Economic sciences/7. Accounting and audit
Professor Rozhkova
N.K.
Professor Blinova
Y.U.
Akor Martin Luther
Financial University under the Government of the
Russian Federation
Accounting in therepublic of ghana
INTRODUCTION
Ghana is a West African Country, bordered by Cote D’ivoire to the west,
Togo to the east, Burkina Faso to the north and the Gulf of Guinea to the
south. According to the form of governance, it is a presidential republic and a
unitary government. Ghana boasts of a population of 25million, with a land size
of 238 537 km2. The country consists of ten(10) regions. Accra is the capital
city of Ghana. The official language of Ghanaians is English. “Ghana Cedi” is
the official currency used in Ghana. Currently, one dollar is equivalently 2,
64 Ghana Cedi (1$=2,64GHC). With the abundance of resources such as gold,
bauxite, manganese and cocoa, and as a model of democracy in Africa, Ghana is
referred to by most people as the “Gate-way to Africa”.
ACCOUNTANCY
Accountancy as a profession started to develop in Ghana only in the last
four decades of the 20th century due to the fact that the country
gained independence just in 1957, once a former colony of Great Britain. Ghana
as a country used to apply the Ghana Accounting Standards prior to the year
2007. The ICAG issued Ghana National Accounting
Standards (GAS) in the late 1990s, some of which became effective in 1997 and
others in 1999. These national standards were based on International Accounting
Standards effective in mid- 1990s (World Bank, 2004, P8).
GAS requires companies to present some
compulsory financial reports based on its organizational form. For instance,
partnerships are required to submit the following: Trading Profit and Loss Account, Profit and Loss
Appropriation Account and a Balance Sheet, whereas companies (both joint stock,
limited and unlimited liability companies) are also required to submit in
addition to the above listed document an income surplus account. Sole
proprietors are however permitted to present only a balance sheet. The capital
section of the balance sheet of a partnership slightly differs from that of
companies as that of partnership has two sub-groups namely the current account
and the capital account. Current Account in the context of GAS is an account
which shows the various transactions of partners in one accounting period,
whiles a capital account shows the transactions of partners over more than once
accounting period. Government agencies such as ministries and district
assemblies are also required to present a Statement of Revenue and Expenditure,
a trial balance and a balance sheet.
GAS
also uses no plan- sheet as used in Vietnam and in Russia. Accounts are
referred to by their individual names such as Debtor’s Account (this
corresponds to account ¹ 62 and 76/1 on the Russian plan-sheet), Creditors
Account, Suppliers Account (account ¹ 76/2 and 60 on the Russian plan-sheet)
etc.
The World Bank noted in its assessment in the
year 2004, that the GAS were
outdated and lacked any compliance with IFRS
due to the fact that most of the legal backings (documents) and the processes
used in the preparation, regulation and monitoring of accounting activities
such as the Companies Code (1963) and the Partnership Act (1962) haven’t been
updated since they were implemented. In line with the World Bank
recommendations, in January 2007 the late Mr. KwadwoBaah-Wiredu, Minister of
Finance and Economic Planning of Ghana, at that time, formally announced the
launching of Ghana's adoption of
IFRSs and the subsequent replacement of the local GASs in a speech (Ministry of Finance
and Economic Planning, 2007). As
noted in a 2007 United Nations Conference on Trade and Development report,
IFRSs became applicable for all listed companies, government business
enterprises, banks, insurance companies, securities brokers, pension funds, and
public utilities (eStandardsForums,
2007). As of 2007 IFRS is
required for all unlisted banks, utilities, brokerage, insurance,
government-owned businesses. IFRSs was required for all other unlisted entities
starting 2009.
“IFRS” is the term used to indicate the whole body of
International Accounting Standard Board’s(IASBs) authoritative literature. IFRS
are designed for profit oriented entities. Any entity claiming compliance with
IFRS must comply with all standards and interpretations, including disclosure
requirements. There are no special standards or exemptions for medium and small
scale entities.
