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The International Journal of Accounting

46 (2011) 459 – 480

The Development of Accounting and Reporting

in Ghana☆
Oheneba Assenso-Okofo, Muhammad Jahangir Ali ⁎, Kamran Ahmed
School of Accounting, La Trobe University, Bundoora, Vic 3086, Australia

Received 30 October 2009

Abstract

In this paper, we examine the economic, political, and legal systems as well as the institutional factors
that influence the accounting and disclosure practices in Ghana. The impact of International Financial
Reporting Standards (IFRS) on disclosure is also investigated, as Ghana has recently completed full
adoption. We find that the accounting and reporting practices are significantly influenced by legal, po-
litical, institutional, and economic factors and that the regulatory environment is neither effective nor ef-
ficient due to the weak monitoring and enforcement of compliance. Although there has been some recent
progress, the Companies' Code, which is the corporate legal framework of Ghana, must be updated to
reflect the dynamic nature of world operations. This study advances the course of standards setters, reg-
ulators, accounting practitioners, and policymakers to improve the corporate reporting and accounting
practices. Urgent measures need to be undertaken to reform and build the capacities of institutions
charged with the responsibility of regulating and monitoring Ghanaian accounting and reporting prac-
tices to ensure best practices and build investors' confidence.
© 2011 University of Illinois. All rights reserved.

Keywords: Accounting regulation; Accounting practices; International Financial Reporting Standards; Corporate
governance; Ghana

1. Introduction

Accounting is the product of its environment. It has been argued that an efficient and
effective institutional framework and a favorable socio-economic and political climate
☆
We appreciate the helpful comments and suggestions of Mahmoud Al-Akra, Leo Langa, and the participants
of the School of Accounting, La Trobe University seminar. Any remaining errors are ours.
⁎ Corresponding author.
E-mail address: m.ali@latrobe.edu.au (M.J. Ali).
0020-7063/$ - see front matter © 2011 University of Illinois. All rights reserved.
doi:10.1016/j.intacc.2011.09.010
460 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480

improve the accounting and reporting practices of a country (see Ali & Ahmed, 2007; Ball,
Robin, & Wu, 1999; Choi & Mueller, 1979; Gray & Vint, 1995; Mueller & Meek, 1997;
Williams & Tower, 1998). In this paper, we examine the socio-economic and political en-
vironment, the institutional framework, accounting education, the role of local and interna-
tional accounting standards, and the existing enforcement mechanisms in order to provide
an understanding of the development of accounting and financial reporting in Ghana.
In response to the increased globalization of capital markets, there is a greater call for trans-
parency, improved disclosure, and quality accounting practices worldwide. As capital becomes
a global “commodity,” the ability to compete for this commodity requires countries, especially
emerging economies, to strengthen the institutions and invigorate the reporting standards that
govern their accounting and disclosure practices. A favorable environment is vital for capital
providers, both domestic and international, to supply funds for businesses to continue and
thrive. In general, emerging countries suffer from a dearth of investments due to lack of account-
ability caused by lack of information on how the managers have used their resources. However,
it would be too simplistic to conclude that this is true of all emerging countries since each coun-
try has its unique environments that must be understood. Although accounting academics and
practitioners have focused on understanding reporting environments in many emerging nations
(see Ashraf & Ghani, 2005 on Pakistan; Ali & Ahmed, 2007 on South Asia; Mashayekhi &
Mashayekh, 2008 on Iran; and Al-Akra, Ali, & Marashdeh, 2009), there are few studies of Af-
rican countries. This paper, examines one of those countries, Ghana. One reason for this study is
to help enhance local and international investors' confidence through improved financial report-
ing practices. Recently, there has been a surge in interest by investors to invest in Ghana (The
World Bank Annual Report, 2007). The Association of Ghana Industries (AGI) and the
World Bank Investment Climate Surveys indicate that international investors are showing opti-
mism due to an improved political climate (Abor, 2007; Standard & Poor's, 2008). For example,
the net inflows of foreign direct investment increased from US$1519 million in 2000 to US
$2139 million in 2007 (The World Bank Annual Report, 2009).
A second reason for this study is to provide information on the Ghanaian environment,
which determines the country's disclosure, financial, and reporting practices. Such infor-
mation is important so that the influx of investors into Ghana has an adequate description
of the status of corporate financial reporting. The recent performance of the Ghana stock
market and foreign direct investments have been significant. The Ghana stock exchange
was recognized as number one among the top 25 performing stock markets in the world,
with a percentage change in price index of 58.1 (Standard & Poor's, 2008). The number
of listed companies also increased from 22 in 1999 to 35 in 2008. In the same period,
the market capitalization and trading value increased from $US916 million to
$US3,394.4 million and $US25 million to $US124 million, respectively. In addition, the
discovery of crude oil in commercial quantities in Ghana in 2007 has resulted in an im-
proved mining sector, which has attracted a number of foreign companies into the country.
The stable political atmosphere of Ghana, unlike other neighboring countries, has included
five successful, peaceful elections since 1992, which also creates an investment-friendly
climate. This expansion and inflow of capital have generated interest in the country's
soundness of financial reporting and disclosure of information.
This in-depth study, which examines the factors that influence the current practice of cor-
porate disclosure and ways to improve accounting reporting, contributes to the literature of
 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480 461

accounting and reporting practices and provides guidance for other emerging nations in
Africa.
The paper is structured as follows. Section 2 provides background information about Ghana,
followed by accounting regulations for corporate financial reporting in Section 3. Section 4 fo-
cuses on a discussion of the environmental factors influencing accounting and reporting prac-
tices. Section 5 describes the institutional framework for accounting practices and corporate
disclosure, while Section 6 deals with the accounting standards due process. The recent devel-
opment and the role of IFRS are discussed in Section 7. Section 8 examines the enforcement of
and compliance with accounting standards in Ghana. The final section provides a summary and
concludes the paper.

