Accounting Scandals 3

CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarized, interpreted, and communicated; for public companies, this information is generally publicly-accessible (Financial Accounting Info, 2006). Accounting attempts to create accurate financial reports that are useful to managers, regulators and other stakeholders such as shareholders, creditors or owners (Financial Accounting Info, 2006). Inefficiencies in the processes of accounting may amount to a professional scandal. Accounting scandals or fraud can be explained in various ways.

Accounting fraud is a deliberate and improper manipulation of the recording of sales revenue and/or expenses in order to make a company 's profit performance appear better than it actually is. Things that companies do that can constitute fraud are: not listing prepaid expenses or other incidental assets, not showing certain classifications of current assets and/or liabilities and collapsing short- and long-term debt into one amount (Greatinca, 2007). Accounting scandals or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations (Wikipedia, 2007).

The framework of governance of business in Ghana provides certain laws for governance structures for companies in Ghana. These are: the Company’s Code 1963 (Act 179), which provides for governance of all companies incorporated in Ghana, the Securities Industry Law,(PNDCL 333), regulation 87 as amended by the Securities Industry (Amendment) Act 2000, (Act 590), which provides for, among other things, governance of all stock exchanges, investment advisors, securities dealers and collective investment schemes licensed under the Securities and Exchange Commission (SEC) , the Ghana Stock Exchange’s Listing

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