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I discuss the development of accountancy and the professional historical context of accounting in the Gold Coast in this section. The country emerged from the post-colonial British West Africa in the late 1950s to become the first country in Sub-Saharan Africa to attain independence. At the time of colonial invasion and the scramble for Africa, accounting was never known to indigenous cultures of the people of Gold Coast and only came to exist following the invasion of African by the West. Among many things that diffused from the west to Africa, accounting was perhaps one of the late comers as trading between colonies and colonial merchants were mainly controlled remotely by merchants back in Britain. Like many other professions such as law, medicine, banking, architecture, pharmacy, etc. accountancy found its roots into the Ghanaian society not as a direct consequence of indigenous origins but as a result of the increase in the exportation of the profession from

Britain to its former colonies. The next section of this chapter discusses the historical origins of accounting, accounting standards and accounting standard-setting in Ghana.

4.2.1 Post Colonial Periodization of Accounting and Auditing in Ghana (1956-1980s) In the Gold Coast there is very little evidence of the origin of accounting and booking keeping in pre colonial times. However, during the period of colonization by the British, accounting was introduced as a managerial instrument in the colonial administration. Colonial administrative work was carried out by clerks and staff brought in from Britain to run the economy in the interest of the British (either as colonial administrators or as merchants in the trade of natural resources and slaves). During this time, accounting was very much restricted to book keeping of accounts in the fashion of profits made from the export of mineral resources, slaves and agricultural produce. Running the economy was pretty much limited to monetary stability and monetary growth which was tied to the preformance of the export industries.

A turn of events came in 1896 when the first commercial bank was established in the Gold Coast. The Bank of British West Africa Limited (BBWA) was established with the aim of importing silver coins from the Royal Mint. Banking was established with the objective of providing banking services to British trading enterprises and the British Colonial Administration (Uddin & Tsamenyi, 2005).Though many accounting academics do not associate the development of the banking sector to the development of accountancy in Ghana, it serves as a basic account for the earliest form of the importation of accounting skills from Great Britain to the Gold Coast.

Formal attempts at putting accountancy at the forefront came at the birth of taxation in the Gold Coast to govern the people. As a way of governing the people, the colonial administration introduced taxation to regulate the behaviour of colonial people by forcing them to work in order that they may fulfil their tax obligations. The account of Mensah (1997) shows that as early as the 1930s, the imposition of taxation in the British West African states of the Gold Coast, Sierra Leone, and Nigeria was met with fierce resistance from the colonized people. In 1852, the Governor of the Gold Coast, Major Hill, introduced a poll tax of one shilling per head per every adult to finance the administration of the Gold Coast colony. In the following years, the people of the Gold Coast resisted attempts by Lord

Frederick Lugard to introduce taxation in April of 1892. Alas in 1943, when the World War was already in place and budget cuts had come to the colonial administration from Britain, the colonial administration in a way to raise more revenue to run the colonial administration introduced the Income Tax Ordinance (No. 27) which became operative in April 1944 (Bush & Maltby, 2004).

The production of accounts for tax purposes increased the demand for accountancy services, both internally in organizations and externally for auditing purposes. By 1948, the composition of the accountancy profession had changed dramatically as there were a significant number of British and expatriate accountants then resisdent in the Gold Coast. Nevertheless, there was no record of any African accountant in the country at that time. Records show that there were 29 British accountants and one German accountant in the Gold Coast to facilitate trade with Europe.This consequently led to the formation of the Association of Accountants of the Gold Coast in 1954. The formation of the Association of Accountants in the Gold Coast was nothing close to the effect of aiding African development but as a consequence of cordinating the lobbying power of accountants who found it neccesary to speak with one voice in their dealings and interactions with the various government agencies at a time of rapid change in the Gold Coast economy (Abdallah, 2006; Agyeman, 2005).

Accountancy practices in Ghana like many other former British Colonies have always been in the British tradition (Poullaos & Uche, 2012) and often been influenced by the British even long after they ceased to be colonial masters in British West Africa (Annisette, 1999, 2010; Graham & Annisette, 2012) by virtue of the formal institutions that support the development of accounting. When the Association of Accountants was first established, its main aim was to serve the interest of foreign companies then operating in the Bristish territory. As evident from the account of James Barnes of Deloitte:

‘’When I first arrived in the Gold Coast in 1939 there were very few qualified Accountants in the country. Most organizations only produced local returns, which were forwarded to their overseas bodies to be incorporated into final accounts. With the introduction of Income Tax in 1943, the production of accounts for tax purposes increased the demand for accountancy services both internally in organizations and externally as auditors and after the war…[the number of accountants] increased in professional practice, the commercial firms, the mines, Government and income tax and the the need for an Association whereby we could meet, discuss common problems and have a unified body to make representations to Government.’’ Barnes, (1981,p.6) as cited in (Uche, 2010; Wallace, 1992).

