ABSTRACT

The aim of this study was the analyzing of the challenges and opportunities in preparing financial statements based on International Financial Reporting Stand-ards (IFRS). Also, another aim of the thesis was to find out the extent to which financial accounting harmonization is important for accounting practices.

 

The study also focused on related theory and articles about IFRS and accounting practices.

 

In the study, quantitative research data was gathered by through structured ques-tionnaires. A total of thirty (30) questionnaires were sent to employees of UT Bank Ghana Limited while 20 fully answered questionnaires were received.

 

The results revealed that respondents expect to have opportunities from the bank im-plementing the IFRS into its annual financial reporting.

 

The author therefore recommends that for IFRS to work effectively in the first time implementation and also continuous usage, the Institute of Chartered Accountants, Ghana and the Chartered Institute of Bankers must work together with the banks to provide intensive training and support for banking officials through seminars and other such events.

1    INTRODUCTION

The thesis is based on the topic Financial Reporting Based on International Finan-cial Reporting Standards (IFRS) Challenges and Opportunities, A case study of UT Bank Ghana Ltd.

 

Taking into consideration, a situation where a reputable company from Finland wants to invest hugely into the Ghanaian economy. With all things been equal, accounting practices cannot be isolated into having a successful investment. In-vestment experts will therefore be interested in knowing how financial statements are prepared and on what basis they are presented.

 

In the business world of today, accountant focus on the ultimate needs of decision makers who use accounting information, but the world is also advocating for the harmonization of accounting information reporting. There are a majority of for-eign and indigenous firms in Ghana which are listed on the Ghana stock exchange and their dealings are based on best accounting practices that is required by all stakeholders and important worldwide agencies like World Bank, International Monetary Fund etc. It is, therefore, necessary to have a look into whether financial reporting in Ghana is really based on these IFRS that is being used and adopted by most firms in other parts of the world.

 

In Ghana, most public and private entities since 2008 have accepted to preparing financial statements using the International Financial reporting standards as a base after the government adopted the standards in January 2007. It has become man-datory for all firms listed on the Ghana Stock Exchange to prepare their accounts using IFRS. This is seen to be good news which will help harmonize the account-ing practices in Ghana with that of the rest of the world. The question to ask is, have these adoptions been easy or not? This is the reason why the researcher is taking the opportunity to make a study into the possible challenges and opportuni-ties after firms have adopted and prepare annual accounts using IFRS as a basis in Ghana.

According to a World Bank report in 2011, about 15 countries in Africa have cur-rently converged to or have fully adopted the International financial reporting standards as a basis for preparing annual reports (World Bank, 2011)

 

With comparability and transparency as one of the main focus of the IASB for introducing IFRS, it is always important and necessary to present annual reports in compliance with certain standards which are worldwide accepted and used by various firms. To emphasize on this, Showerman and Tomaszewski (2010) re-vealed that, by the end of 2012, it is expected that about 12000 public and private firms would be adopting and implementing IFRS in over 100 countries worldwide (Showerman & Tomaszewski, 2010).

 

Accounting standards according to Jill and Roger are an important aspect of the accounting profession, since it is known to be a profession that is based on rules, concepts, principles and regulations. Accounting standards apply to financial statements that are intended to give a true and fair view. Because of the complex structure and activities of large companies, all accounting standards are important for them (Jill & Roger, 2006).

 

Business activities and hence accounting practices are not an end in itself but known to be a means to an end. For the accountant, when presenting his annual accounts, the focus is always on stakeholders and also on all those people who use the accounting information for various decisions making. Therefore, there is the need to conform to what the law requires of the accounting practice. This calls for the need to focus on practices that will help the accounts presented to be accepta-ble to all stake holders.

 

Accounting must therefore be considered as a link between business activities and decision makers. First, accounting measures business activities by recording data about business transactions for future use. The data gathered is then stored to be processed to become useful information which is then finally communicated, through reports, to decision makers who especially have direct interest in business