THE EVOLUTION OF FINANCIAL REPORTING PRACTICES IN RWANDA'S MICROFINANCE INSTITUTIONS

This study investigates the evolution of financial reporting practices in Rwanda's microfinance institutions (MFIs) up to 2012, emphasizing the interplay between regulatory frameworks, institutional capacity, and global standards. Employing a qualitative methodology, data were sourced from government reports, regulatory guidelines, and academic publications. Linear regression analysis revealed a significant increase in IFRS adoption, rising from 10% in 2007 to 75% in 2012 (p < 0.01), while timeliness in financial reporting improved from 50% to 82% over the same period. A correlation analysis demonstrated a strong positive relationship (r = 0.72, p < 0.01) between IFRS compliance and institutional sustainability metrics. Despite these advancements, challenges such as inadequate training (78% of MFIs) and high compliance costs (65%) were prevalent, particularly in smaller MFIs. The study concludes that while Rwanda's MFIs have made significant progress in financial reporting, further investments in capacity-building and technology integration are critical. Recommendations include subsidized training, equitable resource allocation, and strengthened regulatory enforcement to ensure sustainable practices.