The formation of an Association of Accountants in the Gold Coast in the 1950s had very little if nothing at all, to do with the production of indeginous accountants. By 1948,

population census conducted in the Gold Coast concluded that there was no indigenous accountant in Ghana.

After the attainment of independence in 1957, Ghana begun to pursue industrialization aimed at rapid economic development and the need for an indigenous institute became ever more pressing. However, the achievement of establishing a full fledged institution to take care of the accounting needs of the country was limited by the fact that there were very few accountants that remained in Ghana by the time British colonial rule was over. To solve the problem of the shortage of qualified professionals who could contribute to national development as envisaged by the socialist government led by his Excellency Dr. Kwame Nkrumah, the government begun to offer scholarships to students to study abroad notably in the United Kingdom in many disciplines such as medicine, law, engineering and accountancy (Poullaos & Uche, 2012).

Efforts to build an accountancy profession did not stop to wait for students to train abroad and return. In 1957, a sub-committee of the Association of Accountants was set up to examine the need for the development of the accounting profession in the country. In 1958, the committee submitted its report to the state recommending that;

i. The new status of the country (independence) made the establishment of an independent professional accountancy examining body desirable and enviable.

ii. A local examining body would be better able to frame an examination curriculum and a general educational policy suited to the particular needs of the country.

iii. Only one recognized accountancy body in the United Kingdom, the ACCA opened its gates for local examinations in Ghana

iv. The syllabus of the United Kingdom bodies (whose examinations were principal ones taken by Ghanaians) covers certain subjects such as executorship law and accounts, which had little relevance or practical application in Ghana. (Ghartey, 1992)

In submitting its report, the committee noted that although these recommendations were valuable to develop the accounting profession, the establishment of a local examining body was premature. A number of factors were responsible for this. First, there were no facilities for the practical training of accountants as most professional accountancy firms in the country at that time were training only the required number of staff in the firm and many continued to import accountants from Britain. Secondly, even if there were facilities in the country to accommodate the training of accountants, there could not have been enough

competent accountants and accounting academics to prepare examination papers for local accounting examinations. That apart, to establish an institute of accountants, there needed to be some level of international recognition by the International Federation of Accountants (IFAC). At that time, these requirements were impossible to fulfil (Ghartey, 1992, p.92).

In the early years of the 1960s, the idea of a local institution to organize the accountancy profession was reborn, spearheaded by the old but the defunct Association of Accountants in the Gold Coast and subsequently in 1963, precisely on the 19th of April, the Institute of Chartered Accountants Ghana (ICAG) was formed via the signing of the ICAG Act of 1963 by the president becoming the first of its kind in British West Africa. Perhaps the greatest stimulant towards the establishment of the institute was the decision by the Gold Coast Government to revise the Companies Act of 1907 into a world class Companies Code in line with practices of the United Kingdom. In the Companies Act of the UK, it required that all companies duly registered shall have a qualified auditor who shall sign off the financial statement issuing a “true and fair”opinion on the financial status of the company (Anyane-Ntow, 1992).

At the time, the main statutory function for the formation of the institute, according to Uche (2010), was to organize and regulate the accounting profession. The ICAG, just as the Association of Accountants in the Gold Coast, had amongst its objectives to promote the accountancy profession and provide local training and education of accountants in Ghana.

In 1963, when the Institute of Chartered Accountants Ghana was established, it was noted that its infant nature and the inexperience of many accounting educators could not support the development of the profession. In 1964, an agreement was signed between the ICA Ghana and the Institute of Chartered Accountants of England and Wales (ICAEW) for the latter to mentor the former until its maturity. Nearly all the examinations and teaching materials were in the format prescribed by the ICAEW. These efforts to gain legitimacy as a noble profession comparable to medicine, law, politics and well noted professions did not produce the desired results as fewer students qualified as accountants in the ICAG organized examinations. In 1974, the State owned daily newspaper The Ghanaian Times

carried an article which was entitled “Train More Accountants”. The article claimed that; “Ghana needs an intensive recruitment of experienced professional accountants into the high echelon of Public Services to redress the unduly late submission of accounts of state owned enterprises some of which are three to four years in arrears” (Ghanaian Times, January 22, 1974) cited in (Ghartey,

1992)

The demand for an increase in the training of more accountants came from the state as an actor. Not only did the accounting profession respond to this request, other actors such as British accountancy certification associations responded by taking steps to provide certification qualifications in the country and to expand their membership numbers. For intance, the Association of Chartered Certified Accoutants opened its offices in Ghana in the 1960s conducting examinations for students interested in the Chartered Accountant designation.

