethiopia

Political-economic milieu of Ethiopia: 1900s to 2000s
The process of accounting professionalization in Ethiopia exhibits distinct patterns in
the three epochs when the country’s state ideology has been at different positions in the
continuum from market-oriented to centrally-planned economic policies. Prior to 1974,
Ethiopia was a feudal society under transition to capitalism (Tesema, 2003). From 1968
to 1973, the country’s private sector accounted for 59 percent of the nation’s
manufacturing output with the rest being produced by state-owned enterprises. The
private sector’s share of output was 79 percent for the construction sub-sector during
the same period. Foreign investors were major participants in the private sector as the
national culture considered entrepreneurship as an undignified concept. Rather, owing
to the legacy of the feudal system, land ownership was the major and sought-after
source of income compared to capitalist enterprise ownership (Tesema, 2003). A stock
market was established in 1965 and operated under the administration of the National
Bank of Ethiopia (the country’s central bank) until it ceased operation in 1975 following
the nationalization of all private sector companies by the communist government that
took power in 1974 (Tesema, 2003).
In 1974 a revolution occurred in Ethiopia due to discontent from the people about
the ruling class’s control of land. A communist military government controlled state
power following the revolution and ruled Ethiopia until 1991. This government
followed a centrally-planned economic policy as a result of which it nationalized
virtually all private enterprises, restructured them as state-owned enterprises (SOEs)
and established new SOEs[2]. During this period, private enterprise was discouraged
and the dominant focus of the state remained abolishing feudal, bourgeoisie and petty
bourgeoisie classes. Kinfu (1990, p. 212) stated:
The powers and duties of the Working People’s Control Committees and the Special Court are
specified in Proclamations of 213 and 215/1981. The overall objectives and purpose of the
Working People’s Control Committee are ideological and political in nature, such as the
protection of the wealth and property of the broad masses, fighting against anti-people and
anti-social elements, and helping guide socialist principles.
Following the collapse of the former USSR (in 1991) the military government of
Ethiopia, which was supported by the USSR, was weakened. A coalition of opposition
fronts that had been confronting the military regime through armed insurrection
throughout the communist years of Ethiopia overthrew the regime and the current
government took power in 1991. Subsequently, the country embarked on major
AAAJ economic policy reforms in the direction of a market-oriented economic system
25,7 (Tesema, 2003) under the technical and financial assistance of the World Bank and
International Monetary Fund (IMF). As a result, the state privatized a number of SOEs
and granted enhanced management autonomy to the remaining SOEs by Proclamation
No. 25/1992 (Government of Ethiopia, 1992). Nevertheless, similar to the earlier two
episodes covered in this study, SOEs continue to dominate the economy (The World
1212 Bank, 2007) and thus the state remains a major employer of professional accountancy
labor. An historical account of the accounting professionalization processes in the
country during the past century is presented next.

The start of accounting in modern Ethiopia

Although Ethiopia is one of the world’s earliest civilizations (Turchin et al., 2006,
p. 222), the start of modern accounting in the country is traced to the beginning of the
twentieth century (Kinfu, 1990). According to Kinfu (1990), the keeping of formal
records of government activities started in the 1900s when Emperor Menelik
established a Finance and Guada (meaning treasury) Ministry, which was responsible
for keeping records of the King’s treasury. Kinfu also indicates that modern financial
accounting in the private sector was started in Ethiopia in 1905 when the Bank of
Abyssinia was established as a branch of the Bank of Egypt, which was in turn
administered under the British financial system. Kinfu pointed out that, despite Italian
and French involvement in the affairs of the Bank of Abyssinia, mainly British experts
controlled its administration with successive British nationals as governors until 1931.
As a result, British accounting terminology, financial reporting requirements and
personnel training left their footprints. This observation lends support to Frank’s
(1979) classification of Ethiopia’s pre-communist financial reporting practices mainly
under the British Commonwealth model[3].
In the government sector, a Commission of Trade Inspectors was established by
government regulation in 1917 to undertake inspection of trade and customs. The
inspectors were required to report their “negative” and “positive” findings on the
operations of trade and customs (Kinfu, 1990, p. 193). Kinfu noted the contribution of
foreign advisors to the kings of Ethiopia from the 1890s to 1970s helped the issuance of
government regulations and proclamations, some of which continue to influence the legal
basis of accounting and audit practice in Ethiopia to the present day. European
consultants during the Ethio-Djibouti railway construction in the 1890s and of the legal,
military, and foreign affairs advisors in the 1930s contributed to the development of
accounting in Ethiopia (Kinfu, 1990). Subsequent developments of accounting from 1934
to the early 1970s are then attributed to Anglo-American legal and financial advisors to
Emperor Haile Silassie I (1928-1974). These advisors included an American financial
advisor to the king up to 1935, an American legal advisor until 1974, and several British
advisors to the king (Kinfu, 1990). The first substantial development during this period
was the issuance of a Ministry of Finance directive in 1942 (Argaw, 2000b; Kinfu, 1990;
Kinfu et al., 1981). This event was followed by the formation of an Audit Commission by
Proclamation No. 69/1944 to conduct external audits of accounts of the Ministry of
Finance (Government of Ethiopia, 1944). The Commission’s audit mandate was
subsequently extended to cover other public-sector institutions as well. This marks the
start of the present day Office of the Federal Auditor General of Ethiopia (OFAG), which,
among other duties, licenses public accounting practitioners in Ethiopia.
 The 1940s also saw the start of internal and external auditing along with the Accounting
development of SOEs and the entry of British firms. The Ethiopian Highway Authority professionalization
and Ethiopian Airlines were established; and Ethiopian Telecommunications
Corporation and Ethiopian Electric Light and Power Authority became autonomous in Ethiopia
state-owned enterprises. These phenomena engendered involvement of foreign
companies as partners, financiers or consultants to the SOEs. Consequently, internal
auditing was introduced in these enterprises with a view to strengthening internal 1213
controls (Argaw, 2000b; Kinfu, 1990). Furthermore, public accounting practice started
in Ethiopia as foreign branches of British auditing firms were established to service
foreign branches of their British clients. Kinfu (1990, p. 197) comments:
It is apparent that different types of accounting systems were, at this stage [i.e. 1940s],
instituted in Ethiopia by the financing agencies and expert advisers [to the state-owned
enterprises]. While many foreign experts from different countries played a role in introducing
accounting into Ethiopian enterprises, the influence of Britain is particularly evident on the
accounting side, especially in the books [. . .]. Accounting and auditing advisory services were
offered [to Ethiopian organizations] by British accounting firms, such as the Price
Waterhouse and Peat & Co. etc. the first accounting firms to open a practice in Ethiopia.
British influence penetrated the accounting practices of many client organizations as auditing
and financial advisory services were provided by their foreign and indigenous counterparts
and were to remain British-oriented even up to today.
Consistent with the growth of demand for trained manpower in accounting and auditing
up to the early 1940s, the Addis Ababa College of Commerce was established in 1943.
The College of Business Administration was then established at Addis Ababa
University (AAU) in 1963, with the assistance of American Peace Corps volunteers, with
154 students, twelve full-time academics and six part-time lecturers (Knowles, 2006), and
then at Asmara University in 1969[4]. The College aimed to (Knowles, 2006, p. 2):
. . . supply skilled businessmen and women to manage the expected growth of Ethiopian
industry and other economic activities pursuant to the Second Five-Year Development Plan
of the [Ethiopian] Imperial Government of that time.
Subsequently, two significant developments took place in the 1960s. First, the
Commercial Code of Ethiopia was enacted in 1960 (Government of Ethiopia, 1960). This
code contains accounting and external auditing provisions, which continue to serve as
the legal basis for financial reporting and external auditing of companies (Argaw,
2000b; The World Bank, 2007). It specifies financial accounting, reporting, and external
auditing requirements for companies operating in Ethiopia. However, the code failed to
specify the source of accounting standards to be followed in financial reporting and to
define the qualifications of an auditor (The World Bank, 2007). These failures limit the
code’s contribution to the development of the accounting profession. Second, the Office
of the Auditor General (OAG) was established in 1961 by Proclamation 199/1961
(Government of Ethiopia, 1961) with greater authority than was provided in the 1944
proclamation (Argaw, 2000b; Kinfu, 1990). The 1997 revised version of this
proclamation (Government of Ethiopia, 1977) has served as the legal basis for external
auditing for government organizations in Ethiopia up until the present day.
The need for an autonomous accounting profession in Ethiopia was felt in 1966. The
then Ministry of Commerce and Industry drafted legislation proposing the establishment
of a public accountants’ certification committee. The draft legislation suggested
AAAJ minimum qualifications required for certification, and provided for monitoring of public
25,7 accounting practices (Kinfu et al., 1981). Kinfu et al. (1981) argue that the draft legislation
was not enacted due to: a lack of a sufficient number of qualified Ethiopians to meet the
requirements; the presence of individuals in accounting practice who did not meet the
proposed minimum requirements but obtained practicing licenses through practical
experience; and dominance of foreign public accounting firms and accountants with
1214 foreign accountancy body qualifications (i.e. UK qualifications).

