However, the development still needs to be given legal backing through various laws or regulations that have financial reporting requirements. Although implementation support activities are taking place through CPD workshops, these still need to be increased and widened to reach a wider stakeholder base in the financial statements supply chain, in addition to making them more practical in approach. ICAG needs to further strengthen its technical and financial resources capacity to further improve its activities. Done with effect from 2012.
Legal backing through the law or regulations is still needed. Implementation activities starting with awareness building need to be undertaken, targeting all stakeholders who will be relevant in the successful implementation of this standard.
Establish an independent oversight body to monitor and enforce accounting and auditing standards and codes
Not implemented as recommended. Instead, an AQM Unit was established within the ICAG (currently staffed by a part time director, two managers, and an assistant manager), reporting to a committee which is not an ICAG Council Committee. But still reports the AQM Unit’s findings to the Council. The focus of the AQM Unit at the moment is on being advisory rather than as a sanctioning body. The governance arrangement needs to be reviewed on an ongoing basis as the Unit gets more established so that its activities are seen as protecting the public interest. SMPs that have been reviewed are already realizing the positive impact of this Unit in terms of advice given to them to better run their firms.
Continued professional education should be regularly monitored
This was implemented and is an ongoing activity. Various stakeholders indicated that CPD sessions organized by ICAG are adding value to them. However, they indicate that the CPD sessions should be more practical, particularly with regards to the application of accounting and auditing standards.
Recommendation Status and root cause for slow/non-implementation
Enhance professional education and training embracing IFRS and ISA for all players; • Preparers • Regulators • Auditors • ICAG • Students • Training providers and teachers
This is being achieved by CPD sessions provided by the ICAG and various collaboration initiatives between the ICAG and regulators. The regulators consult the ICAG on issues to do with financial reporting. The increased CPD sessions are benefiting Small and Medium Practitioners (SMPs). ICAG staff in the AQM Unit was sent for training with the Institute of Chartered Accountants of England and Wales (ICAEW).
The quality of lecturers has been increasing over the years, partly contributing to the increasing pass rates.
Some university lecturers and other tertiary institution lecturers indicated that collaboration between them and the ICAG particularly in curriculum development can be further improved.
Improve arrangements for enhancing ICAG’s capacity to assist practice development and quality enhancement of its members
The established AQM Unit is playing a significant advisory role particularly to SMPs in the areas of running their practices, conducting high quality audits in terms of ISAs compliance, and ensuring compliance with applicable financial reporting standards by their clients. SMPs indicated that more could be done by ICAG, particularly through adapting the various Guides published by the SMP Committee of IFAC aimed at assisting SMPs in running their offices in compliance with ISQC 1, Applying ISA in the audits of SMEs, etc. Although the ICAG has reproduced these publications with relevant IFAC authority, the SMPs want these adapted to Ghana’s situation and disseminated to them, supported by workshops. A large number of copies were reproduced by ICAG, but have not been collected by the SMPs. The Guides have clear implementation guidelines on
Upgrade the procedure of licensing practicing auditors
This meets minimum requirements of IFAC in terms of practical training required.
Recommendation Status and root cause for slow/non-implementation Strengthen capacity of the regulatory bodies Regulatory bodies have not been strengthened and most of them, with the exception of the BoG, are completely relying on external auditors’ work for assurance in compliance with standards. The regulators need to introduce capacity in their structures to competently check financial statements for compliance with IFRS, complimenting their sector specific prudential compliance checks. This will enhance the value of the financial information in meeting their sector user’s needs. This independent check becomes even more necessary given that there is currently no independent oversight
- Section B: Detailed explanation for the establishment of independent audit oversight body in Ghana.
- Reason 1: To meet the object/spirit of Public Financial Management Act, 2016, Act 921
Section 1 of Public Financial Management Act, 2016, Act 921 (Act 921) specifies this:
(1) The object of this Act 921 is to regulate the financial management of the public sector within a macroeconomic and fiscal framework. (2) For the purpose of subsection (1), there shall be established: (a) A framework to support a sound fiscal policy and the macroeconomic management of public funds; (b) Processes for the preparation, approval and management of a transparent, credible and predictable annual budget; (c) Mechanisms for the operation of the Consolidated Fund; (d) Mechanisms for the management of public funds, assets and liabilities; (e) Internal and external audit frameworks and correlative reporting and accounting systems; and (f) A mechanism to oversee the matters specified under paragraphs (a) to (e).
One can argue that an internal and external audit framework and correlative reporting and accounting systems will require the establishment of an independent auditor’s watchdog in Ghana. This is because the best way to achieve transparency, accountability, and sound management, which are the tenets of Act 921, is to have impartial and independent auditors. Experience has shown that impartial and independent auditors flourish with an independent auditor’s watchdog in place.
The correlation between the object of the Public Financial Management Act, 2016, Act 921 and establishment of an independent auditor’s watchdog in Ghana can be seen if we look at other countries that have object to their Public Financial Management similar to Ghana’s Public Financial Management. A case in point is the South Africa’s Public Finance Management Act, 1999 (Act No. 1999). The object of South Africa’s Public Finance Management Act, 1999 (Act No. 1999) is to secure transparency, accountability, and sound management of the revenue, expenditure, assets and liabilities of the institutions to which this Act applies.
One can deduce that Ghana’s Public Management act was set up in a similar fashion to achieve similar object like South Africa’s Public Finance Management Act, 1999 (Act No. I of 1999). Notwithstanding the Public Accountants’ and Auditors’ Act, 1991 (similar to Ghana’s Chartered Accountant, Act, 1963 Act 170), in order to meet the spirit of the South Africa’s Public Finance Management Act, 1999, the Parliament of South Africa passed the South Africa Auditing Profession Act, 2005 (Act 26) to establish an independent auditors watchdog. In a similar way, to meet the objective of Act 921, I am calling on the Ministry of Finance to move immediately to put forward legislation to establish an independent auditor’s watchdog in Ghana.
- Reason 2: To address issues associated with the effectiveness and independence of the current auditors’ watchdog in Ghana
In Ghana, auditors are regulated by the Institute of Chartered Accountants Ghana (“ICAG” or “Institute”). The Institute is governed by the Chartered Accountant, Act, 1963 (Act 170).
By: Emmanuel Akrong
