Joseph Mensah Onumah

Disclosure and corporate governance in developing countries: evidence from Ghana

Purpose – Following previous studies the paper seeks to use disclosure scores to examine corporate governance practices of Ghanaian listed firms. The study is motivated by the dearth of literature on corporate governance practices in the developing world despite the increasing interests in the topic in both the developed and the developing world.Design/methodology/approach – The data for the analysis are gathered from 22 listed companies on the Ghana Stock Exchange (GSE representing 95 percent of the Ghanaian market capitalization). The paper also examines the extent to which factors such as ownership structure, dispersion of shareholding, firm size, and leverage influence disclosure practices.Findings – Consistent with findings reported in studies from other developing countries the study finds that the level of disclosure in Ghana is low. Furthermore, ownership structure, dispersion of shareholding, and firm size (measured as total assets and market capitalization) all have significant effect on disclos...

Knowledge and Skills Development of Accounting Graduates: The Perceptions of Graduates and Employers in Ghana

Accounting education has come under criticism over the past two decades for failing to meet the demands of the changing business environment. This paper presents the results of a survey of accounting graduates and employers from Ghana on the accounting knowledge and skills required by graduates. We examined both the professional and information technology (IT) skill requirements of the graduates. These skills are relevant to preparing the graduates for careers as professional accountants. Analytical/critical thinking was rated as the most important professional skill by both the employers and the graduates. In terms of IT skills, the use of spreadsheet packages was rated by both groups as the most important skill. The only significant differences between the two groups were the IT skills in word-processing and Windows. The findings of the paper have implications for accounting education in Ghana and in other developing countries.

The influence of social and political relations on corporate governance systems: The case of rural banks in Ghana

Purpose of paper – Rural Banks (RBs) are unit banks owned by members of the rural community through the purchase of shares and are licensed to provide financial intermediation in rural areas of Ghana. This paper reports on the external and internal mechanisms through which corporate governance is maintained in these banks. Design/methodology/approach – The findings reported in the paper are based on evidence obtained from a review of relevant documents and interviews with the managers of selected RBs. Findings – The corporate governance system in the RBs is mainly a rational western model recommended by the World Bank and implemented by the Central bank of Ghana. Under this model corporate governance is expected to be maintained externally through regulatory agencies (the Central Bank of Ghana and the Association of Rural Banks) and internally through the respective Boards of Directors. However, we observe that because of the locations and ownerships of these banks, board appointments and decisions are often embedded in local political and social relations. This affects the independence of the boards and impacts on their role in maintaining corporate governance. Research limitations/implications – We argue that any attempt to design corporate governance systems in these banks without taking these social and political factors into consideration is likely to lead to failure. This is particularly important given that the World Bank and other international donors are continuously proposing rational western models of governance to institutions in the developing world, such as the RBs. Given that these organizations operate under different sets of environmental conditions, there is likely to be differences between the actual and the idealized corporate governance systems. Originality/value of paper – The study is important because of the role the rural banks play in the socio-economic development of Ghana. Several other developing countries have established similar institutions to support the development of the informal sector through the provision of microcredit. The research will contribute to the design of appropriate corporate governance systems so as to improve the overall contributions of these institutions.

Barriers and Catalysts to Effective Internal Audit in the Ghanaian Public Sector

Purpose – The purpose of the study is to investigate the role of the internal audit function in the public sector entities in Ghana and the factors limiting the effectiveness of internal audit in the sector. Design/Methodology/Approach – The study collected the data from 120 internal auditors in 40 ministries, departments and agencies (MDAs) through a self-administered questionnaire. A semi-structured interview with a senior manager of the Internal Audit Agency, the oversight body was also carried out as a follow up. Findings – The scope of internal audit services in the sector is limited to regular audit activities, mainly pre-audit of payment vouchers which take estimated 74% of the average productive audit time. The effectiveness of internal audit in the Ghanaian public sector is hampered by several factors: low professional proficiency of internal auditors; lack of management ownership and support for internal audit activities, lack of budget authority of the internal audit units and weak functioning of audit committees, among others. Some remedial programmes are ongoing. Research limitations – Inherent in the study result is the limitation associated with non-probability sampling methods because of the use of purposive sampling technique to select the internal auditors and the organisations. Practical implication – The result of the study may have policy implication for government in the design of programmes for improving the effectiveness of internal audit as an element of public financial management reforms. Originality/Value – Despite several studies on internal audit effectiveness in the public sector organisations, none relates to Ghana. This study fills the gap.

THE AUDIT EXPECTATION GAP CONCEPT: EXAMINING VIEWS ON AUDITORS' REPORTS FROM GHANA

Purpose – The audit expectation gap has been the subject of research in many countries and in different forms. However, such research of the nature and dimensions of the gap has been limited, if done at all, in the developing countries of West Africa. This study assesses its existence and investigates the factors that have been influencing it. Design/methodology/approach – Survey responses from questionnaires administered to preparers and users of audited financial statements were analysed. Findings – Financial statements users have significantly different perceptions about assurances provided by auditors’ reports, whereas the views of company accountants are quite close to those of auditors. Originality/value – Although the validity of the results of this for international comparison may be limited by the number of financial statements users covered and the socio-cultural characteristics of the Ghanaian business environment, it should be recognised as one of the few to investigate the existence and nature of the expectation gap in the context of a developing country in the West African subregion. It thus adds the literature and points to the need for the adoption of multidisciplinary measures by the accounting profession and financial statements users with the view to eliminating or at the least minimising its persistence and escalation among the various relevant players.