Professional accounting associations in Ethiopia

Ethiopian Professional Association of Accountants and Auditors (EPAAA). The effort
to establish an indigenous professional accounting association in Ethiopia culminated
in the establishment of the Ethiopian Professional Association of Accountants and
Auditors (EPAAA) on 27 March 1973 (Kinfu, 1990, p. 208). This Association aspired to
certify professional accountants and regulate public accounting practice in Ethiopia
(Argaw, 2000b; Kinfu, 1990; Kinfu et al., 1981). Table II presents founders’ profiles.
Founding membership of the Association comprised the Auditor General,
practicing accountants and an accounting academic. The founders in public practice
included two expatriate chartered accountants, fellows of Institute of Chartered
Accountants in England and Wales, working for branches of UK auditing firms in
Ethiopia and Mr. Getachew Kassaye, the first ACCA qualified Ethiopian national who
also established an indigenous auditing firm in Ethiopia (namely, Getachew Kassaye
& Co. Chartered Certified Accountants). Mr Gebremedhin was the then Auditor
General of the country, who initiated the formation of EPAAA. His initiative indicates
the state’s interest to strengthen the financial system of the country (Interview:
Participant 6). Dr Kinfu was an academic at the Accounting Department of Addis
Ababa University who served as dean of the Faculty of Business for multiple terms of
office and as a professor until his retirement in the late-1990s. He was evidently
interested in his Department’s linkage to employers of accounting graduates
(Interview: Participant 6). Thus, the establishment of the Association was a state
initiative that also matched the interests of other stakeholders. Participant 6
commented:
The establishment of the Association [EPAAA] was initiated by the Office of the Auditor
General. With an interest to strengthen the financial system of the country, the Office took
this initiative and invited auditing firms and Addis Ababa University to participate in the
establishment of an accounting professional association. EPAAA was then established with
founders representing their employer organizations.

