SPEECH BY THE HONOURABLE KWADWO-BAAH WIREDU AT THE LAUNCHING OF GHANA’S FORMAL ADOPTION OF IFRS AT THE LA PALM BEACH HOTEL ON 23RD JANUARY, 2007 AT 9:00AM
Mr. Chairman,
President of ICA,
Heads of Regulatory Institutions,
Members of ICAG Council,
Distinguished Invited Guests,
Ladies and Gentlemen,
1. It gives me much pleasure to be invited as Guest Speaker for this important event, the formal launching of the adoption of International Financial Reporting Standards in Ghana.
2. Since 2005 when the International Federation of Accountants made the implementation of IFRS mandatory for all its member countries including Ghana, the IFRS has become a common vocabulary in the financial world.
3. Acceptance and use of IFRS has become virtually universal, with many countries which hitherto operated their own national standards having phased them out for IFRS despite the associated challenges.
4. It is pertinent that in March 2006 the Finance Minister of China (Jin Renqing) announced that China – the world’s fastest growing economy has achieve a “milestone” by bringing its accounting and auditing practices in line with AFRS, moving China towards “a more modern economic model” and helping investors make “more servable decisions” as from 1st January, 2007.
5. International flows of investment capital and capital instruments across geographical boundaries have added a new impetus to the current bandwagon for adoption of international standards in Ghana.
6. As you are aware, one of the policies of the Government of the New Patriotic Party has been to promote accelerated growth of the economy through private sector-led growth.
7. This gives meaning to the saying that the private sector is the engine of growth of every progressive economy.
8. The private sector businessman needs to attract capital for expansion of his business and also set up new ones.
9. As expected to be able to source capital from the financial institutions both locally an externally, there is the need to present a credibly and easily understandable financial statements.
10. In order to keep the transparency and accountability at the desired levels in both the private and public sectors, not only should transactions be accounted for on time but also they must be done in such a manner that the public interest is kept in view.
11. For Institutions and the Government to account and attract finance from multilateral organizations, donor communities and other investors, financial statements presented should follow standards that are understood and acceptable by these institutions.
12. We recognize the fact that in order to create a conducive business environment so as to propel the economy fifth gear, we need large infusion of investments both from internal and external sources.
13. The creation of the free zone, the reformulation and enactment of new investment code and the setting p of Commercial Courts cannot achieve the desired results until changes are made to agree our accounting standards with international standards.
14. Infact in 2004, the World Bank and the Ministry of Finance and Economic Planning [MOFEP] commissioned a Report on the Observance of Standards and Codes [ROSC] in Ghana.
15. The report issued in March 2006 indicated that the financial reporting standards used in Ghana lagged behind internationally acceptable standards. Please permit me to quote the first paragraph of the Executive Summary of that report:
16. “The accounting and auditing practices in Ghana suffer from International weaknesses in regulation, compliance and enforcement of standards.
17. Various weaknesses were identified in the laws and regulations governing financial reporting.
18. Although Ghana Accounting and Auditing Standards have been based on International Accounting Standards and International Standards on Auditing, respectively, they are outdated and gaps exist in comparison with the International equivalents.
19. Full compliance with Ghana National Accounting Standards is not often achieved; some listed companies inappropriately claim compliance with International Accounting Standards”.
20. There is therefore the compelling need to leave the old aged standards and migrate to international Standards.
21. It is refreshing that ICAG has risen to the challenge in less than a year to put our house in order. We, as a government acknowledge the untiring efforts of the Institute of Chartered Accountants, [Ghana] in collaboration with other Regulators which has led to the formal adoption of the International Financial Reporting Standards today.
22. We are also happy that the Institute sought public input and stakeholder support to come to a phased implementation of IFRS by 2009.
23. Institute of Chartered Accountants Ghana [ICAG] is commended for spearheading the initiative on IFRS convergence.
24. Government on its part will expedite action on the required regulatory arrangements to support the IFRS regime in Ghana.
25. All affected partners and structures must work hard to meet the reporting deadline of December 31, 2007 set to enable Ghana realize the benefits of convergence.
26. May I remind the Institute of Chartered Accountants, [Ghana] that we would also expect the Institute to also come out with workshops and seminars on the IFRS so that all affected firms would have a firm grasp of the various provisions of the standards.
27. Undoubtedly, you would in addition be expected to play your watch dog role in monitoring your members in complying with the International Financial Reporting Standards.
28. It is our hope that ICAG will work with the public sector for Ghana to implement International Public Sector Accounting Standards [IPSASs] and International Standards on Auditing [ISAs] latest by 2009 in line with the country strategic plan developed by ICAG.
29. Mr. Chairman, President of ICAG, Members of ICAG, Distinguished Invited Guests, it is my singular honour and priviledge to declare the adoption of IFRS formally launched.