A STUDY ON THE IMPLEMENTATION OF IFRS AND CORPORATE GOVERNCE PRACTICES WITH REFERENCE TO COMMERCIAL BANKS IN GHANA
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Date
2018
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FACULTY OF BUSINESS STUDIES JOSEPH SCHOOL OF BUSINESS STUDIES & COMMERCE SAM HIGGINBOTTOM UNIVERSITY OF AGRICULTURE, TECHNOLOGY AND SCIENCES NAINI, ALLAHABAD-211007 2018
Abstract
Corporate governance and corporate reporting in recent times have attracted high-profile support from global institutions such as the Organisation of Economic Co-operation & Development (OECD) and the International Accounting Standards Board (IASB) which operates under IFRS Foundation. In 2010, the Ghana Securities and Exchange Commission (SEC), in recognition of the significant role of good governance, formulated an encyclopedic guidelines for effective corporate governance practices in Ghana. Besides, approximately 150 jurisdictions in the world including Ghana have adopted or converged with the IASB’s International Financial Reporting Standards (IFRS), which is regarded as a single set of high-quality globally accepted accounting standards. In this background, the purpose of the study was in two fold.
Firstly, the study attempts to find out the factors that impact on the effective implementation of IFRS in Ghana as well as examining the perceived relationship between the use of IFRS and improved financial reporting. Secondly, the study aims at providing insights on the corporate governance practices of the banking corporates using the SEC governance principles as a benchmark. The study also looked into the challenges of both IFRS implementation & good corporate governance practices in Ghana.
The study employed quantitative research methodology and descriptive research design with both primary and secondary data. Primary data was collected through survey questionnaire with purposive sampling technique from a sample of 20 banks including140 senior executives drawn from the selected banks as respondents for study. With the aid of SPSS (Statistical Package for Social Sciences), the study systematically analysed the data collected and tested the hypotheses of the study.
On account of the multiple correlation analyses the study concludes that there is a healthy relationship between the corporate governance practices of the banks and the governance guidelines provided by SEC Ghana. It was revealed by the Chi-Square test that global institutions (i.e. the World Bank, IMF and IFAC) have significant influence on the adoption and implementation of IFRS in Ghana. The study further confirms that there is a positive link between the application of IFRS and firm performance i.e. improved financial reporting.
Despite the numerous advantages of IFRS the study finds that the burden of continuous IFRS education and training, and the problem of inadequate IFRS know-how personnel have a negative impact on its smooth implementation among the commercial banks. Lastly, the study finds that good governance helps in curbing persistent poor business performance but does not prevent corporate short-comings such as defective leadership and wrong strategies. The study suggests that regulatory authorities and professional accounting bodies should collaborate in holding training sessions to educate the banking corporates about the need for consistent application of IFRS standards in order to reap its full benefits. The study also recommends that management of the banks should endeavor to put in place a whistle blowing mechanism and then also provide adequate protection for employees who reports concerns about unethical behaviour or suspected fraudulent acts of others in the company.
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Ph.D. Thesis
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