Founders * Qualification/professional affiliation Background, nationality

Gorfu Gebremedhin F.K., P.M., B. Com. Auditor general, Ethiopian

Johannes Kinfu DBA, Accounting Academic, Ethiopian
Getachew Kassaye FCCA, ACIS Public practice, Ethiopian
W.J. Pile FCA, ACMA, ACIS Public practice, Expatriate
P.F. Hawkins FCA Public practice, Expatriate
Table II.
Founders and first Board Source: EPAAA Board of directors directive No. 1 and 2, 1975. *These individuals were part-time
of Directors of EPAAA volunteers
Kinfu et al. (1981) claim that the EPAAA achieved limited success because most of its Accounting
members were expatriates who were already certified abroad. The motivation of professionalization
certified/chartered accountants to participate in the affairs of EPAAA mainly
originated from the need to comply with government regulations. In the words of in Ethiopia
Participant 6,
Some of the founders who were already certified were involved because the government gave
a message that auditing firms should assist in strengthening the profession or their licenses 1215
to operate in Ethiopia would be revoked. There was also an advantage to the firms because as
they were recruiting staff from abroad, including India and Pakistan, their involvement was
necessary to define the qualifications acceptable to them. The accounting department of
Addis Ababa University was also interested because it was the major institution producing
locally-trained accountants in the country.
Following the 1974 revolution, UK public accounting firms, namely, PriceWaterhouse,
Peat & Co. and Mann Judd & Co., closed their branches in Ethiopia (Kinfu, 2005;
Woldegiorgis, 1992). This occurred subsequent to the communist military regime’s
seizure of power and the nationalization of private enterprises and their reorganization
as SOEs. Some writers (Argaw, 2000b; Blake, 1997; Kinfu, 2005) maintain that the
EPAAA made little progress during the communist era of Ethiopia. Participant 2 links
this to the communist ideology of the time:
. . . Private companies were nationalized and many state-owned enterprises were established.
There was little separation of technocrats and bureaucrats. Professionals could not succeed in
their careers unless they showed loyalty to the Workers Party of Ethiopia. Hence,
professional standards were weakened during this period.
On the other hand, there were significant developments in terms of strengthening
external auditing as a state-owned activity during this period. The formation of the
Audit Service Corporation (ASC) to conduct external audit of public enterprises was an
important landmark in this regard. Proclamation 1977/126, Article 7(1) states that
ASC’s board of directors is chaired by the Auditor-General, and includes as members
the Minister of Finance, Commissioner of Central Planning, Minister of Law and Justice
and the General Manager of the Corporation, who is also to be a Deputy
Auditor-General (Article 10(1)) (Government of Ethiopia, 1977). Proclamation 1977/126,
Article 5(1) states the objective of the ASC as follows:
Audit the accounts of production, distribution and service giving organizations of which the
government is the owner or majority shareholder and submit through the Auditor-General, a
consolidated report thereof to the congress of the Provisional Military Administration
Council.
The establishment of the ASC occurred as a result of the need to fill the gap created by
the closure of UK public accounting firms (Woldegiorgis, 1992). Article 4(3) of the ASC’s
establishment proclamation specifies this imperative for the formation of the ASC:.
. . . to find ways and means for the further development of the audit profession and to try to
make Ethiopia self-sufficient within a short period, with respect to the audit profession.
Furthermore, internal auditing was recognized as a separate function during this
period (in 1987) when the Auditor General was mandated by Proclamation 13/1987 to
monitor and regulate internal auditing in government offices and SOEs (Argaw,
AAAJ 2000b). This proclamation also mandated the Auditor General to set minimum
25,7 qualifications and experience for internal auditing positions, provide training to
internal auditors, and require reports on performance of internal audit units of
government organizations. A survey of internal audit in Ethiopia in 1991 indicates that
over 90 percent of state-owned enterprises and over 70 percent of government
budgetary organizations in Ethiopia had established internal audit units (Argaw,
1216 1997). Many Western pro-market academics, both liberal-democratic and right-wing,
might indeed be surprised to learn that some aspects of accounting actually advanced
in Ethiopia during the communist era. Consistent with Karl Marx’s own
“base-superstructure” theory (Marx, 1968, pp. 181-5; Fischer, 1973, pp. 80-1), internal
auditing, as part of the superstructure, ultimately responded to the changes in the
society’s economic base when the country shifted to communism.
In the succeeding epoch (i.e. post 1991) the EPAAA gained a more active status than
in the preceding era. Following the change of government in 1991, consistent with the
market-oriented economic policy, the Ethiopian government has been undertaking
financial reforms in the areas of financial reporting and public sector internal auditing
(Peterson, 2001). At the time of writing, the Association has membership categories of
authorized auditor, authorized accountant and non-practicing members. Authorized
auditors are those holding practicing certificates as a chartered or certified accountant,
active membership of a recognized international accounting body and practical
experience in auditing. The Office of the Federal Auditor General (OFAG) also uses
these criteria to grant a license to authorized auditors. EPAAA’s practicing members
are predominantly members of the ACCA (The World Bank, 2007). Authorized
accountants are those who provide bookkeeping and accounting services on a fee basis.
Membership as an authorized accountant requires university/college accounting
education and practical experience in accounting. OFAG also grants practicing
licenses to authorized accountants.
The interview with Participant 1 indicates several points that clarify EPAAA’s
more recent status. At the time of this interview, the Association had 123 active
members. This signifies a slow growth when compared with 38 members in 1975
(Kinfu et al., 1981). Also, as Participant 1 states, the reason for this increase in
membership is that OFAG recently put a requirement that an applicant for a license as
an authorized auditor/accountant possess active membership of an indigenous
professional accountancy association (i.e. including ASE and IIA).
Following the launch of ACCA-Ethiopia branch in 2002, ACCA and EPAAA made
arrangements such that Ethiopian resident members of the former obtain automatic
membership of the latter. Ethiopian resident ACCA students are also members of the
EPAAA under this agreement, and the two Associations’ emblems are affixed to the
students’ identification cards. Moreover, ACCA provides annual funding to the
EPAAA based on ACCA student numbers in Ethiopia. Furthermore, the two
Associations agreed to launch a joint examination scheme such that the ACCA would
incorporate Ethiopian variants of its taxation and commercial law papers on condition
that appropriate materials would be developed pertinent to Ethiopia for these papers.
Participant 1 believes that “the possible contribution of this arrangement to the
development of EPAAA has not been exploited because of EPAAA’s limitations.”
The EPAAA does not fully control the jurisdiction for professional accounting
services in Ethiopia as it lacks a legislative backing (Mengesha, 2006). Participant 1
stated that, the Association’s challenge remains “inadequate member commitment”. Accounting
Members maintain membership and pay fees voluntarily to assist the development of professionalization
the profession in Ethiopia. Not many members exhibit high levels of commitment to
EPAAA as membership “does not confer economic benefits”. This is because in Ethiopia
membership of an international association is generally sufficient and EPAAA
membership is not mandatory to obtain a practicing license in Ethiopia (Interview:
Participant 1). Participant 1 commented: 1217
Practicing members regularly pay their fees and meet all the requirements of their
international associations, which provide them with economic benefit. But, understandably,
that is not the case when we consider their commitment to EPAAA.
This lack of jurisdictional control caused the Association to continue mainly as “a
voluntary club” rather than as a strong professional association (The World Bank,
2007). It is not a member of IFAC, which requires having a large membership base,
providing professional certification, having a code of ethics and professional conduct,
providing continuous professional development programs to members, undertaking
practice monitoring and professional regulation, and possessing local recognition.
These prerequisites cannot be achieved unless the Association obtains a monopoly on
the Ethiopian market. Professionalization of a service could be achieved if a
professional service is standardized through codification of the cognitive base for
training and certification of professional association members (Abbott, 1988, p. 4; Seal
et al., 1996). By contrast, the EPAAA relies on the ACCA for education and certification
of its members. In addition, the EPAAA did not work vigorously with the state to
secure accountancy legislation. Participant 1 also commented:
Limitation of the Association’s leadership is one factor for EPAAA’s limited achievements.
For instance, the EPAAA board had forums for consultation with key government officials
but this initiative has not continued.
Ethiopian Association of Finance and Accounting (EAFA). The formation of Ethiopian
Accounting and Finance Association in 1994 was another notable attempt to establish
an indigenous accountancy body. EAFA was founded by a greater proportion of
non-practicing members than was the EPAAA. (Table III shows founders’ profiles.)
Membership of founders comprises a president who was the then Dean of Addis Ababa
Commercial College and lecturer in accounting; an ACCA qualified vice president and
founder of Degefe Lemmessa & Co., Chartered Certified Accountants; and an