Exploring the Disclosure of Intellectual Capital in Ghana: Evidence from Listed Companies

Intellectual Capital (IC) has become a prominent feature of business transactions and discourse. The rising interests in IC and Intellectual Capital Disclosure (ICD) issues in both developed and developing countries have necessitated insightful studies. This study explores ICD in Ghana and seeks to contribute to fill the dearth in the literature on ICD from the perspective of developing countries. The study examines the ICD of 25 companies listed on the Ghana Stock Exchange (GSE) over a five-year period (2006-2010) through content analysis of their corporate annual reports. The study revealed that the ICD level in annual reports in Ghana is quite high and descriptively reported and though disclosure of IC is improving but at a relatively marginal rate. Therefore looking at the trend of ICDs by the companies, the study recommends the need for accounting regulatory bodies and oversight agencies (local and global) to develop specific standards or guidelines on identifying, measuring and reporting IC. This paper is one of the few studies to have investigated the disclosure of IC in corporate annual reports in Ghana.

Effectiveness of Internal Control Systems of Listed Firms in Ghana

Purpose – This study examines the effectiveness of internal control systems of listed firms in Ghana. The recent (especially international) financial reporting scandals have caused regulators to place a lot of attention on internal control systems as a mechanism that could help improve the quality of financial reporting. Design/methodology/approach – The study examined annual reports of a sample of 33 firms listed on the Ghana Stock Exchange. In measuring the level of internal control effectiveness, 23 items relating to internal control categorised under control environment, information and communication, risk assessment, control activities and monitoring were operationalised and the effectiveness score was determined based on the items. Findings – Overall internal control system showed an average level of effectiveness in this study, which implied an overall low level of effectiveness. Of the five categories assessed under internal control system, control environment showed a higher level of effectiveness. Originality/value – The study makes a contribution to the academic research activities relating to internal controls in Ghana. Limitations – Inherent in the measurement process is an element of estimation error as a result of the use of subjective judgement for some items operationalised in assessing internal control effectiveness.

Risk disclosures in the annual reports of firms in Ghana

This study examines risk disclosure of firms on the Ghana Stock Exchange (GSE) pre and post adoption of IFRS. Despite calls for the study of risk disclosure in different cultural context, the effects of IFRS adoption on risk disclosure remain an issue. Content analysis is employed to examine the annual reports of listed firms from 2004 to 2011. A paired t-test is then used to test the differences in risk disclosure pre and post IFRS adoption. To assess the reliability of the results, the study also employed a regression model to test the effect of IFRS adoption on risk disclosure. The study reveals that the amount of risk information disclosed by listed firms in Ghana is low although there have been significant improvement after the adoption of IFRS. The study contributes to the debate that the adoption of IFRS leads to improvement in financial reporting from a developing country context.

The Banking Industry Requirements of Accounting Graduates in Ghana

Purpose – This study analyses the various skills needed by todays accounting graduates in order to be suitable for the Ghanaian banking industry. Design/methodology/approach – The study adopted a simple random sampling technique to select 15 of the 27 banks currently in the banking industry, a sample selected as first part of a total banking industry study. Questionnaires were used, supported with interviews, to collect the data from the responding 13 banks. Findings – The study revealed that variables (in order of preference) such as; positive attitude, communication skills, strong work ethics, team work, good interpersonal skills, analytical and problem-solving skills, flexibility and adaptability, management and organizational skills and strong IT skills are some of the key skills employers expect accounting graduates to have in order for them to be deemed ready for the banking industry. Research limitation – The only targeted respondents were the human resource and branch managers. The result could have been different if the sample had been widened to cover a greater number of the banks in the industry and included other responding groups like accountants. Practical implications – The findings offer guidance to those involved in the training of accountants in tertiary institutions and graduates of accounting seeking to develop skills necessary for the banking industry. Originality/value – This is a major contributor to skills-analysis-requirement of specific jobs, looking at the banking industry. The case can be extended for other job-specific industries like insurance.

Ethics and Accounting Education in a Developing Country: Exploratory Evidence from the Premier University in Ghana

Purpose – This chapter examines the extent to which ethical issues are integrated in accounting education at a university in a developing country. It also explores the perception of a broad spectrum of stakeholders on the need to integrate ethics into the accounting curriculum. Methodology/approach – The study adopts multiple data collection tools. Questionnaires were predominantly used to solicit information from students, faculty and alumni of University of Ghana Business School (UGBS) as well as accounting firms. There was a content analysis of the course outlines of the accounting major subjects. In addition, policy makers and a professional accountancy body were interviewed to obtain additional insights. Findings – The accounting course outlines reveal limited ethical issues; confirmed by majority of respondents that the level of ethics in accounting education is woefully inadequate. With regard to integrating ethics, there was consensus among stakeholders. Accounting firms argue that ethical issues are crucial to the practice of accountancy, thus the need for their integration into the curriculum. Moreover, the dearth of ethics in the curricula of universities in Ghana is attributed to the limited collaboration between academia and professionals. Research limitations – This study focused on only one university, and some aspects of ethics in accounting education; not examining the quality of ethics, how and at what level it must be taught, and therefore generalising the findings must be done cautiously. Practical implications – The varying stakeholders’ perceptions offer invaluable suggestions for managers and policy makers in developing the human resource for accountancy in Ghana and possibly, other developing countries. The need to reconsider ethics fully is overwhelming. Originality/value – This study is first of its kind in a developing country.