A 2004 assessment of the accounting and auditing environment in Ghana conducted by the World Bank noted that the regulation of accounting practices was somewhat weak and recommended strengthening the statutory framework, enforcement mechanisms, and professional education. It also recommended adoption of International Financial Reporting Standards (IFRSs) without any modifications, in place of the existing Ghana National Accounting Standards (GASs). The World Bank pointed out that GASs are based on a mid-1990s version of IFRSs (then International Accounting Standards, or IASs) and hence are outdated and differ significantly from their international counterparts. Other major recommendations included the creation of an independent oversight body responsible for the process of adoption and enforcement of accounting and auditing standards based on international equivalents for public interest entities, and developing simplified reporting requirements for the Small and Medium-size Enterprises (SMEs). In line with the World Bank recommendations, in January 2007 Mr. Kwadwo Baah-Wiredu, Minister of Finance and Economic Planning of Ghana, formally announced the launching of Ghana's adoption of IFRSs and the subsequent replacement of the local GASs. As noted in a 2007 United Nations Conference on Trade and Development report, consistent with a phased approach towards adoption of international standards, IFRSs became applicable for all listed companies, government business enterprises, banks, insurance companies, securities brokers, pension funds, and public utilities in 2007. SMEs, State-owned Enterprises, Ministries, Departments and Agencies have been provided with an additional two-year transition period and are required to apply IFRSs by 2009.

General Overview

In 2004, the World Bank conducted a review of accounting and auditing practices in Ghana in order to evaluate the weaknesses and strengths of the accounting and auditing requirements, and to review the reporting requirements against actual practices. This review involved the participation of representatives from the Ghanaian regulatory, supervisory, and industry bodies. International Financial Reporting Standards (IFRSs) and International Standards on Auditing (ISAs) were used as the benchmarks for assessing national standards. The Report on the Observance of Standards and Codes (ROSC), published in June 2004 as a result of the assessment, contained policy recommendations to improve the reporting framework in Ghana. As part of its recommendations for improvement of the accounting and auditing statutory framework, the World Bank recommended adoption of IFRSs without any modifications. The World Bank noted that "the ICAG [Institute of Chartered Accountants of Ghana] has not updated any national standards since [they were] originally adapted from international standards. There are 28 GASs. The international equivalent of certain GAS statements have been withdrawn, and 10 active international standards have not been reflected in Ghana National Accounting Standards. The absence of a national standard based on IAS 41, Agriculture, is significant in agriculture-dominant Ghana. Furthermore, over the past years, extensive revisions have been made to the International Accounting Standards that are not reflected in GAS" (p. 11). The World Bank also recommended creation of an independent oversight body responsible for the process of adoption and enforcement of accounting and auditing standards based on international equivalents and developing simplified reporting requirements for the Small and Medium-size Enterprises (SMEs).

In line with the World Bank recommendations, in January 2007 Mr. Kwadwo Baah-Wiredu, Minister of Finance and Economic Planning of Ghana, formally announced the launching of Ghana's adoption of IFRSs and the subsequent replacement of the local GASs. 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. Starting in 2009, all other entities including SMEs will be also required to use IFRSs.

The legal framework for financial reporting and auditing requirements in Ghana for public and private companies is largely based on the Companies Code of 1963 (Act 179) which prescribes basic reporting requirements without specifying applicable accounting standards. According to the World Bank 2004 assessment, "some accounting requirements prescribed by the Code are incompatible with International Accounting Standards" (p. 3). Overall, the World Bank pointed out that the Code is outdated. However, at the time of the assessment, the Code was under review. The Securities and Exchange Commission Regulations of 2003, Securities Industry Law of 1993, Stock Exchange Act of 1971, Listing Regulations of 1990, Banking Law of 1989, Financial Institutions (Non-Banking) Law of 1993, and Insurance Law of 1989 supplement the Companies Code in regulating financial reporting requirements for different types of companies.

Under the Securities and Exchange Commission Regulations of 2003 and the Securities Industry Law of 1993, the Securities and Exchange Commission of Ghana (SEC) monitors compliance with financial reporting requirements. Empowered by the Stock Exchange Act of 1971 and the Listing Regulations of 1990, the Ghana Stock Exchange (GSE) ensures compliance with disclosure requirements. The SEC does not play a role in standard setting. The World Bank noted that the SEC and the GSE lacked adequate capacity to monitor compliance with the financial reporting requirements.

Under the Banking Law of 1989 and the Financial Institutions (Non-Banking) Law of 1993, the Bank of Ghana (BoG) monitors compliance with financial reporting requirements for banks and non-banking financial institutions. In addition to the requirements specified by the Companies Code and the SEC, the entities regulated by the BoG must comply with the requirements specified in the Manual of Accounting and Manual of Auditing for Banks. Governed by the Insurance Law of 1989, the National Insurance Commission regulates the insurance companies and financial statements of insurers are required to comply with requirements of the Insurance Law in addition to other requirements. However, the World Bank noted that except for the banking sector, sanctions and penalties in place were inadequate and some of the requirements outdated.