2. Ghana — A brief profile

The Republic of Ghana is located on the West Coast of Africa, between 4° and 12° latitude
with the Greenwich Meridian passing through it. It covers an area of 238,540 km 2
(92,100 mile 2), which is comparable in size to the state of Oregon or about the size of United
Kingdom. Formerly known as the Gold Coast, because of the abundance of gold in West Africa,
Ghana became the first country in sub-Saharan Africa to gain independence on 6 March 1957.
Ghana shares borders with Francophone countries, Togo on the east, Ivory Coast on the
west, Burkina Faso in the north, and the Atlantic Ocean to the south. In 2008, the population
was 23 million, drawn from more than 100 ethnic groups, each with its own unique language.
English, however, is the official language, a legacy of Britain. With the highest point being
Mt. Afadjato (at 880 m or 2887 ft), the climatic condition is warm and arid on the southeast
coast, hot and humid in the southwest, and hot and arid in the north. More than 40% of the
country occupies the Volta River Basin, a large area flooded by Lake Volta where a dam
was built (Akosombo Dam) to provide hydroelectric power for smelting alumina into alumi-
num (Berry, 1995; Boateng, 1967). The British took control of the country in 1821, and the
colonization continued until Ghana attained its independence in 1957. After leading the coun-
try for 9 years, the nation's founding president, Kwame Nkrumah, was overthrown in a coup
d'etat in 1966. Subsequently, Ghana was ruled by a series of military despots with intermittent
experiments with democratic rule, most of which were curtailed by military takeovers. The
latest and most enduring democratic experiment began in 1992 and has led to Ghana's repu-
tation as a leading democracy in Africa (Ghanaweb, 2009).
According to Belkaoui (1983), the number of people interested in the accounting profes-
sion and the quality of accounting and reporting practices depend on the size of the country's
population. Ghana had an estimated population of 23 million in 2008, and the growth rate has
remained stable at about 2.5% since 1989 when the total population was about 14 million
(CIA, 1989). The majority of the population lives in the urban areas, and about 48% are
under the age of 25. The literacy rate has been estimated to be approximately 65% (UNICEF
Annual Report, 2010).
The economy of Ghana is dependent on the export of natural resources, including gold,
bauxite, industrial diamond, manganese, timber, rubber, and cocoa production. However,
the higher price of imports, mainly crude oil 1 machines, and accessories, has adversely
1
Although Ghana has discovered oil, it still imports crude oil due to the lower amount of production.
462 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480

Table 1
Ghana's Population, GDP growth, and inflation rate since 1989.
Source: Ghana Statistical Service, Bank of Ghana, and International Monetary Fund.
YEAR Population GDP (in millions INFL. YEAR Population GDP (in millions INFL.
(000) of US $) (%) (000) of US $) (%)
1989 13,951 5249 30.46 1999 17,953 7710 13.79
1990 14,306 5886 35.90 2000 18,412 4983 40.54
1991 14,672 6599 10.26 2001 18,883 5312 21.29
1992 15,046 6413 13.33 2002 19,366 6157 15.17
1993 15,431 5966 27.66 2003 19,861 7624 23.56
1994 15,825 5440 34.18 2004 20,368 8877 11.78
1995 16,231 6461 70.82 2005 20,889 10,726 14.84
1996 16,644 6929 26.12 2006 21,423 12,906 10.92
1997 17,072 6888 22.14 2007 21,973 15,031 12.75
1998 17,506 7478 15.75 2008 22,532 16,124 18.13

impacted the Gross Domestic Product (GDP). This, coupled with high inflation, has led to a
reduction of investments.
Not only does inflation hamper productive sectors' ability to access funds for growth
and development because of higher interest rates, but it also affects earnings because of
changing prices (FIAS, 2002; Saudagaran, 2004). Table 1 presents inflation rate and
GDP from 1989 to 2008, and it shows that since 1989 the GDP has increased more than
threefold from US$5.6 billion to US$16.2 billion in 2008. The accompanied inflation
rate also fluctuated but steadily declined from as high as 71% in 1995 to 13% in 2007.
There are three major sectors of the Ghanaian economy: agriculture, which is the back-
bone of the economy, service, and industry. As Table 2 shows, there has not been a signif-
icant change in terms of each sector's ratio to the GDP over the years.

3. Accounting regulations for financial reporting practices in Ghana

There is limited information on accounting practices during the pre-colonial period in

Ghana as to when and how accounting practices in Ghana began (Wilks, 1989). The establish-
ment of the Institute of Chartered Accountants of Ghana in 1963 by Act 170 of Parliament is
seen as the foundation of formal accounting in Ghana. The main legal framework for financial
reporting and auditing for both private and public companies is based on the Companies' Code
of 1963 (Act 179). In addition to the Companies' Code, which governs corporate financial
reporting practices, other accounting regulations include the Ghana Accounting Standards

Table 2
Percentage of the GDP attributed to the Ghanaian economy sectors.
Source: Computed based on the Bank of Ghana's annual reports.
Sectors/years 1986–1990 1991–1995 1996–2000 2001–005 2006–2008
Agriculture 46% 42% 39.5% 38.35% 37.0%
Industry 14% 14% 26.5% 26.25% 25.7%
Services 40% 44% 34.0% 35.40% 37.3%
 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480 463

(until 2009), Securities Laws, Taxation Laws, and Corporate Governance Guidelines, all of
which are discussed below.

3.1. Companies' Code

Accounting practices can be transferred from one country to another through colonial-
ism, which led to groupings such as the “British-Influence group” and the “U.S.-influence”
group (Nobes & Parker, 2002). Since Ghana was ruled by the United Kingdom (UK), the
Companies' Code 1963 Act 179, which is the corporate legal framework of Ghana, has its
roots in English Common Law. It was written by D. Gower, who also wrote the UK Com-
panies Act. In addition to the adopted international codes and standards, Companies' Code
gives guidelines for the governance of all companies incorporated in Ghana. The Code pre-
scribes the basic reporting requirements but stops short of suggesting applicable account-
ing standards. Even where accounting requirements are proscribed, some of them vary
from the international standards (World Bank Report on the Observance of Standards
and Codes, 2004; hereafter ROSC, 2004). The Companies' Code recognizes the role of au-
ditors in disclosure and transparency in operations of corporate bodies. For example, it re-
quires directors of companies to provide shareholders with audited annual accounts
(financial statements) at the Annual General Meeting and debenture holders annually.
However, the establishment of an audit committee is not emphasized in the Companies'
Code. Additionally, the Code does not mention preparation of a cash flow statement or
statement of changes in equity as part of the financial statements; reference is made to a
profit and loss account instead of an income statement.
The Code has seen virtually no amendments since its promulgation in 1963. This may en-
cumber accounting reporting and disclosure practices. A careful examination of the Compa-
nies' Code and the other reporting regulations (e.g., SEC regulations) reveals that though they
complement each other, the body of regulations must be synchronized in order to eliminate
the differences and make application simple. The Companies' Code of Ghana is seen as out-
dated in the light of current accounting and disclosure practices. Therefore, it needs revision to
adequately protect investors and to accurately reflect current realities in the world of
accounting.