Foundersa Background, nationality Responsibility

Kumlachew Abera Academic, Ethiopian President

Degefe Lemmesa Public practice, Ethiopian Vice president
Gebremedhin Gebrehiwot Academic, Ethiopian Secretary
Solomon Seyoum Academic, Ethiopian Editor
Paulos Basazinew Industry, Ethiopian Treasurer
Getachew Yitna Industry, Ethiopian Member Table III.
Teshome Teklehaimanot Public practice, Ethiopian Members Executive committee
composition of Ethiopian
Source: Ethiopian Accounting and Finance Association, Inaugural conference proceedings, 1996. Association of Finance
a
These individuals were part-time volunteers and Accounting
AAAJ accounting lecturer from Addis Ababa University as a secretary. Other members
25,7 included an accounting lecturer from Addis Ababa Commercial College and two
individuals from industry and practice. The mix of backgrounds of founders suggests
not only the Association’s more relaxed membership criteria but also (as Participant 8
stated) the Association’s academic focus as an integral part of the Association’s
objectives. This objective is also shown in the Association’s publication (Ethiopian
1218 Journal of Finance and Accounting) which, nonetheless, did not make it beyond the first
two issues. The inclusion of the finance discipline further strengthens this notion.
This Association aimed to achieve a broader membership base than that of
EPAAA. As the experience of the British accountancy profession indicates, a closure
strategy that restricts professional association membership to a few elites leads to the
formation of competing associations ( Johnson and Cargill, 1971; Walker, 1995;
Willmott, 1986). Similarly, the interviewees (Interviews: Participants 5, 8 and 9)
support the notion that EPAAA’s exclusive membership criteria contributed to the
formation of EAFA to accommodate university and college accounting graduates.
Given the more inclusionary membership criteria, membership shortage is unlikely to
have been a pressing challenge for EAFA. However, the EAFA did not continue as an
active Association beyond the founding executive committee’s term of office. However,
similar to EPAAA, membership to this Association did not confer exclusive benefits to
members since it had neither the capacity to administer certification exams nor the
jurisdictional power to regulate the profession.
Some participants attributed EAFA’s transiency to leadership issues as it did not
pursue its mission actively since the transfer of leadership to the second executive
committee. For instance, Participant 9 comments:
The major challenge was to secure volunteers to work freely for the newly born EAFA. At the
initial stage the founding members sacrificed a lot of their time and resources to establish the
Association, conduct workshops and conferences and served two terms. However, the same
commitment could not be sustained by the second executive committee elected by the
members despite the help offered by the outgoing founding members.
From among the second executive committee members, Participant 5 concurs that
EAFA did not achieve its goals, but he attributes the Association’s failure mainly to
resource constraints:
EAFA did not achieve its goals, because there were serious resource limitations. EAFA did
not have proper office and support staff and its members in general and executive members
in particular were busy in their daily professional work. Even if they wanted to give more
time to the causes of the Association, financial resources were very scarce. There were cases
where the Association was housed under Addis Ababa University but could not generate
members’ contributions to cover its office expenses. Members did not initiate to pay their
membership contributions and collecting the membership dues required serious effort on the
part of the executive committee.
In spite of this, there was one significant contribution that the Association made, which was
its involvement in the study on the development of accounting and auditing profession in the
country commissioned by the government in 1997. The study was completed with all the
recommendation[s] both with respect to academic qualification and professional qualification.
However, though there was consensus reached by the then high government officials with
most of the recommendation[s] of the study, concrete measures were not taken to implement
the recommendations.
Aside from the more obvious challenges the participants explained that the failure of Accounting
EAFA could be linked to its member backgrounds in a subtle way. Although having professionalization
relaxed membership criteria presents an opportunity, it also poses a challenge because
heterogeneity of members’ backgrounds undermines unity of purpose in the struggle in Ethiopia
for jurisdiction. Heterogeneity of member backgrounds and consequential diverse
motivations are likely to have contained the seeds of the Association’s subsequent
demise. Diversity of members’ motivations also means that the contemplated model of 1219
closure strategy would be blurred. Therefore, the broad goals of the Association were
bound to render closure strategies inoperative. It is only natural if members became
less cohesive to promote interests evidently lacking unity.
Institute of Internal Auditors (IIA) – Ethiopia. The IIA-Ethiopia was formed in 1996
as a chapter of the IIA-Global with personal initiatives of individuals engaged in
accounting/audit practice and academia (Argaw, 2000a, p. 5; Interview: Participant 4).
(Table IV presents executive and organizing committee members’ profiles.) Prior to the
formation of the IIA Chapter, Woldegiorgis completed a master’s degree at City
University of London with a thesis on ‘Training and Education of Internal Auditors in
Ethiopia’. One of Woldegiorgis’s (1992) recommended courses of action for the
development of internal audit in Ethiopia was establishing an IIA Chapter in the
country. In 1996 the Chapter was established by a group of individuals including
Woldegiorgis himself. Participant 2 commented:
We talked to the Auditor General, whose office was given the responsibility to monitor internal
audit in government organizations. We also organized other people including academics. A
minimum of 17 members was required to establish a chapter. In 1996, we applied to the
IIA-Global for establishment of the Chapter by meeting all the criteria. Then, as the chapter had
to obtain legal status to operate in Ethiopia, we had to translate the charter to Amharic
[country’s official language]. Then we secured legal status and started operating in 1996.
The interview with Participant 2 also indicates several points about the Institute. The
Chapter developed into an Institute in January 2008. As of November 2008, it had over
15 institutional and 492 individual members. Through its exam center, IIA-Ethiopia

