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    Enterprise Group PLC records 37% rise in revenue in 2021

    Prices of petrol, LPG to fall by 4% in first pricing window of July – IES

    Losses due to fraud in banking sector in 2021 up by 144%; hits GH¢61m – BoG report

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    Gov’t still plans on tabling a legislation to compel banks to lend to the Agric sector – Agric Minister

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    [From the left] Thomas Abanga (CEO of Abanga Farms & Food Systems), Selma Ashipala Musavyi (Namibia High Commissioner to Ghana), Dr. Benjamin Sasu (Head of Food Safety), Mrs. Chariti Gbadawo (Director at the Ministry of Foreign Affairs & Regional Integration) ), Prof Bani (Board Chairman, Abanga Farms and Food Systems) and Clarence Zamuee (MEATCO Rep)

    Ghana’s Abanga Farms & Food Systems and Namibia’s Meatco in big partnership

    Gov’t still plans on tabling a legislation to compel banks to lend to the Agric sector – Agric Minister

    Financial transactions will be allowed even without Ghana card from 1st July – GAB assures

    Enterprise Group PLC records 37% rise in revenue in 2021

    Prices of petrol, LPG to fall by 4% in first pricing window of July – IES

    Losses due to fraud in banking sector in 2021 up by 144%; hits GH¢61m – BoG report

    ASTM International pledges support for Ghana’s petroleum industry

    NIB MD laments cost of borrowing for private sector

    Finance professionals urged to develop strategies to boost ESG-driven business environment

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    Financial transactions will be allowed even without Ghana card from 1st July – GAB assures

    Losses due to fraud in banking sector in 2021 up by 144%; hits GH¢61m – BoG report

    BoG, CSA deepen collaboration to fight cyber threats

    Dr. Bawumia unveils Ghana’s first Tier IV data centre

    ADB pioneers in global remittance services in Ghana [ARTICLE]

    Introduction of GhanaPay complements efforts to capture the unbanked into digital payments ecosystem – Veep

    #CitiBusinessFestival: How the country can take advantage of the “Ghana Opportunity”

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Emmanuel Appiah-Kubi writes: COVID-19; The accountant’s perspective

May 19, 2020
in FEATURES, Top Stories
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Never have I imagined an era of a time when governments in Africa would ask churches, mosques and other places of worship to close their doors whilst the UK government also asks pubs to close their doors to the public.

In most parts of Africa it is a taboo for any government to criticize a church or a mosque, whilst in the UK the pub culture is seen as an integral part of the British life. I was made to believe that pubs are indispensable part of the life of the British people.

When churches and mosque are closed in Africa and pubs made dispensable in the UK, it wakes everyone up and it points to the fact that we are in unprecedented times.

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The world is in its greatest public health emergency in living memory and one religious leader has dubbed it “World War III without guns” and I can’t agree more.

There are the health and economic implications that affect us all but as an accountant what should I be concern about? Below are the few issues that I have been pondering over.

Going Concern

Despite governments’ stringent efforts to keep business afloat during and after this pandemic, unfortunately some businesses will sink.

As Accountants it is therefore critical that in preparing our financial statements we assess the ability of the company to continue trading in the next 12 months. Under IAS 1 this assessment needs to be done when preparing the financial statements and not as at the reporting date.

In a situation where a business has lost a major customer and management believes the business will not survive within the next 12 months due loss of revenue, the conceptual framework which requires us to prepare financial statements under going concern assumption will not apply in this instance.

IFRS or FRS is not clear on how to prepare financial statements when going concern does not apply. Companies Act in certain jurisdiction requires financial statements to be prepared on “break up or piece meal” basis. This simply means assessing individual assets and liabilities and presenting them.

I was faced with a similar issue years ago when I was a trainee accountant. The advice then by my manager was to continue to apply the relevant accounting standards but still having it at the back of my mind that the business will not be trading again.

What my manager meant was for me to prepare the financial statements as usual but should look at the possibility of reclassifying certain non-current assets as current assets, making provision for onerous contracts due to cessation of operations etc. This does not mean because the financial statements are not prepared on going concern basis all assets should be classified as current assets. NO. If cessation will make previously stated non-current assets current assets, it needs to be stated as such and if not we leave it as it is.
Importantly we need to disclose clearly that the financial statements are not prepared under the going concern assumption.