3.2. Securities laws

Securities laws standardize securities contracts and enforce an unrestricted access of dis-
closure of information to investors. These laws spell out the obligations and related respon-
sibilities and sanctions to various parties in the corporate world (see Bushman & Piotroski,
2006; La Porta, Lopez-de-Salines, Shleifer, & Vishny, 2003). In line with developments in
other emerging nations and the advice of the World Bank, Ghana instituted the Securities
Industry Law 1993 (PNDCL 333) and established the Securities and Exchange Commis-
sion (SEC). This law outlines how the SEC should function. It is the duty of the SEC to
maintain surveillance over the securities market, to ensure adequate protection and security
to all investors, and to guarantee fairness in the securities market. The SEC provides for the
establishment of stock markets, the licensing of stockbrokers/dealers and investment advi-
sors, and oversees issues concerning accounting and audits and conduct of securities
464 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480

business. It also investigates any breaches and settles disputes arising under the securities
laws and the Companies' Code. In 1995, the SEC enforced the 1993 law when it sus-
pended and fined three brokerage companies for contravening the rules governing the fi-
nancial markets. This action by the SEC improved the public's confidence in the
Commission (Osei, 1998). The Securities Industry Law 1993 (PNDCL 333) was amended
significantly in December 2000 (Act 590) to provide for the operation and regulation of
Unit Trusts and Mutual Funds. It also ensures absence of abuse, such as insider trading,
and also reviews takeovers, mergers, and acquisition of companies and then gives
approval.
The World Bank in its report, however, suggested that the SEC improve enforcement of
disclosure quality, related party transaction regulations, insider trading, disclosure of direc-
tor remuneration, and ownership disclosure through staff training and provision of re-
sources (ROSC, 2005).

3.3. Corporate governance guidelines

Corporate governance is described as a system of directing and controlling corporations

through mechanisms such as board composition, size, committee structure, code of conducts,
and ethics programs (Luo, 2005). Corporate governance is critical to ensuring financial
reporting accountability and disclosure of all relevant, reliable, and accurate information to
stakeholders. It plays a pivotal role in guaranteeing good practices, transparency, accountabil-
ity, probity, responsibility, and ethics in the corporate world (Berglof & Von Thadden, 1999).
It is crucial for continued investments toward corporate long-term sustainability, by reducing
and preventing corruption and unethical business practices that affect stakeholders' wealth
(Gompers, Ishii, & Metrick, 2003; Mensah, Aboagye, Addo, & Buatsi, 2003).
The SEC and the Ghana Stock Exchange (GSE) are primarily responsible for implement-
ing good corporate governance within listed companies. For example, the GSE recognizes the
need for an audit committee and provides guidelines for its composition and function. It also
identifies the importance of balancing the board members as executive and non-executive
members since the Companies' Code is silent about these issues. The ROSC (2005) reports
that aspects of the corporate governance regime are commendable. For example, the basic
shareholder rights are generally well observed and information is available in a timely and
regular manner. It is, however, noted that enforcement on other material facts of disclosure
and monitoring for content is lacking. Further, the ROSC observed lack of awareness of cor-
porate governance, lack of policy framework, enforcement and compliance issues, incompe-
tent governing boards, weak parliament, ministerial, and public oversight, and excessive
political interference (ROSC, 2005). Therefore, to ensure quality accounting and reporting
practices, corporate governance must be improved in Ghana, with regular review of the sys-
tem and legislation in place (Kyereboah-Coleman & Biekpe, 2005).
As part of the ongoing reforms, the Institute of Directors (IoD) of Ghana has issued a code
of best practice on corporate governance for companies, although it is not mandatory. The
IoD promotes the training of listed companies' directors but does not have a certification pro-
gram. Other organizations that are involved in fine tuning Ghana's corporate governance code
are the Private Enterprise Foundation, the Institute of Economic Affairs, the Ghana Centre for
Democratic Development, and the Commonwealth Association of Corporate Governance.
 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480 465

4. Environmental factors affecting the development of accounting in Ghana

It is often argued that accounting is a product of its environment, and, therefore, every set
of accounting practices is unique to its time and locality (Perera, 1989). The accounting prac-
tices of a country are influenced by a variety of environmental factors, including but not lim-
ited to: political, economic, educational systems, and international factors of the country
(Choi & Mueller, 1992; Mueller, 1968). These factors are examined to determine the influ-
ence on financial reporting practices in Ghana.

4.1. Political and economic influences

Archambault and Archambault (2003), among others (see Choi & Mueller, 1992; Mueller,
1968; Perera, 1989), find that social, political, and economic systems influence accounting
reporting and corporate disclosure practices of a country. This explains why there are varia-
tions in corporate disclosures practices across countries. Consequently, these national systems
are examined vis-à-vis their effects on disclosure practices.

4.1.1. Political system

It has been established that the political system influences the business environment, the
economy, and the accounting practices of a country (Archambault & Archambault, 2003;
Goodrich, 1986). McColm (1992) and Belkaoui (1983) reported that political freedom en-
hances disclosure and argued that political freedom is the people's right. Together with
economic freedom, political freedom helps create an environment conducive to better cor-
porate disclosure (see Deese, 1998).
Most African countries have experienced uncertainty as a result of unstable economic
and political systems, which affected important policies prior to 1990. Ghana experienced
such political instability after its independence, first as a one-party state during 1960s, fol-
lowed by repetitive military coup d'états and dictatorship, and intermittent civilian rule
(1966–1992), which affected its political direction. Even though Ghana did not suffer
from civil war like many other African countries, a lack of press freedom, of freedom of
speech, and of economic freedom, especially during the military rule, affected the coun-
try's socio-economic direction. It can be argued that the turbulent political system after in-
dependence until 1992 had failed to enhance information disclosure and good corporate
reporting. However, the stable, democratic political system in place in Ghana since 1992
has led to significant improvements in the country's accounting environment.