Founders Background Educational Qualification Responsibility

Executive committee members *

H.E. Mr Lemma Argaw Auditor general Master’s degree President
Professor Johannes Kinfu Public practice DBA Vice president
Mr Woldefufael Woldegiorgis Industry Master’s degree Secretary
Antonio Silla Treasurer
Organizing committee members
Mr Woldefufael Woldegiorgis Industry
Getachew Abebe Industry
Teshome T. Haimanot Public practice
Belayneh Haile Industry
Demissie G. Michael Public practice
Getachew Yitna Industry Table IV.
Mamo Gitto Industry Executive and organizing
committees’ composition
Source: Accounting Focus (2005). *These individuals were part-time volunteers of IIA-Ethiopia
AAAJ achieved 24 CIA (certified internal auditor) members at the time of the interview. It also
25,7 organizes conferences in the country and facilitates members’ attendances at
international conferences of the IIA-Global.
The Institute has been receiving substantial government support. In addition to
strengthening internal auditing in government ministries (Government of Ethiopia,
1996; Mihret and Yismaw, 2007; Mihret and Woldeyohannis, 2008) and SOEs
1220 (Interview: Participant 4), the Ethiopian government has been providing more direct
support for the development of internal auditing by providing office space to
IIA-Ethiopia. In the words of Participant 4:
The Chapter throughout its existence is mainly financed by the contribution of its individual
and institutional members. It is also fortunate to get free office accommodation for the first
few years of its existence from Management Institute of Ethiopia and for the last 7 years from
Ministry of Finance and Economic Development. In few instances it got sponsorship from
organizations and Global IIA to cover conference and training costs abroad.
Overall, the Institute is active and it has been growing at a reasonable pace.
Nevertheless, exercising closure remains a continuing challenge to internal audit
globally as internal auditors do not exercise a professional monopoly as yet. One of the
challenges in this regard, which also applies to IIA-Ethiopia, is “[the] diverse
backgrounds and educational standing of members [. . .] [causing] the biggest problem
to move as one force” (Participant 4).
Accounting Society of Ethiopia (ASE). The formation of Accounting Society of
Ethiopia (ASE) in 2004 was yet another development in accounting professionalization
in Ethiopia (Table V presents executive committee composition). The fact that ASE’s
executive committee membership comprises predominantly Addis Ababa University
lecturers, although it also includes one member each from industry and public practice,
suggests that this Association has the potential to progress along academic lines.

Qualification/professional
Founders * affiliation Background, nationality Responsibility

Mengistu Bogale Master’s degree AAU * * Academic, President

Ethiopian
Padakanti PhD AAU Academic, Vice president
Laxmikantham Expatriate
Teferi Ghebrai Master’s degree AAU Academic, Secretary general
Ethiopian
Anteneh Mitiku Master’s degree AAU Academic, Editor-in-chief
Ethiopian
Adugnaw Siferaw BA, FCCA, CIA Public practice, Finance head
Ethiopian
Ashenafi Beyene Master’s degree AAU Academic, Public relations
Table V. Ethiopian head
Executive committee Adam Gutu BA degree Industry, Ethiopian Treasurer
member profiles ASE
Notes: *These individuals were part-time volunteers. * *Addis Ababa University
However, as explained later, the Association also intends to develop the capacity to Accounting
conduct professional training and certification. professionalization
Participant 3 stated that ‘the Association aims for a broad-based membership that
accepts accounting practitioners, academics, and students as members’. ASE is aimed in Ethiopia
at linking accounting practice and education. Participant 7 stated the rationale for
establishing ASE as follows:
We saw that academicians have limited exposure to real world practice and practitioners are 1221
not updated with new accounting and finance theories. To fill this gap we believe and were
motivated to establish ASE. Among its major objectives are to: facilitate seminars on current
accounting and finance issue; facilitate academicians to do research and publish on ASE
Journal; consult and comment on government accounting, finance and auditing policies, rules
and regulation; and to certify members by administering a standardized exam and assessing
professional experience.
Participant 3 believes that the Association is on the right track towards achieving its
objectives. In the words of this participant:
The Association has brought about some attitudinal changes by starting to demonstrate the
possibility of an active indigenous professional association. We have finalized the
preparation to establish branches in 4 regional towns in collaboration with regional
university lecturers. This will help broaden our membership base. ASE is administering
accreditation examinations of accounting graduates of the Technical and Vocational
Education and Training under the Ministry of Education.
Participant 3 also stated that awareness of ASE in the business community has been
raised and that this awareness has helped the Association create a positive impression
on members, potential members and the business community about the profession. It is
noted from this interview that the challenges facing other accounting associations in
Ethiopia are relevant to ASE as well. First, there were resource constraints to conduct
ASE activities. The Association has been trying to curb this problem through various
fund raising strategies. It has started publication of books which enable it to generate
income from sales and company sponsorships of publications. Publications are also
aimed to serve as part of developing the knowledge base for conducting certification
exams in the future. ASE participates in administering accreditation examinations for
accounting graduates of technical and vocational schools under the Ethiopian Ministry
of Education, which helped the Association to generate income and also garner
recognition. Second, absence of exclusive member benefits limits member commitment.
As Participant 3 stated, “members receive just recommendation letters in support of
applications for promotions, jobs, and licensing as authorized auditors or accountants”.

Accounting reforms and the role of International Financial Institutions (IFIs)

Economic policy reforms have been underway in Ethiopia since the early-1990s with
financial and technical assistance of IFIs, i.e. the World Bank and IMF (Peterson, 2001;
Tesema, 2003). Since February 2003, the nation has been making required policy
reforms to gain World Trade Organization accession (World Trade Organization,
2011). IFIs funded a number of projects aimed at enhancing the private sector, fostering
competition in the private sector, and developing global competitiveness of the
country’s economy (The World Bank, 2010). One component of the reforms focuses on
modernizing the financial infrastructure of the country. Owing to the pressure from the
AAAJ World Bank, the Ethiopian’s Ministry of Trade and Industry conducted a study in 2005
25,7 to develop a road map for the development of accounting and auditing standards in
Ethiopia and also to establish a National Board of Accountants and Auditors (Michael,
2005). This study was funded by the World Bank with OFAG and EPAAA taking the
responsibility for the study (The World Bank, 2007), which was contracted out to the
ACCA as a consultant (Mengesha, 2006; Interview: Participant 1). As a separate
1222 initiative, the Ethiopian Civil Service College (ECSC) also established the Institute of
Certified Accountants and Auditors (ICAA) with World Bank funding. The Institute
was aimed at initially providing accounting certifications and developing reporting
standards for the public sector with a mission to subsequently work for the private
sector as well.
Subsequently, the IFIs undertook a study that produced Reports on the Observance
of Standards and Codes, i.e. ROSC (The World Bank, 2007). The ROSC study assessed
the status of financial reporting and external auditing in Ethiopia and offered some
recommendations: enacting a financial accountancy law; revising the Commercial Code
of Ethiopia; developing financial reporting standards in consideration of International
Financial Reporting Standards (IFRS); and establishing a National Board of
Accountants and Auditors in Ethiopia under which professional accounting
associations with legislative backing would operate (The World Bank, 2007).
Following the ROSC, all the forgoing initiatives (including ECSC’s) have been
coordinated into a national steering committee working within the framework of the
IFIs recommendations. Membership of the committee comprises the existing
indigenous professional accounting associations and other local stakeholders. The
committee oversees the projects aimed at revising the Commercial Code of Ethiopia,
drafting a financial accountancy law, developing national financial reporting
standards (with a consideration of IFRS) and establishing a National Board of
Accountants and Auditors (Interview: Participant 1). The contemporary initiatives as
well as historical events outlined in this section are analyzed next.