For businesses in certain industries, for example those in aviation, hospitality etc. though management might assume the business will continue to operate in the foreseeable future it’s very important that in the light of this pandemic, a disclosure is made in the notes that there may be certain uncertainties surrounding this assumption.

Budgets

At the university I was made to believe that budgets were like the bible, once approved by the board its untouchable. In my working life at least for once we had to change an approved budget, because there was a fundamental change in the underlying assumptions.

We had lost a major customer who used to purchase 80% of our products at the beginning of the year and the budget in this instance became unworkable and therefore had to be binned. This is likely going to be the situation for many businesses due to the pandemic. This will not only apply to the budgets but also the long range plans.

In this uncertain time, it will be difficult for business impacted by the pandemic to make plausible economic planning using budgets, because budgets look at the long term. For now budgets should be binned and we shouldn’t bother preparing a new budget as we are not certain how long this pandemic and its lingering effects will last.

I will rather implore accountants to use quarterly forecast as their planning and performance measurement tool. This will provide more accurate levels of expenditure and because it covers a short span, corrective actions can also be quickly be taken where appropriate.

External Auditing

In my previous role as an auditor, there were instances I had to travel as far as Egypt and Cambodia to obtain sufficient, appropriate evidence to support my report.

With the current travel restrictions, social distancing, lockdowns etc. impose by various governments there will be instances that seeking to obtain sufficient appropriate evidence will be impracticable.

Guidance issued by the Financial Reporting Council (FRC) in the March 2020 Bulletin implore auditors to harness the power of technology as far as practicable in their audit engagement under the current circumstances.

There will be instances like physical verification, inventory count etc. where the use of technology will not suffice. This will amount to limitation of scope which might lead to a disclaimer or qualification.

In order to meet the information needs of users of audited financial statements there’s the need to balance the timing of audit reports and the assurance auditors are able to provide.

My advice to accountants is to write to their regulatory bodies and tax authorities to seek extension of the filing deadline. This will give their external auditors ample time to complete the audit and also avoid unnecessary penalties.

Technology

My first job after passing my ACCA exams was with a small accounting firm in Basingstoke. I was put in charge of the “digitization project”. This was just a glorify name for a scanning. All I did all day was scanning client records and working papers unto an online portal.

The firm had decided to go paperless. At that time I thought it was a boring job and in fact few months into the role I left. But come to think of it that was a great move by a small firm at that time.

There are a lot of companies, small, medium and large that has not fully leverage technology to create efficiency. From experience most organisations continue to keep paper files that always require physical presence in the office in order to work efficiently. This should not be the case in this day and age.

The accountant should be able to work from home efficiently with the little investment in technology. Currently with there are number of employees at home who cannot work efficiently due lack of adequate technology causing employers to lose millions of dollars.

Going forward Accountants should advise businesses to make technological investment a key item in the budget.

This should range from paperless filing to video web link. This will enable businesses switch from the traditional brick and mortar office to remote working. COVID 19 is a warning to businesses to rethink their IT strategy.

Human Capital

I am a fervent advocate of the capitalization of certain employees on the company’s balance sheet as done by the football clubs. I have always been confronted with the usual argument of the “right to use”. This is another topic for another day.

The point I am trying to drive home is, in all this, our employees matter the most as they are our greatest asset. We therefore should take every step to protect them and their family.

To quote the Ghanaian president in his recent speech;
“We know how to bring the economy back to life but what we do not know is how to bring people back to life.”

This sums it all up that every strategy we implement at this time should priorities the welfare of our employees.

We should also be cognizant of the fact that we might lose certain employees in the short term, medium term and long term and therefore we should have a contingency plan in place to improvise or replace them should such unfortunate incidents happen.

Others

There are other critical issues that as Accountants we should keep our eyes on. This include keeping our grip on cost, cash flow, making appropriate provisions, impairment, post balance sheet events etc.

Conclusion

This pandemic just like any war will have lessons for us. One lesson learnt so far for me as an accountant is trial and error is allowed just as the scientists and governments are doing now. Never be afraid to get it wrong.

Another lesson learnt is “the experts know less than you think”.

Source: Emmanuel Appiah-Kubi (FCCA, Msc)|emmanuel.kubi@gmail.com
Tags: AccountantsCOVID-19Technology
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