4.1.2. Economic system

A country's economic policies together with the common law legal systems greatly impact
business dealings (Doupnik & Salter, 1993). They form the framework that establishes how
companies relate to stakeholders (see Gernon & Meek, 2001; Mashayekhi & Mashayekh,
2008). The theory of accounting development links disclosure and economic environment
(Riahi-Belkaoui, 2002). There is a strong link between improved accounting and disclosure
practice on one hand and economic development on the other (Cooke & Wallace, 1990;
Nicholls & Ahmed, 1995). An improved accounting system creates a favorable business
466 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480

climate for domestic and foreign investments. This leads to economic growth, access to long-
term financing, and the development of the securities markets (ROSC, 2005).
A country's economic orientation, either macro (high government intervention) or micro
(less government intervention), determines how much and how freely information is
demanded and disclosed to the public (see Berry, 1987; Doupnik & Salter, 1993). It is argued
that market-based economies depend on a strong disclosure regime (Mensah et al., 2003).
From the characteristics expounded by Berry (1987), Doupnik and Salter (1993), and Mensah
et al. (2003), it can be argued that Ghana is a micro-based economy because the legislative
framework, accounting standards, and the accounting profession play more important roles
in the development of accounting regulations and practices than the central government.
Ghana, therefore, has an economic system that would encourage disclosure of quality
information.

4.1.3. The capital market in Ghana

The growth of the private sector hinges on capital markets (Pardy, 1992). If properly run,
these markets can increase inventors' confidence and thereby help attract capital for the devel-
opment of a country's economy. Well-developed capital markets promote good accounting
and disclosure practices (Adhikari & Tondkar, 1992; Gray, Radebaugh, & Roberts, 1990;
Pratt & Behr, 1987). They also oblige companies to make available to the public their annual
reports and financial reports (Camfferman & Cooke, 2002). Capital markets, therefore, pro-
vide monitoring and enforcement by sanctioning non-compliant companies.
The Ghana Stock Exchange (GSE) was formed in November 1990 and is governed by a
council. The number of listed companies has grown from 11 in 1990 to 35 in 2008 (Ghana
Stock Exchange Factbook, 2009). The reasons for this slow growth include: a lack of under-
standing of the stock exchange, limited knowledge, and low purchasing power among citizens
as a result of high inflation and high interest rates. The GSE has also seen significant capital
appreciation and index performance. With the exception of 1995 and 1996, which saw 6.3%
and 20% appreciation, respectively, there has been an average rate of capital appreciation of
70% since 1990 (Ghana Stock Exchange Fact Book, 2007). The GSE now features an Auto-
mated Trading System (ATS), and Electronic Clearing/Settlement complements the Depository
system. The GSE applies Continuous Auction Trading (CAT), and share prices are determined
by demand and supply. Nevertheless, short selling is prohibited. The three main methods of
gaining entry to the GSE are introduction, private placement, and offer to the public.
There is continuous strong improvement in trade volume and values. Primary market ac-
tivities have been ascending. The GSE's capitalization of GH¢11.47 billion (US
$2380 million) as of June 30, 2007 (Standard & Poor's, 2008) makes it one of the largest
in sub-Sahara Africa in terms of market capitalization (The World Factbook, 2007). The
Ghana financial market is dominated by the money markets, even though it is made up of
bonds, equities, and foreign exchange and derivative markets.
Despite the potential and recent achievements, the GSE is plagued with challenges and in
need of reforms. There appears to be weak institutional foundation, capacity issues, and en-
forcement gaps that need to be addressed to achieve the required standard (Senbet & Otchere,
2006). The ROSC (2005) stresses that improvement in Ghana's capital markets depends more
on increasing the institutional capacity of the regulators, administration, and judiciary than on
 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480 467

reforming the legal framework. An efficient and vibrant stock market will most likely lead to
quality accounting reporting and disclosure practices.

4.1.4. Privatization/diversification
Privatization has been established as a means of transferring ownership from the state to
individuals or organizations. It involves offering equities to the general public through initial
public offerings and/or selling via private negotiations, the whole or part of the enterprise,
resulting in an increase in the number of stakeholders (Boubakri, Cosset, & Guedhami,
2005). Consequently, this broad ownership leads to more transparent disclosure to stake-
holders about the performance of newly privatized entities (Chau & Gray, 2002). Privatiza-
tion also helps attract foreign direct investment because foreign investors demand
comparable corporate disclosure (Shehadi, 2002) to mitigate the information asymmetry
owing to the language and geography barriers (Huafang & Jianguo, 2007). Privatization
also compels governments to make changes in the legal framework and corporate governance
mechanisms to ensure quality corporate disclosure (Al-Akra et al., 2009). Consequently, pri-
vatization has a beneficial effect on corporate reporting via increased disclosures. Greater fi-
nancial disclosure is also linked with investors' protection (Jaggi & Low, 2000).
More than two decades ago, Ghana initiated a privatization program in order to improve
the efficiency and performance of some state-owned enterprises (SOEs). During that time,
the country diversified more than 300 of its SOEs, which had been a drain on the government
budgets. The divestiture took the form of privatization, joint venture, lease, liquidation, or sale
of shares (Adei, 2004). During the divestiture, many locals could not raise the needed funds to
acquire the companies. For example, the assets of the former Continental Hotel were sold to
Ghana Libyan-Arab holding Co. Ltd. for US$3,578,125. While 70% of the shares of Lever
Brothers Ghana Ltd. were sold to Unilever PLC for £3 million, the government of Ghana
retained 30%. Moreover, for £270,000, the GIHOC Glass Factory was leased to Tropical
Glass Factory. As recently as 2008, the government of Ghana relinquished 70% of its shares
in Ghana Telecom to Vodafone International Holdings B.V. for US$900 million
(£549 million) on a “debt-free, cash-free basis.” As a result of significant foreign invest-
ments through acquisition of SOEs, either fully or partly, it is expected that the quality
of reporting has increased since most of the acquirers are multinationals that maintain
up-to-date records and disclose more in order to meet the high standard of reporting in
their host countries (Street & Gray, 2002). The data for Ghana government's 335 divested
SOEs since 1990 appear in Table 3.