According to the description of the Ghanaian regulatory framework as detailed in the 2006 ICAG self-assessment, the Registrar-General has the legal authority to enforce compliance with the provisions of the Companies Code and has the authority to use sanctions for non-compliance. However, the 2004 World Bank assessment noted that "the Registrar-General has no technical and logistical capacity to review financial statements with which to identify accounting and auditing violations" (p. 9).

The ICAG is the national accounting and auditing standard-setter in Ghana, and is established by the Chartered Accountants Act of 1963. The World Bank pointed out that the ICAG did not have a "clear legal mandate to set accounting standards" (p. 8), yet it issued GASs prior to the adoption of IFRSs as Ghanaian standards. The ICAG conducts qualifying examinations and assures continuing education for members of the Institute. The World Bank in its 2004 assessment noted that the ICAG lacked resources and required further strengthening of education standards and professional training in the field of accounting and auditing. ICAG also sets out requirements for professional codes of conduct and ethics to be observed by auditors. According to the 2007 ICAG self-assessment, the IFAC Code of Ethics has been adopted without any modifications. The ICAG is listed as a member on the International Federation of Accountants (IFAC) website.

The Principles

IFRS 1: First-time Adoption of International Financial Reporting Standards (effective 2006)

II

In January 2007, Mr. Kwadwo Baah-Wiredu, Minister of Finance and Economic Planning of Ghana, formally announced the launch of Ghana's adoption of IFRSs. As noted in the 2007 UNCTAD report, IFRSs became applicable for all listed companies, government business enterprises, banks, insurance companies, securities brokers, pension funds, and public utilities. Starting in 2009, all other entities including SMEs will be also required to use IFRSs. However, there is insufficient information publicly available that directly addresses this principle.

IFRS 2: Share-based Payment (effective 2005)

II

See Principle 1.

IFRS 3: Business Combinations (effective 2004)

II

See Principle 1.

IFRS 4: Insurance Contracts (effective 2006)

II

See Principle 1.

IFRS 5: Non-current Assets Held for Sale and Discontinued Operations (effective 2005)

II

See Principle 1.

IFRS 6: Exploration for and Evaluation of Mineral Resources (effective 2006)

II

See Principle 1.

IFRS 7: Financial Instruments: Disclosures (effective 2007)

II

See Principle 1.

IAS 1: Presentation of Financial Statements (effective 2007)

II

See Principle 1.

IAS 2: Inventories (effective 2005)

II

See Principle 1.

IAS 7: Cash Flow Statements (effective 1994)

II

See Principle 1.

IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (effective 2005)

II

See Principle 1.

IAS 10: Events after the Reporting Period (effective 2005)

II

See Principle 1.

IAS 11: Construction Contracts (effective 1995)

II

See Principle 1.

IAS 12: Income Taxes (effective 2001)

II

See Principle 1.

IAS 14: Segment Reporting (effective 1998)

II

See Principle 1.

IAS 16: Property, Plant and Equipment (effective 2005)

II

See Principle 1.

IAS 17: Leases (effective 2005)

II

See Principle 1.

IAS 18: Revenue (effective 1995)

II

See Principle 1.

IAS 19: Employee Benefits (effective 2006)

II

See Principle 1.

IAS 20: Accounting for Government Grants and Disclosure of Government Assistance (effective 1984)

II

See Principle 1.

IAS 21: The Effects of Changes in Foreign Exchange Rates (effective 2005)

II

See Principle 1.

IAS 23: Borrowing Costs (effective 1995)

II

See Principle 1.

IAS 24: Related Party Disclosures (effective 2005)

II

See Principle 1.

IAS 26: Accounting and Reporting by Retirement Benefit Plans (effective 1998)

II

See Principle 1.

IAS 27: Consolidated and Separate Financial Statements (effective 2005)

II

See Principle 1.

IAS 28: Investments in Associates (effective 2005)

II

See Principle 1.

IAS 29: Financial Reporting in Hyperinflationary Economies (effective 1990)

II

See Principle 1.

IAS 31: Interests in Joint Ventures (effective 2005)

II

See Principle 1.

IAS 32: Financial Instruments: Disclosure and Presentation (effective 2005)

II

See Principle 1.

IAS 33: Earnings per Share (effective 2005)

II

See Principle 1.

IAS 34: Interim Financial Reporting (effective 1999)

II

See Principle 1.

IAS 36: Impairment of Assets (effective 2004)

II

See Principle 1.

IAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1999)

II

See Principle 1.

IAS 38: Intangible Assets (effective 2004)

II

See Principle 1.

IAS 39: Financial Instruments: Recognition and Measurement (effective 2006)

II

See Principle 1.

IAS 40: Investment Property (effective 2005)

II

See Principle 1.

IAS 41: Agriculture (effective 2003)

II

According to the 2004 World Bank assessment, at the time of the assessment, there was no equivalent standard in Ghana.