In IFRSs, the following must be presented:
Balance Sheet; income statement; statements of change in equity; statement of
recognized income and expenditure, statements of cash flows and notes, including
accounting policies. However, in Russia the Russian Accounting Standard or
Principle is used. (According to the Russian Federal Law ¹ 129 FZ)
The following are some of the difference between
the IFRS and RAP:
a)
Unlike IFRSs, official document
regulating, directly or indirectly, accounting and reporting in Russia are
designed for use by all entities.
b)
Unlike IFRSs, RAP applies to items
that are immaterial.
c)
In IFRSs, transactions are accounted
for in accordance with their substance, rather than only their legal form.
d)
While IFRSs specify minimum
disclosures to be made in financial statements, they do not require a
prescribed format. RAP however prescribes a general format for financial
statements.
e)
Unlike IFRSs, RAP uses a “plan-sheet”-
a numbered order of various asset, liabilities and capital. For instance
Materials on the Russian plan-sheet is denoted by the number 10, Share Capital
is denoted by the number 80 etc.
f)
In Russia, all companies are
required to prepare their financial statement, using the Russian Ruble as the
unit of measure, whiles in Ghana, the laws of Ghana as well as IFRS does permit
entities to use any currency as its unit of measurement in its financial
statement. Most companies in Ghana, however often use the Ghanaian cedi as
their unit of measurement.
g)
Unlike the IFRSs, financial
statements in Russia must be prepared in Russian language.
h)
Unlike IFRSs, all entities must have an annual balance sheet date
of 31st December.
i)
Unlike IFRSs, in Russia no statement
of recognized income and expenditure is prepared.
Aside these differences, there are also some significant similarities
between the IFRS and the RAP;
a)
Both require the financial statement
to be accurate, reliable and complete.
b)
Both consider a business as a legal
entity and hence the asset of the business is different from that of its
owners.
c)
Both follow the general accounting
principles. For instance Asset= Capital + Liabilities in both standards.
Whereas Federal Law from 6th December, 2011 N-402 FZ is the
highest accounting law in the Russian Federation to which all other accounting
laws must comply to, Ghana has not yet come out with its highest accounting
law.
Aside this, there are no specific requirement to become a chief
accountant. However, most companies prefer to employ individuals with at least
5 years of work experience, with at least a first degree in accounting or other
related professions and must have no criminal background. Comparatively, in
Russia, a chief accountant must be someone who has no criminal background in
the area of economics, must have at least 5 years of work experience in the
field of accounting.
In other to become an external auditor, one must be accredited by the
Ghana Audit Board. Such accreditations are given to candidates, who have
completed at least a higher education, with at least three years of work
experience as an accountant and with a good score on the Institute of Chartered
Accountants’ Test. A good score is considered to be 70%. There are no specific
requirements for the position of internal auditor. As at January 2014, the
total number of qualified accountants and qualified auditors were 5703 and 1318
respectively. Due to the small number of qualified auditors and accountant in
Ghana, several companies employ unqualified people to function as accountant
and internal auditors.
The ICAG is the sole body charged with the regulation of the accountancy
profession in Ghana. Its members are the only persons recognized under the
Companies Code (Act 179) 1963, for the purpose of audit of company accounts.
Unlike most other countries, Ghana has the position of Accountant
General and Auditor General who are the heads of the Accountant General’s
Department and Auditors General Department.Whereas the public accounts of Ghana and of all public offices, including the
courts, the central and local government administrations, and any public
corporation organizations established by an Act of Parliament shall be prepared
by the Accountant General, the Auditor General audits and reports on such
account prepared by the former.
There are no strict requirements for companies, specifying periods by
which financial report should be prepared and submitted to the interested
parties. However, most companies prefer to issue a monthly and or an annual
accounting report. It’s very rare to come across a quarterly accounting report
in Ghana.
In summary, the accountancy profession in Ghana, unlike in most other
countries is on the verge of development. Measures are been put in place by the
government to amend existing laws and to implement solid laws to regulate the
accounting profession.
Literature
1.
Companies Code 1963 Ghana
2.
Partnership Act 1962 Ghana
3.
World Bank Accounting Report
on Ghana,2004
5.
Institute of Chartered
Accountant-Ghana’s official website
6.
Russian Federal Law ¹ 129 FZ