Table 3
Divestiture of State-Owned Enterprises (SOEs).
Source: DIC Fact Sheet (2004).
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Totals
Sale of assets 3 5 3 4 25 19 66 34 15 12 11 3 7 21 225
Sale of shares 8 3 6 3 8 1 1 5 3 3 1 0 1 4 47
Joint venture 0 1 2 0 7 1 3 1 1 0 0 0 0 0 16
Lease 2 0 0 0 2 0 0 1 0 1 0 0 0 0 6
Liquidation 21 3 2 3 7 0 1 0 2 2 0 0 0 0 41
Total 34 12 13 10 49 21 71 41 21 18 12 3 8 25 335
468 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480

4.1.5. Multinational companies

It has been argued that multinational companies (MNCs) provide more complete and
transparent accounting information than domestic companies (Cooke, 1989; Street &
Gray, 2002). As operators that raise capital in many different countries, MNCs are obliged
to disclose useful information to satisfy the demands of their international stakeholders in
order to provide bonding for resource providers and to obtain resources at lower cost. Fur-
thermore, the Organization for Economic Cooperation and Development (OECD) provides
guidelines on accounting and reporting practices in member countries of MNCs and mon-
itors for diversity or conformity of such practices. The large presence of MNCs in Ghana
(e.g., Unilever, Cadbury, Shell, Barclays Bank groups) greatly impacts accounting report-
ing and corporate disclosure practices (ROSC, 2005). It can be argued that with their large
capacity and their well-developed accounting systems, MNCs in Ghana may help to im-
prove disclosure through transfer of skills and technology. For example, a cursory look
at the annual reports of listed companies on the GSE establishes that MNCs prepare
their accounts based on the IFRS instead of the Ghana GAAP cal standards.
Despite the immense contribution by MNCs to accounting reporting and disclosure prac-
tices, there may be conflicts between MNCs and host countries. For instance, in Ghana, a con-
flict between the government and Vodafone International Holdings B.V. was resolved after a
committee set up by the government to investigate “perceived corrupt practices” in the deal
between the previous administration and Vodafone found nothing incriminating. The com-
mittee, however, recommended that the government re-engage with the management of
Vodafone International to ensure compliance with the country's laws. In such a situation,
the role of accounting is important because more transparent, reliable, and full and fair disclo-
sure is expected to reduce the tension and mistrust among stakeholders.
Foreign direct investment (FDI), which is a key ingredient in the development and sus-
tainability of economic growth, plays a crucial role in the economy of many emerging
countries. In an attempt to reduce the dependence on unreliable foreign donations, govern-
ments of developing countries now focus on FDI. The effects of FDI on the growth of the
economy, however, depend on many conditions, including well-developed and implemen-
ted policies, political stability, and economic growth potentials (UNCTAD Report, 2005).
Over the years, there has been an appreciable rise in FDI into Ghana as Table 4 shows.

Table 4
Annual averages of remittances and FDI (US$ million) 1987–2006.
Source: Various reports of Bank of Ghana, UNCTAD database, FDI/TNC database.
Year Remittances FDI Year Remittances FDI
1989 – 304.5 1999 637.9 1439.2
1990 410.5 319.3 2000 649.3 1605.4
1991 421.9 339.3 2001 978.5 1693.7
1992 470.2 361.8 2002 912.4 1753.6
1993 517.4 486.8 2003 1379.0 1859.2
1994 471.8 719.8 2004 1746.0 1998.4
1995 523.2 826.3 2005 2654.0 2143.2
1996 497.9 946.3 2006 3211.4 2779.9
1997 576.5 1028.1 2007 4501.0 3634.1
1998 751.0 1195.0 2008 5283.0 5755.0
 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480 469

Generally, FDIs, which may include remittances, come with high disclosure require-
ments from countries where high-quality disclosure is the norm. This puts pressure on
the recipient country (in this case, Ghana) to provide quality accounting reporting and cor-
porate disclosure practices.

4.2. Legal systems

Prior research on corporate disclosure suggests that common law countries generally
have legal systems that are strong enough to protect investors (Ball, Wu, & Robin,
2003; La Porta, Lopez-de-Salines, Shleifer, & Vishny, 1998). Legal systems, therefore,
shape the orientation of companies and accounting regulation. Consequently, common
law gives priority to individual rights as opposed to the state, because of its decentralized
nature. Common law systems assure that transactions are done between or among different
independent parties, hence, they lead to a high level of disclosure to the public (see Beck,
Demirgüç-kunt, & Levine, 2003; Ho & Wong, 2001; Mueller & Meek, 1997).
The scope of service provided by professional accountants is influenced by legislation
and case law (Bushman & Piotroski, 2006). Investors expect that their investments will
be protected against fraud and losses (Mensah et al., 2003). They also expect that if their
rights are violated they can seek satisfactory redress from the system. The protection of in-
vestors is, therefore, enshrined in the legal system that is efficient, effective, and swift.
Such a system is very significant in attracting investors and in providing capital for the de-
velopment of a country.
Ghana is a common law country; its legal system builds on the foundation of the British com-
mon law tradition supplemented by customary (written and unwritten) laws. Lopez-de-Silanes
(2003) suggests that countries with a common law legal framework are oriented toward quality
disclosure. It can be argued that since Ghana applies common law, it will have a better account-
ing and disclosure environment than code law countries within Africa.

4.3. Taxation

The issue of taxation in relation to the accounting and disclosure practices of a country is
worthy of examination. Tax legislation influences accounting and disclosure as revenues and
expenses are recorded for tax purposes. Since the state uses taxation as a source of revenue
from companies, there is the possibility of political cost, which can influence corporate disclo-
sure (Bushman & Piotroski, 2006). The fact that taxation is based on how much profit a com-
pany makes, management may seek to manipulate the system to reduce the tax obligation. In
this regard, the credibility of the financial reports and disclosure may be compromised. The
tax regime in Ghana is governed by various legislations, with the Tax Decree-SMCD 1975,
the VAT Act 546 of 1998, and the Income Tax Act 592 (2000) with Amendment 622
(2002) being the most important.
Ghana has tax rules that are separate from commercial rules (Osei, 2000). Companies
pay income tax on their profit shown in the annual financial report; failure to pay is a se-
rious breach of the law. The reports are prepared in accordance with the accounting stan-
dards as adjusted by any difference between accounting requirements and the tax law.
Ghana does not use tax-reporting procedures for financial reporting. Companies file a
470 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480

copy of their audited financial reports with the tax office; the tax on profits, which is cal-
culated on an accrual basis, is assessed according to certified financial statements. The re-
port on Ghana by ROSC (2004) suggests that most companies submit different sets of
financial statements for the Internal Revenue Service (IRS), credit institutions, and the gen-
eral public. This creates opportunities for accounting manipulation to suit each stakeholder,
as in the case of Turkish (Nashui, 1984) and Pakistani companies (Ashraf & Ghani, 2005).
Such a practice does not encourage quality disclosure. Another tax system that is being
implemented in Ghana is the avoidance of double taxation. This system is expected to re-
duce tax avoidance via manipulating accounting numbers.

