The World Bank has expressed willingness to assist Ghana to implement a comprehensive programme to strengthen the corporate, financial and audit reporting regime in the country.
The bank will also help in building the capacity of professional accountants in line with international standards.
This follows a study commissioned by the bank in consultation with the government to find out how Ghana's corporate society is observing standards and codes of ethics in financial and audit reporting.
The Report on Observance of Standards and Codes (ROSC)-Accounting and Auditing for Ghana review exercise was an assessment of the degree to which the country observes internationally recognised standards and codes in reporting and auditing.
It is also part of a worldwide assessment programme prompted by recent financial crises in the world.
The study examined the financial reports of all listed companies, six financial institutions, an insurance company, regulators and professional accounting bodies among other groups.
The Programme Manager of ROSC, Mr Zubaidur Rahman, said at a roundtable discussion on the findings in Accra on Tuesday that the statutory framework of accounting reporting must be improved to conform to world standards.
That, he said, was necessary to improve economic performance, develop the capital market and bolster investor confidence in the economy.
Mr Rahman said a proper accounting and auditing reporting was also vital for regulating the financial sector, as only the market forces were not satisfactory.
He stated that conforming to proper and international accounting standards would do away with some of the ethical issues such as a firm preparing the financial statement for a corporate entity and also auditing it, adding that avoiding that would lead to increased tax revenue for the government.
“Auditing must first be seen as a profession and not as a business. This way, auditors will be able to protect the public interest and shareholders,” he stated.
A Senior Financial Management Specialist, Mr Frederick Yankey of the World Bank (Ghana Office), who presented the findings of the report, said the study found a number of weaknesses in the legal and regulatory framework and in the auditing firms as well as companies themselves.
For example, while the reporting requirements of the Companies Code of 1963 were outdated compared to present day internal practices, the Securities and Exchange Commission, the National Insurance Commission, and the Institute of Chartered Accountants Ghana (ICAG) had a number of regulatory and enforcement inadequacies that diluted their effectiveness.
Those regulatory bodies also lacked the financial resources to do effective on-site and off-site supervision and most of their sanctions were also not punitive enough, Mr Yankey pointed out.
The report said while the Bank of Ghana conducted a good supervision of the banking, it did not specify any financial reporting standards for non-financial institutions.
Mr Yankey said education and training of professional accountants did not fully meet international standards.
The study, therefore, recommended improvement in the statutory and regulatory framework of accounting reporting in the country and the enhancement of the capacity of professional accountants.
It also recommended the harmonisation of all legal requirements on accounting reporting and auditing that were spelt out in different legislations.
Also, there was the need for an independent regulatory body to be called the Financial Reporting Council that would regulate the financial reporting of all listed companies, non-bank financial institutions, banking institutions, insurance companies and other corporate entities.
Mr George Winful of the Audit Service, who presented the recommendations, said the council should be adequately funded for it to discharge its duties effectively.