Analysis and implications

It can be seen that, in the pre-1974 era, the development of accounting in Ethiopia was
fostered by efforts aimed at modern state building and the development of state-owned
enterprises. This was accompanied by entry of British capital in the early 1900s and
subsequently up to the 1940s. This phenomenon not only led to the start of modern
accounting with a British orientation but also resulted in entry of British public
accounting firms. The simultaneous introduction of British accounting practices in
Ethiopia with the inflow of British capital is similar to experiences in other developing
countries (Annisette, 2010; Bakre, 2008, 2010; Sian, 2010; Uche, 2010; Yapa, 2010) and
former British colonies at large (Poullaos, 2010; Richardson, 2010). These
developments also highlight the imperialistic tendencies of UK accountancy
observed in some countries including even some located outside the formal British
empire (Perera, 1989; Sian and Poullaos, 2010).
The 1966 state initiative to enact legislation for the accounting profession, a year
after the formation of the stock exchange in 1965, demonstrated the state’s response to
the growing private sector in Ethiopia. On the other hand, absence of occupational
groups to take advantage of this initiative and claim jurisdiction by establishing a
professional accountancy body is evident. Although the state creates an enabling
environment for the development of the accounting profession (Sian, 2006; Uche, 2002), Accounting
occupational groups are crucial actors in professionalization projects. From both professionalization
functionalist and interactionist perspectives, failure of this attempt to provide
jurisdiction for an indigenous accounting profession is unsurprising. In the in Ethiopia
functionalist view, producing professionals with specialized knowledge should
precede the development of a regulated profession because the crux of
professionalization rests in the product rather than the process. Thus, without such 1223
a body to control key professionalization activities, i.e. training and certification of
potential members, a professional body hardly succeeds in controlling a jurisdiction
(Abbott, 1988, pp. 59-85; Carnegie and Napier, 1996; Walker, 2004). In addition, the
draft legislation implied exclusionary strategies regarding non-qualified and
part-qualified practitioners who were already in public practice.
The EPAAA’s formation as a state initiative in 1973 further strengthened the notion
of the state’s recognition of accounting services to the economy. This state initiative
exhibits a marked variation from the development of the accounting profession in the
West as well as from other developing countries where accounting professionalization
was linked to colonial administration. As professions are never formalized independent
of jurisdictions provided by the state (Abbott, 1988, pp. 59-85), the initiative can be
viewed as another major step in the accounting professionalization process in Ethiopia.
However, occupational groups did not struggle adequately for jurisdictional control.
Professional group mobility of EPAAA was limited at least in its early years because it
had a limited number of members to exert significant influence. Closure cannot be put
into practice unless a profession first forms a critical mass of members (Sian, 2006).
Thus, EPAAA’s closure move was rather early given that evidently it did not achieve a
critical mass in the 1960s, 1970s or even later than that. The experience of Kenya
shows that promoting inclusionary usurpation at the beginning is a more constructive
strategy than exclusionary moves (Sian, 2006, 2007). Inclusionary strategies help to
attain a critical mass of members at early stages of development of the profession
(Ramirez, 2001; Sian, 2006).
In addition, successful closure requires that aspiring members define a body of
knowledge that a professional association would own, control, and develop. As
Carnegie and Edwards (2001, p. 303) maintain, the development of a body of
knowledge is one of the key “signals of movement” towards the formation of a viable
professional body as a basis for training and certification of members. Therefore,
EPAAA’s claim for jurisdiction is made exigent as it did not develop the capacity to
train and certify its members. Consequently, EPAAA’s reliance on ACCA for
certifications and the resulting dual membership presents a continuing challenge of
failure to produce professional accountants trained with knowledge grounded in the
relevant context of Ethiopia. Dual membership also generates conflict of interest and
complicates the struggle for jurisdiction (Uche, 2002). From a critical perspective,
certified members qualified by a foreign accountancy body might be expected to lack
the motivation to shift professional commitments to EPAAA and away from the parent
accounting body to which they are members. Further, as dual membership entails
additional fees, members tend to choose the parent accountancy body that is perceived
as having a more established reputation (Carnegie and Parker, 1999; Uche, 2002;
Wallace, 1992).
AAAJ During the communist years of Ethiopia, it is evident that the accounting profession
25,7 was “nationalized” and formally structured as part of the state apparatus under the
ASC. This is consistent with the change in state ideology to centrally-planned
economic policy whereby virtually all private enterprises were nationalized and all
economic activity was made state-owned. Thus, the formation of the ASC with
reporting responsibly to the Auditor General expanded the latter’s role with additional
1224 capacity provided through the former. As in other centrally-planned economies (Hao,
1999; Seal et al., 1996), the Ethiopian government was able to provide professional
accountancy labor to the state-owned enterprise sector through the ASC. The
implication of this notion for professionalization is that occupational groups should
negotiate for professional autonomy with the government, a powerful “client”, in the
capacity of employed experts. As jurisdictions are determined by client choice, client
power has a potential to restrain professional power (Abbott, 1988, pp. 140-2). The
state, being a dominant client, defines the knowledge and skills it seeks from
accounting professionals. Therefore, it can dictate the terms and conditions under
which accounting services are provided. As a result of the change in the structure of
the auditing profession, the EPAAA did not make progress in the pursuit of growth
along the lines of independent fee-paid professionals servicing the market.
Nonetheless, the communist-era must not be viewed as a total negative in terms of
accounting development in Ethiopia. For example, the ascension of internal auditing as
an integral unit in government organizations signifies the state’s interest in
strengthening internal mechanisms as compared to nurturing a professional
accounting body of independent professionals with closure intentions. Thus,
EPAAA’s little progress in its closure moves during this period appears to be as a
result of the change in direction of development of the profession rather than the state’s
inhibition of the development of accounting as a generic activity.
A different picture appeared about accounting professionalization in Ethiopia after
1991 owing to Ethiopia’s commitment to market-oriented economic policy. The
resulting new corporate governance structure in the private sector is normally
expected to foster the importance of financial reporting and external auditing (Seal
et al., 1996). Change of government and the type of government are important
influences on the development of the accounting profession. The contribution of