4.4. Business ownership and organization

The extent of financial disclosure can depend on business ownership. Businesses in Ghana
fall into the following categories: limited and unlimited liability companies, partnerships,
joint ventures, branches of external companies, and sole proprietorships. An African Peer Re-
view Mechanism (APRM) 2 reports that the business community in Ghana is dominated by
the informal sector and, hence, may result in low disclosure as this sector is neither well mon-
itored nor accountable (CSAR, 2005). Concerns over loss of control, cost of listing, and other
challenges keep most companies away from listing on the stock exchange. Moreover, in the
formal sector, most companies have large (block ownership) shareholders which are mainly
institutional, and may lead to low disclosure (Tsamenyi, Enninful-Adu, & Onumah, 2007).

4.5. Educational systems for accounting profession

The accountancy profession is a crucial institution for the development of accounting, fi-
nancial reporting, and auditing practices (Ali & Ahmed, 2007), and high-quality education
and training are instrumental in the development of the accountancy profession (Doupnik
& Salter, 1995). A high level of professional education leads to better understanding and prac-
tices of accounting standards. If the general level of education is high, a high level of profes-
sional education can also be achieved.
The quality of Ghanaian accounting education depends on the few professional institutions,
such as the Institute of Chartered Accountants, Ghana (ICAG), an institution established by an
act of Parliament to regulate the accounting profession. The ICAG ensures that professionals
acquire the appropriate education and practical experience in order to be qualified as a practic-
ing accountant or auditor. An individual must pass the ICAG exams or obtain an equivalent
foreign qualification from either the Association of Chartered Certified Accountants
(ACCA), the American Institute of Certified Public Accountants (AICPA), the Institute of
Chartered Accountants of Scotland (ICAS), or the Institute of Chartered Accountants in
England and Wales (ICAEW). An individual must also have at least 4 years of practical
relevant experience working under a qualified practicing accountant. The practicing cer-
tificate is subject to annual review with the payment of annual fees.
2
APRM is an African development framework that offers a unique approach to the monitoring of agreed norms
of political, economic, and corporate governance in Africa.
 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480 471

Although Ghana has 5 public universities, 21 training colleges, 18 technical institutions,

and 503 senior secondary schools, the World Bank observed that the Ghanaian accounting
studies in the secondary schools, colleges, and the universities were too basic (ROSC,
2004). It also noted a lack of centrally coordinated curriculum and a lack of strong teaching
methodology as well as weak critical thinking skills by students. In response, the Institute
of Professional Studies (IPS), a private initiative that was later adopted by the government,
provides accounting tuition for students (Mantey, 2007). This prepares students for the
local ICAG exams and other professional exams, such as the Association of Chartered Certi-
fied Accountants (ACCA) and the Chartered Institute of Management Accountant (CIMA)
(which is independent of the ICAG). Its curriculum emphasizes teaching, learning, and re-
search opportunities for students to develop analytical skills in problem solving. Through
this innovation, students acquire professional accounting and auditing skills, and practical ex-
periences (IPS, 2005). Although other consulting firms help students prepare for professional
examinations, the ICAG is the sole body responsible for regulating and conducting exams.
The professional education and training for accountancy is saddled with a number of diffi-
culties. The proscribed curriculum for educating and training professional accountants and au-
ditors does not fully meet the International Federation of Accountants' (IFAC) International
Education Standards (IES). For example, components such as corporate governance, organiza-
tional and business knowledge, and quantitative methods are not taught separately as required
by IES 2. Hence, the acquisition of professional skills requirements is in jeopardy (ROSC,
2004). The ICAG should be empowered to structure the right curriculum to satisfy the IES.
The institution must also work to attract and develop its professional base by promoting and
lobbying for competitive reward and remuneration for its members. This would improve the
reputation of the ICAG and put it in a position to champion good financial reporting and dis-
closure (ROSC, 2004).

4.6. The accounting/auditing professions

To a large extent, the quality of financial reporting depends on the strength, size, compe-
tence, adequacy, and effectiveness of the accounting profession (Ali & Ahmed, 2007). It has
been argued that a well-developed accounting profession leads to improved, judgmentally
based public accounting systems rather than centralized and uniform systems (Radebaugh
& Gray, 1993). The ICAG, which regulates Ghana's accountancy profession and develops
and issues financial accounting standards, was established with British influence of self-
discipline and professional ethics. The ICAG is the sole institution with the right to award
Chartered Accountant designation to qualified members.
Since ICAG members are recognized under the Companies' Code to engage in audits of
companies' accounts in Ghana, it also issues licensing authority to qualified members. The
ICAG also expects its members to follow the code of professional conduct, which is based
on the abridged version of the IFAC code of ethics, and has the power to discipline those
who violate the code. The ICAG is governed by an eleven-member council, four of which
are appointed by the sector minister (Ministry of Education-Government). The ICAG also
is the legal authority that is responsible for setting audit and other assurance standards. It
does this through one of its divisions: the Ghana National Auditing Standards Board.
472 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480

Despite this authority, the ICAG faces constraints, including: limited financial re-
sources, operational difficulties, and a lack of adequate capacity to monitor, investigate,
and discipline members who do not comply with the existing standards and code of ethics.
Another challenge is a shortage of qualified accountants. For example, the ICAG estimates
that Ghana needs about 8000 accountants for its growing economy. However, the nation
has only about 3000 accountants, with a small percentage of them in public practice. For
this reason, many companies rely on less-qualified persons to hold accounting positions,
which invariably affects the quality of financial reporting and subsequently disclosure.
The ICAG, therefore, must be strengthened to adequately function as an effective profes-
sional accountancy body. Financial resources and logistical concerns must be addressed
to overcome operational difficulties. It is also critical that legal requirements and guidelines
are in place to ensure that members follow the code of professional conduct.

4.7. The role of international donor agencies

Ghana depends largely on the World Bank (WB) and the International Monetary Fund
(IMF) for economic reforms (e.g., Economic Recovery, Structural Adjustment Programs,
and Heavily Indebted Poor Countries initiatives (HIPC)). In addition to the WB and the
IMF, Ghana also relies on such international bodies as the European Union (EU), the Af-
rican Development Bank (ADB), the French development agency in Ghana (AFD), and
other donors for financial assistance in balancing their deficit budgets. These bodies re-
quire transparent and quality disclosure in terms of accounting practices. Ghana, therefore,
has little choice but to improve its accounting practices to be able to access such assistance.
Ghana is also a member of a number of international bodies, and about 48% of the accoun-
tants in Ghana hold foreign accountancy qualification and are foreign trained. Again the
majority of auditors for the listed companies are from the Big 4, all of which put pressure
on Ghana to have good accounting and disclosure practices.

