According to an assessment of the accounting and auditing environment in Ghana conducted by the World Bank in 2004, although Ghana's National Standards on Auditing (NASs) are based on the International Standards on Auditing (ISAs), they are "outdated" and not in line with current international standards. Furthermore, the assessment pointed out that, with the exception of the banking sector, compliance with the existing NASs was weak, due to inadequate enforcement mechanisms. One of the World Bank's major recommendations was 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. The World Bank also recommended developing simplified reporting requirements for the Small and Medium-size Enterprises. Although Ghana adopted International Financial Reporting Standards in January 2007, there is insufficient publicly available information as to whether Ghana plans to adopt ISAs as well.

General Overview

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). As specified in this Act, annual accounts of both public and private companies must be audited by independent auditors, and the Ghana National Auditing Standards (NASs) are to be used for the purpose of auditing. 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 the Insurance Law of 1989 supplement the Companies Code in regulating financial reporting requirements for different types of companies.

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 statutory framework of accounting and auditing, the World Bank suggested the adoption of ISAs without any modifications. The World Bank noted that "although Ghana Accounting and Auditing Standards have been based on International Accounting Standards and International Standards on Auditing, respectively, they are outdated and gaps exist in comparison with the international equivalents" (p. 1). NASs issued by the Institute of Chartered Accountants of Ghana (ICAG) became effective in 2001. However, the World Bank noted that NASs need to be updated and revised in line with the current ISAs. Furthermore, the absence of implementation guidelines impedes application of NASs locally. While Ghana adopted IFRSs in January 2007, there is insufficient publicly available information whether Ghana plans to adopt ISAs as well.

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 for listed and private companies. It also 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 securities market in Ghana is regulated by the Securities and Exchange Commission Ghana (SEC), which monitors compliance with financial reporting requirements. The Ghana Stock Exchange (GSE) ensures compliance with disclosure requirements. The SEC does not play a role in setting auditing standards. However, it does set additional requirements for listed companies. These requirements are called the International Securities Principles and Practices in the ICAG self-assessment of 2006. The World Bank noted that both the SEC and the GSE lack adequate capacity to monitor compliance with the financial reporting requirements.

The Bank of Ghana (BoG) monitors compliance with financial reporting requirements for banks and nonbanking 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 which, according to the 2004 World Bank assessment, is "outdated." The National Insurance Commission regulates the insurance companies, and the financial statements of insurers must comply with the requirements of the Insurance Law in addition to other requirements.

The ICAG is the national auditing standard-setter in Ghana, as mandated by the Chartered Accountants Act of 1963. The ICAG conducts qualifying examinations and acts as the licensing body for auditors. However, the World Bank assessment noted that the ICAG lacked resources and required further strengthening to improve its disciplinary practices and educational 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

ISA 200 Objective and General Principles Governing an Audit of Financial Statements (effective 2006)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 210 Terms of Audit Engagements (effective 2006)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 220R Quality Control for Audits of Historical Financial Information (effective 2005)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 230R Documentation (effective 2006)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 240 The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements (effective 2004)

NC

According to the 2004 World Bank assessment the equivalent Ghana standard needs to be updated in line with ISA 240.

ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 260 Communications of Audit Matters With Those Charged With Governance (effective 2004)

NC

According to the 2004 World Bank assessment, no equivalent national standard exists in Ghana.

ISA 300 Planning an Audit of Financial Statements (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 320 Audit Materiality (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 330 The Auditor’s Procedures in Response to Assessed Risks (effective 2006)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 402 Audit Considerations Relating to Entities Using Service Organizations (effective 2004)

NC

According to the 2004 World Bank assessment, no equivalent national standard exists in Ghana.

ISA 500 Audit Evidence (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 501 Audit Evidence - Additional Considerations for Specific Items (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 505 External Confirmations (effective 2004)

NC

According to the 2004 World Bank assessment, no equivalent national standard exists in Ghana.

ISA 510 Initial Engagements — Opening Balances (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 520 Analytical Procedures (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 530 Audit Sampling and Other Selective Testing Procedures (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 540 Audit of Accounting Estimates (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 545 Auditing Fair Value Measurements and Disclosures (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 550 Related Parties (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 560 Subsequent Events (effective 2006)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 570 Going Concern (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 580 Management Representations (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 600 Using the Work of Another Auditor (effective)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 610 Considering the Work of Internal Auditing (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 620 Using the Work of an Expert (effective 2005)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 700 The Auditor’s Report on Financial Statements (effective 2006)

NC

According to the 2004 World Bank assessment the equivalent Ghana standard needs to be updated in line with ISA 700.

ISA 701 Modifications to the Independent Auditor's Report (effective 2006)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 710 Comparatives (effective 2004)

NC

According to the 2004 World Bank assessment, no equivalent national standard exists in Ghana.

ISA 720 Other Information in Documents Containing Audited Financial Statements (effective 2004)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.

ISA 800 The Auditor’s Report on Special Purpose Audit Engagements (effective 2006)

II

There is insufficient information publicly available regarding Ghana's compliance with this principle.