government in the development of accounting in other sub-Saharan African countries,
e.g. Nigeria (Uche, 2002) and Kenya (Sian, 2006), epitomizes such influences. Consistent
with this notion, there has been some government interest in Ethiopia to enhance
accounting and auditing in the country during this period, which can mainly be seen in
the reactivation of EPAAA with its linkage to the ACCA; the formation of the three
other professional associations; and ongoing accounting reforms championed by IFIs.
Especially during this third epoch, the involvement of the ACCA has remained a
significant force impacting on the accounting professionalization project in Ethiopia
through its influence not only on EPAAA but also on the state. Unlike the experiences
of other countries, for example Nigeria (Uche, 2002), Kenya (Sian, 2006), and China
(Hao, 1999), few state measures have been taken to protect indigenous professional
associations from transnational encroachment. The ACCA’s key role as consultant to
the government in matters of growing the profession, e.g. during the road map study,
illustrates the Association’s high level of influence in this nation. Like the case of
Trinidad and Tobago (Annisette, 2000) and Jamaica (Bakre, 2005, 2006), imported
expertise has also been encouraged by surrendering the control of training and Accounting
certification to ACCA. As the experience of other developing countries (e.g. Annisette, professionalization
1999; Bakre, 2005, 2006; Briston and Kedslie, 1997) suggests, the control of the market
by transnational accounting bodies makes indigenization of the profession exigent in in Ethiopia
Ethiopia. Also, the financial dependence of EPAAA on the ACCA suggests that the
EPAAA cannot vociferously promote issues of indigenization without its role being
circumscribed. The surrender of control of education and certification, coupled with the 1225
financial dependence, bears the potential to make EPAAA accede to the wishes of the
ACCA, which pursues a well-established strategy of exporting accountancy expertise
via global expansion of membership (Bakre, 2010; Briston and Kedslie, 1997; Uche,
2010). ACCA’s funding of EPAAA on the basis of ACCA student numbers in Ethiopia
is also suggestive of this factor at work.
On the other hand, the formal cooperation of the EPAAA with the ACCA helped the
former to consolidate a partial closure by restricting external auditing services to its
ACCA qualified members who dominate EPAAA’s membership. Thus, the
ACCA/EPAAA members closed off the external audit market against: authorized
accountants, i.e. non-certified/chartered accountants who can offer only accounting
services as independent fee-paid experts; CIA members of the IIA; and ASE members.
Nonetheless, it can be noted that EPAAA’s co-optation of the ACCA cannot guarantee
further success in closure moves. As the sociology of professions perspective shows,
occupational groups normally occupy vacant jurisdictions created when new types of
jobs emerge, occupational groups move into other types of services, or one group
dislodges another in a struggle for turf (Abbott, 1988, pp. 86-8). Therefore, the present
arrangements do not allow EPAAA to occupy a jurisdiction as the jurisdictional
vacancy for the accounting profession is de facto filled by the more well-established
ACCA. Thus, ACCA has been consolidating its grip not only by virtue of using its
expert power on the state and the EPAAA but also membership dominance and
financial power over the EPAAA.
It is evident that UK accountancy impacted on Ethiopian professional accounting
project over the last century. This provides evidence that imperialistic influences on
accounting professionalization in developing countries has not been restricted to
Britain’s formal imperial boundaries. Nonetheless, compared to colonial imperatives
that explain UK influence on accounting in developing countries within Britain’s
formal empire, British influence on accountancy in Ethiopia has been linked to British
capital inflows to Ethiopia and the subsequent introduction of accounting and external
auditing. Also, in case of the former, UK company laws and financial reporting
requirements were formally legislated and UK professional bodies other than ACCA
widely operated. This competition led to the type of inter-association competition that
prevailed within the UK itself and also competition of transnational and national
accountancy qualifications (Bakre, 2010; Sian, 2010; Susela, 2010; Yapa, 2006, 2010). It
can be observed that the governments of newly independent states moderated the
relationship between national accountancy bodies and transnational UK bodies in
attempts to establish nationalism in place of formal imperialism (Sian, 2010; Verma,
2010). By contrast, the agenda of indigenizing accounting, similar to the ones pursued
on decolonization of former colonies (Uche, 2010), did not arise with a sense of
immediacy in the Ethiopian state as a result of the unique nature of the linkage
between UK and Ethiopian accountancy.
AAAJ Furthermore, unlike former British colonies, e.g. Jamaica (Bakre, 2005), which were
25,7 at some point dominated by expatriates with UK qualifications, Ethiopian public
accountancy is dominated by ACCA qualified Ethiopian nationals. This dominance
makes the Ethiopian case similar to Trinidad and Tobago (Annisette, 1999, 2000;
Annisette, 2003) where the ACCA controls the accountancy market via membership
dominance of an indigenous association. ACCA’s control of membership reduces
1226 tension of the type that arose between elite accounting groups of UK certified
expatriates and indigenous certified accountants after independence of former colonies.
In addition, the fact that ACCA qualified Ethiopian nationals are controlling the
market, on the surface, undermines the urgency of promoting indigenization agenda.
This has helped keep unchallenged the status quo of ACCA serving as a “parent”
certifying body under which the EPAAA serves as an affiliated body of the former. As
a consequence professional accountancy training continues not to be grounded in the
relevant Ethiopian context.
The recent accounting reform projects championed by IFIs have the potential to
generate another wave of dynamics in the professional project in Ethiopia. The
proposed enactment of a national accountancy law would enable formation of an
indigenous professional body with a legislative backing. The possible establishment of
the National Board of Accountants and Auditors and the coordination of the separate
strands of professionalization attempts in the national steering committee could lead to
the formation of a stronger indigenous professional accounting body capable of
claiming jurisdiction. The move to develop national financial reporting standards (or
possible IFRS adoption) could also make the indigenous professional associations at
ease to contemplate starting education and certification of members grounded in a
body of knowledge relevant to the Ethiopian context.
In trying to decipher the reform projects, nonetheless, it is important to note critical
perspective scholars’ views that such moves of IFIs are more an attempt to ensure
global mobility of transnational capital than a response to the real needs of developing
nations (Annisette, 2004; Bakre, 2008; Soederberg, 2003). Consistent with this view, the
start of reforms in Ethiopia in the early-1990s was attached to conditions that
accompany loan agreements between Ethiopia and IFIs (Mengesha and Common,
2007). Similarly, Participant 6 comments, “. . . In fact, this [the ongoing accounting
reform process] is mainly related to the need to meet requirements of funding
agencies.” When viewed in this light, the interest of IFIs has the potential to contradict