5. The institutional framework for accounting and corporate reporting

The regulatory framework governing the commercial aspects of auditing and financial
reporting in Ghana emanates from the Companies' Code, Act 179, Accounting Standards,
and regulations promulgated by the SEC and the GSE. All entities, both public and private
companies, incorporated under the law of Ghana must comply with these requirements.
Public companies are required to prepare quarterly financial statements and yearly re-
ports and accounts and disseminate the audited accounts to their members (IFAC, 2006).
Companies whose shares or debt are publicly traded under the Securities Exchange Com-
mission Regulations (2003) and Securities Industries Law (1993) are further mandated to
comply with the SEC's rules of disclosure. The SEC's financial reporting requirements
are, however, inconsistent with the Companies' Code and the listing rules (ROSC, 2004).
There is no clear guide in the Companies' Code as to which standards to follow in the
preparation and audit of annual financial statements (ICAG, 2000). Although the SEC re-
quired companies (for external purposes) to submit audited financial statements in accor-
dance with the GAS within 3 months of the year-end, a review of the various corporate
annual reports reveals that some companies comply with either IAS or IFRS instead of
 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480 473

GAS (ICAG, 2000). In addition to the SEC's regulations, the Bank of Ghana regulates fi-
nancial reporting and auditing of banks and non-banking financial institutions using the
Banking Law (1989) and the Non-Banking Law (1993), respectively. While the National
Insurance Commission regulates the financial reporting practices of insurance companies,
the unit trust and mutual funds are regulated by the Unit Trust and Mutual Funds Regula-
tions (2001). The SOEs lack a single statutory accountability regime that covers account-
ing, auditing, financial statement preparation, and other basic reporting requirements.
The auditor general, who is responsible for the audit of SOEs, appoints external auditors
from either the private independent firm or the State Audit Service, which may jointly audit
the entity. On the other hand, private companies are to comply with the Companies' Code
disclosure requirements and Ghana National Accounting Standards. The Companies' Code
requires that every company shall present audited accounts to be sent to every member of
the company. The Ghana National Auditing Standards must be followed in the auditing of
companies' accounts.
Fig. 1 illustrates the institutional framework of accounting and disclosure practices.

6. Due process of accounting standards

Quality financial reporting depends to a large extent on how well standards are set and
enforced by a recognized qualified institution. The process and procedure of setting standards
must be adequate and acceptable by international standards. The Ghana National Accounting
Standards Board (GNASB) was established by the ICAG to develop, adopt, and publish ac-
counting standards and to promote their acceptance. The 16-member board is represented by

Fig. 1. The accounting framework in Ghana.

474 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480

the Ministry of Finance, the SEC, the GSE, Audit Service, Institute of Taxation, the Academia,
the Ghana Bar Association, and other identifiable bodies. In 2001, the ICAG also established
the Ghana National Auditing Standards to guide practicing auditors in ensuring the adequacy
and compliance of financial statements and reporting disclosures with GNAS (ICAG, 2000).
Apart from publishing and enforcing its own standards and guidelines of IASC, the
GNASB also sets standards, reviews, updates, and interprets standards for accounting
and auditing practitioners. The standards are to reflect national pride and both political
and national freedom and are to address specific country needs. The board reviews the
standards periodically and provides guidelines to practitioners as deemed appropriate.
If the GNASB agrees that a subject meets its criteria for discussion, a group of experts
determines how and why the subject is important. Once a decision is made concerning the
subject to be examined, a steering committee is appointed and terms of reference are given.
Research is conducted on the subject, and all the facts and alternatives about the subject are
assembled by the steering committee. This research is published in the press and circulated
for relevant interested groups of the public for 60 days. During that time, the relevant bod-
ies and members of the public can comment and respond to it. The steering committee then
evaluates the responses received from the public. An approval on the basis of a two-third
majority vote of the board members present leads to an exposure draft (ED, a tentative
standard), which is issued to the public domain for comments. This is accompanied with
a discussion paper. After a consideration of the responses received from the public to the
ED, it may be revised accordingly. The ED is then sent to the board for its approval,
and a standard is prepared. In the event that the board is not able to secure the requisite ma-
jority votes for the draft, a second ED is issued or a hearing may even be organized for fur-
ther public input. On the other hand, a simple majority vote of the Board will prompt
issuance of a discussion paper, meant to encourage further public evaluation, and then pos-
sible determination of a standard. The standard, which is accompanied by a summary of
significant issues and impact analysis where possible, is then submitted to the board for
its review. Once the board is satisfied with the procedure and other issues, the standard
must be approved by a 75% majority for the final standard to be issued. The procedure
and due process for setting and establishing accounting standards in Ghana are in need
of a complete overhaul for business and economic advancement (Appiah-Sokye, 2007).
There are claims that some governments and companies influence or lobby their
standard-setting bodies, that some special interest groups influence the accounting
standard-setting process (see Chung, 1999; Nashui, 1984; Sutton, 1984; Zeff, 2005), and
that there is even international lobbying on the IASB to sway standard settings (Zeff,
2006). However, there is no evidence of government manipulating or companies lobbying
the process of standard setting in Ghana.

7. The adoption IFRS in Ghana

Many developing countries adopt IFRS in full or part to be accepted in the international
community and to prevent the problems that arise where there is a limited resource in terms
of human, technical, logistics or otherwise to prepare national standards (Ashraf & Ghani,
2005; Ball et al., 2003; Saudagaran & Diga, 1997). Until 2009, the accounting practices in
 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480 475

