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 Regulations and the Rule on Take-Overs and Mergers regulate the governance of listed companies (Mensah et al., 2003). Under the above legal framework of corporate governance, certain provisions ensure that tight internal control would bring financial inadequacies and corruption to a minimum. Strengthening of the Ghana National Accounting Standards Board would be an important tool in combating accounting frauds which amounts to corruption (Mensah et al., 2003).
The accounting profession must lead the development of standards for audits and for maintaining the independence of the external auditors. All companies should be encouraged to adopt the SEC’s Guidelines of Corporate Governance. In this regard, companies should be encouraged to develop code of conduct for staff. Ratings companies should be established to rate companies and accounting firms and this will encourage them to adopt best practices (Mensah et al., 2003).
1.2 Statement of the Problem
It is an undeniable fact that, the roles of regulatory bodies as far as accounting fraud is concerned are very crucial in preserving and projecting the integrity of sound and reliable investment in Ghana. However, little is known about the laid down structures for their operations. This study therefore, seeks to assess how strong the regulatory bodies are to the extent that they can prevent, punish and control accounting frauds in Ghana. What are the various measures put in place by the regulatory bodies for controlling accounting fraud in Ghana? What are the problems facing the regulatory bodies in discharging their duties in this regard? What are the measures taken to make the business firms and the general public aware of the work of the regulatory bodies? The purpose of this study is the role of regulatory bodies in preventing accounting scandals in Ghana. 1.3 Objectives of the Study
The objectives of this study are;
(1) To find out the various measures put in place by the regulatory bodies in controlling...