Modern Ghana logo

FEATURED: [trailer] Anas To Drop Shocking Video On Children At Orphanage Eating ...

body-container-line
12.04.2007 General News

Re-Denomination Of The Cedi Is The Value Really The Same?

During the re-denomination period all outstanding cedi purchase orders (PO) are to be converted to the new Ghana cedi. For those whose status is completed, any action may affect goods received module and the related invoices.

In some computerised systems, any modification of the PO will further require approvals in the system causing delays. In other cases any modification of the POs will create a new transaction with its associated audit issues

Accounts Payable Sub Systems

The guidelines issued by the Bank of Ghana require that all unpaid invoices be converted into Ghana cedi. This implies the need to alter the invoice values in computerised accounting systems to reflect the new Ghana cedi.

The trouble is that what will happen if that invoice has a related system generated by the POs? Again, what happens to those invoices for which the customer has already made part payment in cedis?

The following are some of the invoice categories that various organisations may be required to deal with. As a result of the re-denomination, each may require a careful treatment of the general ledger imbalances.

• Unapproved invoices in the accounting software

• Approved but unpaid invoices

• Mismatched invoices in the accounting software

• Retained invoices

• Prepaid invoices

Fixed Assets Sub System

The re-denomination will imply the need to alter the cedi value of fixed assets stored in a computerised accounting system. Changes on fixed assets values have direct impact on both accumulated depreciation and depreciation expense.

The Bank of Ghana's technical guideline requires that assets on balance sheet be converted to the new Ghana cedi. In some applications, such changes may not automatically change the related depreciation and hence there will be inconsistencies.

In other instances, this conversion can affect the supporting documents such as purchase orders and invoices.

Reports

Many reports generated from computerised accounting systems are based on aggregation. This can be misleading if nothing is done to these reports. If care is not taken, the system will merely add the old balances in cedis to the new transactions in GH¢ to give a misleading results on the reports e.g. ¢10000 + 1GH¢ = 10001.

Rounding rules

To prevent profit making during the introduction of the new Ghana cedi, there is the need for organisations to ensure that the rules as set by Bank of Ghana are implemented in their accounting systems.

Most computerised applications in Ghana have been set to two decimal places, and in some cases, the systems are set to round decimals to the nearest whole number.

In that case, new Ghana cedi of 1234.4444 will normally be entered in some systems as 1234.44 or in some cases 1234. In the existing currency regime, the decimals can be ignored since they are not very significant. This cannot be so when the new Ghana cedi is introduced and should be entered as 1234.4444.

It is very important that all affected organisations come up with an action plan to deal with the issues raised in this article and other related issues that affect their organisations, preferably before July 2007.

The timing is also very crucial since most managers would not want to shut down operations just to fix data processing errors during the re-denomination period.

It is obvious that systems consultants are going to be engaged in fixing these issues for organisations that are proactive and therefore getting one will be difficult during the re-denomination period.

It must be emphasised for some organisations the volume of work required will be overwhelming. Therefore, budgeting for this one-off event will be better than simply ignoring these issues only to wake up on July 2007 to realise that after all the value is not the same in computerised accounting systems.

body-container-line