Ghana followed GAS, which were meant to reflect IAS. However, GAS differed signifi-
cantly from IAS, as Table 5 demonstrates.
In addition to the differences shown in Table 5, there was no equivalent GNAS for the
following: IAS 19, Employee Benefit; IAS 32, Financial Instruments: Disclosure and Pre-
sentation; IAS 33, Earnings Per Share; IAS 34, Interim Financial Reporting; IAS 35, Dis-
continuing Operation; IAS 36, Impairment of Assets; IAS 37, Provision, Contingent
Liabilities and Contingent Assets; IAS 38, Intangible Assets; IAS 39, Financial Instru-
ments: Recognition and Measurement; and IAS 41, Agriculture. It can be argued that the
GAS was outdated from inception since the ICAG had no clear legal mandate to set nation-
al accounting standards (ROSC, 2004). However, the Chartered Accountant Act (1963),
Act 170, mandated ICAG to set auditing standards, which later resulted in the formation
of NAS. Both the GAS and NAS were to reflect IAS and ISA, respectively, although a
number of standards made compliance difficult. For instance, despite the extensive revi-
sion to the IAS, the GAS was never updated. The ICAG still has the 28 standards it has
had since inception in comparison to the over 40 in IAS. The absence of IAS 41 relating
to Agriculture in the GAS is noteworthy for an agrarian economy like Ghana.
Moreover, none of the 15 International Auditing Practice Statements issued by IFAC
has been adopted in Ghana's NAS (e.g., ISA 240, Auditor's responsibility to consider
fraud and error in an audit of financial statements; and ISA 700, Auditor's report on finan-
cial statements). Furthermore, there is no Ghanaian equivalent for ISA 100, Assurance En-
gagements; ISA 120, Framework for International Standards on Auditing; ISA 260,
Communications of Audit Matters with Those Charged with Governance; ISA 402,
Audit Considerations Relating to Entities using Service Organizations; ISA 505, External
Confirmations; ISA 710, Comparatives; and ISA 910, Engagements to Review Financial
Statements. Consequently, the majority of auditors of listed companies claim that they fol-

Table 5
Comparing the national and international standards.
Source: ROSC (2004).
Items National (GAS) International (IAS/IFRS)
Framework for the Omitted (several sections) Required
preparation of financial
statements
Statement of changes Not required; however, Companies' Required
in equity Code requires capital surplus and
income surplus accounts
Changes in accounting Certain changes should be included in Requires adjustments in opening
policies extraordinary in the current period balance of retained earnings
Minority interest Omits on the income statement Required
Deferred income tax Requires deferred tax assets and Requires recognition of deferred
liabilities, only for timing differences tax assets and liabilities for all
relating to depreciation temporary differences
Segment reporting No requirements Require to identify reportable segments,
disclose reportable segment revenue/expense/
results, assets, liabilities
Borrowing costs/ Omitted Required
capitalization
476 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480

low ISA rather than NAS (ROSC, 2004, p. 15). It is also observed that the ICA of Ghana
and the GNASB are neither addressing revision and updating of the standards nor bringing
the procedures and processes in-line with international standards.
In the light of this disparity and in order to eliminate the gap that exists between the na-
tional and the international standards, Ghana has moved away from just adaptation to
adoption of IFRS, a process that started from January 2007. The adoption of the IFRS as
a common yardstick for financial reporting is to aid global understanding of Ghanaian fi-
nancial statements. The transition from the use of GAS to IFRS started with public compa-
nies, banks, and insurance companies. However, small- and medium-sized private
enterprises as well as government ministries, departments, and agencies in the public sector
didn't begin the adoption process until January 2009.
Even though the adoption of the IFRS is a bold initiative, it is not a panacea for good
financial reporting or disclosure. It is critical that the ICAG facilitates continuous education
for its members, teachers, analysts, and the general public on the effects of IFRS and its
application. A review of companies' laws and accounting policies is also crucial to ensure
that IFRS provides the necessary benefits.

8. Enforcement and compliance with accounting standards

The adequacy of the institutional and statutory framework, the level of development of the
accounting profession, and the roles played by standard-setters and enforcers are paramount
to the development of accounting practices and indeed the disclosure system (ROSC,
2005). Fig. 1 illustrates the various institutions and regulatory frameworks that shape account-
ing practices and disclosures in Ghana. The technical and logistical capacity to review finan-
cial statements and to detect accounting/auditing violations is lacking even at the Registrar-
General Department. The Registrar-General has the legal authority to sanction companies
for non-compliance, but the timely filing of annual financial statements of non-listed public
and private companies is not enforced. The SEC/GSE are to monitor the listed companies
for compliance and timely submission.
Furthermore, these institutions lack the capacity and resources to effectively undertake
their mandated work. However, it can be argued that monitoring and control of insurance
companies and banks by the National Insurance Commission and the Bank of Ghana, respec-
tively, are better than the monitoring of other listed companies. This is due to the fact that
there are additional regulations and a second body that oversee the operations of insurance
companies and banks. Examples of such regulations are the Bank of Ghana Act, 1963 (Act
182), the Banking Law of 1989 (PNDCL 225), and the Financial Institutions (non-Banking)
Law 1993 (PNDCL 328). The ICAG has no effective and efficient mechanism to ensure com-
pliance with auditing standards and professional code of ethics. The ICAG faces difficulties
and challenges in monitoring and enforcing compliance of accounting and auditing standards.

9. Conclusion

The accounting and reporting practices in Ghana are significantly influenced by not
only regulatory and institutional frameworks within the country but also legal, political,
and economic factors. This is consistent with the previous literature that supports the
 O. Assenso-Okofo et al. / The International Journal of Accounting 46 (2011) 459–480 477

link between political system, economic development, corporate ownership structure, and
foreign trade affecting disclosure practices. We also find that even though Ghana has stan-
dards and laws in place to ensure quality accounting and disclosure practices, some regu-
lations and requirements need to be updated to reflect the dynamic nature of the global
market. The Companies' Code is outmoded and requires a review. The legal framework
must be able to empower bodies tasked with the responsibility of regulating the corporate
bodies to operate efficiently. The prevailing conditions suggest that improvements in the
quality of accounting and financial reporting system can help accelerate economic devel-
opment in Ghana.
Despite a number of positive measures taken by the government to improve the disclo-
sure and compliance regime, some of the Ghanaian institutions are still very weak in mon-
itoring and enforcement of compliance. The GSSE should address the bottlenecks that
hinder its growth (especially, the number of listed companies) in order to strengthen and
improve its performance. Consequently, the market will be more efficient and vibrant
and could lead to quality accounting reporting and disclosure practices.
The ICAG should be resourced to strengthen the standard-setting tradition. The
Registrar-General should have the technical, logistic, and human resources to perform its
monitoring and enforcement roles effectively and efficiently. A well-established institu-
tional and regulatory system will promote effective control, stringent monitoring, and effi-
cient performance of the accounting and disclosure practices in Ghana. Even though Ghana
has adopted IFRS, it must be stressed that without an overhaul of the institutions that im-
plement accounting regulations and the revision of the companies' laws and accounting
policies, disclosure practices will not improve since regulation alone is not the panacea.
We recommend that urgent measures be taken to reform and build the capacities of the in-
stitutions charged with the responsibility of regulating and monitoring Ghanaian account-
ing and disclosure practices to ensure best practices.

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