Table 12: Qualifying Rate of Accountants by ICAG

Year Number of Qualifying Accountants Year Number of Qualifying Accountants 1968 2 1981 11 1969 3 1982 8 1970 -* 1983 9 1971 -* 1984 12 1972 -* 1985 11 1973 5 1986 45 1974 2 1987 29 1975 7 1988 19 1976 10 1989 12 1977 3 1990 44 1978 4 1991 36 1979 5 1992 36 1980 5 1993 26

Source: ICAG Archives. * No data available

The ICAG recognizing these challenges in the training of accountants in the country begun to look for solutions to the problem. As a first step, it entered into an arrangment with the Institute of Chartered Accountants of England and Wales (ICAEW) in which the latter will provide technical support to the former in the conduct of its own local examinations. The account of (Uche, 2007) show that;

The Institute of Chartered Accountants in England and Wales... gave every help in the conduct of examinations. An arrangement was agreed such that, for every examination subject where the English Institute appointed an Examiner, the Ghana Institute would appoint a Moderator and vice versa, so that every examination paper was scrutinized by an Examiner and by a Moderator. We were bent on keeping our examination standards equal to, if not better than the English Institute’s. This went on with all examinations of the Ghana Institute from 1968 to 1978 when the English Institute of Chartered Accountants, gave our Institute its independence, satisfied that we could carry on our own (Amegashie, 2003, p.70) cited in Uche (2007).

The results of the above initiatives were still not encouraging as shown in the table above. The ICAG again took steps to mitigate the situation. It held extensive discussions with the School of Administration of the University of Ghana on how both institutions could collaborate (in an academic/professional partnership) to help remedy the situation. The result was the introduction of a four year Bachelor of Science in Administration scheme to help accelerate the training of accountants in the country. In the same year, three polytechnics were also approved by the ICAG to participate in the accelerated training programme for accountants (Boakye-Agyeman, 1988). Despite this, there was no material improvement in the training of accountants by the Institute. This led to the cancellation of these institutional arrangement between the ICAG and the University of Ghana.

Yet, on the international front, ICAG did not loose sight of what was being discussed regarding the development of the profession. It participated in discussions and subsequently became a founding member of the International Federation of Accounts (IFAC) in 1977. With this new status it had acquired, it meant that more efforts were needed to propagate the vision of IFAC in Ghana. Gradually, student numbers improved but were still generally unsatisfactory. I shall in the last section of this chapter discuss the membership of the ICAG to the International Federation of Accountants. (IFAC).

4.2.2 The Audit Industry in Ghana

The audit market in Ghana is quite large and plays an important role in the development of the accounting profession. Audit, just as modern banking and taxation played a significant role in the development of the accountancy profession in Ghana and resembles the business cultures practiced in Britain at the time of colonization. At the promulgation of the Companies’ Code in Britain, it elevated the audit function of the accounting profession to safeguarding the interest of investors who had invested in sugar plantations, mining and slaves trade in British colonies. Investors wanted to be sure that their investments were safe and pushed for reforms to include professional liability on the part of auditors. When the British Companies’ Code came into force in 1929, it required

auditors to provide a “true and fair view” on the financial statements it had audited both locally in the UK and in the overseas branches of all companies. The 1929 UK Companies Act also required auditors to report on whether the balance sheet exhibited a ‘true and correct’ view (Uche, 2007).

In the late 1940s, many British accountancy firms opened local offices in the Ghana to support their clients that had overseas operations in the Gold Coast, particularly in the mining industry. In 1949, the first British accountancy firm to begin operation in Ghana was Pannell Kerr Foster (PKF) (present day PKF International), which was soon followed by Coopers & Lybrand (present day PricewaterhouseCoopers), Peat Marwick, Okoh & Co (present day KPMG), Deloitte Haskins & Sell (present day Deloitte and Touché Tohmatsu). These accounting firms soon established the British tradition of auditing in Ghana and became very respectable companies for multinational corporations particularly in the mining and cocoa sectors, which was booming at the time.

At present, the audit market in Ghana is European in nature and has international audit firms operating in the country. As at January 2014, there were six major accounting firms in Ghana (see table below);

Name Number of Employees Resident Partners Year Establishment Parent Company PricewaterhouseCoopers 180 7 1947 British

Ernst & Young 200 7 1949 British

Deliotte and Touché Tohmatsu 90 3 1949 British

PKF International n/a n/a 1949 British

Mazars 26 3 2011 French

Table 13: Top 6 Accounting Firms in Ghana. Source: Field Data (March 2014)

There is no available statistic on the annual revenues of these firms. However, estimates show that they together control 95% of the audit market and currently over 90% of the firms listed on the Ghana Stock Exchange. These firms audit banks, multinational corporations and State Owned Enterprises. In the section on the role of actors in the

diffusion of IFRS in Ghana, I discuss in detail the contributions of International accounting firms in accounting standardization in Ghana.