the agenda of indigenization in the professional project. The rise to global hegemony of
the WTO, for example, challenges national boundaries for the operation of professions
(Richardson, 2010). Such initiatives are linked to American informal empire replacing
that of the UK. The former focuses more on global convergence of financial reporting
standards rather than nationalities of accounting professionals involved (Annisette,
2010; Richardson, 2010).
Although only time will tell the final outcome, trends suggest that the Ethiopian
accountancy market will be more open for competition. The ACCA, as an international
accountancy body that also originates from the same Western environment that
exports transnational capital, could garner the support of IFIs in case of any
competition between the ACCA and potential indigenous qualifications. Consistent
with this notion, Uche (2010) argues that these IFIs-supported reforms in Nigeria tend
to challenge indigenization moves of the state in regard to professional accountancy.
Similar accountancy laws in Jamaica also facilitated smooth international capital Accounting
mobility instead of promoting accountancy training and certification tailored to professionalization
national needs (Bakre, 2005). Thus, the outcome of reform projects in terms of
localizing professional accountancy depends both on the extent to which local in Ethiopia
stakeholders promote national interest in the process and the ACCA’s subsequent
strategic moves.
1227
Summary and conclusions
This paper has examined the process of accounting professionalization in Ethiopia
over the last century. Accounting has been practiced in Ethiopia since the early
twentieth century. Although Ethiopia has been an independent country throughout its
history, inflow of British capital in the first half of the twentieth century and activities
of the UK-based ACCA in recent decades have amounted to significant British
influence on accounting professionalization in Ethiopia. The development of
accounting in Ethiopia in line with the Western model had been continuous from
1900s to 1974. However, this development was at best in a relative state of ossification
from 1974 through to 1991. Change of state ideology to communism in 1974 and back
to a market-oriented economy in 1991 served as important junctures that marked the
essence of accounting professionalization in Ethiopia. The moves in the direction of
accounting professionalization in line with the Western model were evident in the two
market-oriented economic policy periods of pre-1974 and post-1991.
EPAAA was established as a state initiative and aspired for jurisdictional control of
professional accountancy in Ethiopia. However, its attempt to close off succeeded only
partially. First, the state as a major employer has continued developing accounting
professionals as government employed experts since the country’s communist years.
This implies that greater state power on professionalization undermines the
Associations’ power in the struggle for professional autonomy and jurisdiction.
Furthermore, the Association did not develop the capacity to define, own, and control a
cognitive base that could enable the exercise of closure. The EPAAA’s lack of control
of education and certification indicates that a key “signal of movement” (Carnegie and
Edwards, 2001, p. 303) was missing on the Association’s formation and continues to be
missing to the present day.
Second, EPAAA’s co-optation of the ACCA added to the exigency of the former’s
struggle for jurisdiction because jurisdictional vacancies are de facto occupied by the
latter. Evidently, EPAAA’s struggle for full jurisdictional control has been complicated
because, first, members are already occupants of the jurisdiction, despite their lacking
control over entry. Second, any attempt by the EPAAA to consolidate its hold on the
turf by dislodging the ACCA would be self-contradictory as most EPAAA members
are ACCA qualified Ethiopian nationals. Thus, EPAAA’s member reproduction
remains reliant on the jurisdiction expansion strategy of the ACCA as the former did
not develop the capacity for training and certification. Unlike the case of former British
colonies where UK company laws were also imposed as a part of enhancing imperial
governance and audit of imperial businesses (Bakre, 2008, 2010; Briston, 1978; Bush,
2010), and also where expatriates certified by various UK accountancy bodies were
competing, the ACCA remains a dominant accountancy body in Ethiopia controlling
the accountancy market indirectly through dominant membership of EPAAA.
Through its professional and financial power, ACCA made arrangements with
AAAJ EPAAA and consolidated its control of Ethiopia’s accountancy by dominating the
25,7 latter’s membership. This strategy has rendered EPAAA an affiliated body of the
former, exercising only partial market closure. This conclusion suggests that
developing countries’ indigenous professional accounting associations’ co-optation of
transnational accounting associations could ultimately weaken the former’s struggle
for jurisdictional control and localization of an accountancy knowledge base.
1228 The state’s conduct of economic policy reforms since the early-1990s owing to IFIs’
demands engendered several projects including those aimed at revising the
Commercial Code of Ethiopia, enacting a national accountancy law, developing
financial reporting standards in consideration of IFRS, and establishing a National
Board of Accountants and Auditors under which autonomous accounting associations
would be organized. These ongoing reforms could yield outcomes enabling
jurisdictional control of indigenous professional accounting associations. This
possibility could be exploited by existing professional accounting associations
through creating some form of cooperation to beef up a capacity to control training and
certification of members. As this is a critical step in any attempt to develop the profile
of accounting practice in Ethiopia, it seems an urgent need for the future. Whether the
proposed accountancy law and related reforms would result in indigenization of
professional accountancy training and certification depends not only on the extent to
which local stakeholders promote national interest in the process but also the ACCA’s
next strategic moves in the context of a more open competitive arena likely to be
promoted through the role of IFIs.

Notes
1. Ethiopia is an East African country with a 2009 UN estimated population of 85.8 million
(Source: BBC, http://news.bbc.co.uk/2/hi/africa/country_profiles/1072164.stm#facts).
Ethiopia was market-oriented before pre 1974, it then adopted a centrally-planned
economic policy (1974 to 1991), before returning to a market-oriented economy post 1991.
The nation exports mainly coffee, gold, leather products, beeswax, canned vegetables, tea,
sugar, cotton, oilseeds, and fresh flowers; it imports processed food, petroleum and related
products, chemicals, machinery, civil and military aircraft, transport and industrial capital
goods, agricultural machinery and equipment, and motor vehicles (Nations Encyclopedia,
2004).
2. SOEs are wholly government-owned, for-profit organizations in Ethiopia that operate as per
Public Enterprise Proclamation No. 25/1992.
3. Other countries in the same category include Australia, Bahamas, Ireland, Fiji, Jamaica, New
Zealand, Uganda, Singapore, South Africa, Trinidad & Tobago, and United Kingdom.
4. This university is currently in Eritrea which became an independent state in 1993.

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Corresponding author
Dessalegn Getie Mihret can be contacted at: dmihret@une.edu.au

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