FRANK ACHEAMPONG

84 Pages·2015·0.63 MB·English

KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY
(KNUST)

EXAMINATION OF ACCOUNTING PROCEDURES AND PRACTICES
ADOPTED BY GHANA WATER COMPANY LIMITED.

BY
FRANK ACHEAMPONG

A PROPOSAL SUBMITTED TO THE KWAME NKRUMAH UNIVERSITY
OS SCIENCE AND TECHNOLOGY (KNUST) IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF BUSINESS
ADMINISTRATION IN ACCOUNTING

JULY, 2015
DECLARATION
I hereby declare that this submission is my own work and that to the best of my
knowledge, it contains no materials previously published by another person or
material which has been accepted for the award of any other degree of the
university, except where due acknowledgement has been made in the text.

FRANK ACHEAMPONG ................................ ..............................
Student’s Name & ID Signature Date

Certified by:
EDWARD YEBOAH ................................ ..............................
Supervisor’s Name Signature Date

Certified by:
DR. KINGSLEY O APPIAH ................................ ..............................
Head of Dept, Name Signature Date

ii
DEDICATION
This work is dedicated to my parents for their support and Love.

iii
ACKNOWLEDGMENT
I thank the almighty God for the amazing grace shown to me through guidance,
protection and wisdom granted me throughout the study.I also express my
appreciation to my supervisor, Mr. Edward Yeboah, for the guidance and support to
see this work completed.
The advice and constructive criticism led to the success of this work. To him, I say:
God bless you.
Ultimately, the organization which provided all the necessary information, Ghana
water company limited. My heart felt gratitude therefore goes to entire of the finance
and Audit Departments for their friendly and wonderful reception to me in writing
this paper. Mr. Cosmos, your name will be always remembered.
Lastly, special mention must be made of the lectures and of Business school of
KNUST, for their advice and encouragement during the period this study. God bless
you all.
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ABSTRACT
The issue of accountability and transparency remains resolutely important to
governmental organizations as it is to the private sector. The study entailed the details
and intensive analysis of a single case study design. Primary data were collected
through the use of in depth interviews. Secondary data were also sourced through
publications, and company’s annual reports. The researcher selected the 14 officers of
the accounts and internal audit department of Ghana Water Company Limited to
represent the sample size of the study. Qualitative research analysis was employed in
this study. Explanations and meanings were constructed from the data collected using
descriptive, inferential statistics and rationalizations as well as graphical
representations in the form of Bar Charts were used to help in exploring more into
data collected on Accounting Procedures and Practices at Ghana Water Company
Limited. From the data gathered, it were found out that the source documents kept by
the Ghana Water Company for their accounting procedures and practices includes:
procurement requisition form, invoices, local purchasing order (LPO) payment
voucher (PV), cheque voucher and receipts. The internal audit department pre-audits
all transactions before they are finally transferred into the books of accounts as
compliance to the best standards. However, careful and thoughtful design which could
have been in place to avoid or at least minimize bottleneck was not available. The
knowledge base of the personnel in the standards and its implementation is abysmal
and needs to be brought up to speed. This notwithstanding the accounting procedures
and practices by the company is appropriate enough to mitigate fraudulent financial
reporting. It is therefore recommended that more workshops and seminars should be
organized for GWCL staff by accounting bodies in line with best stand accounting
procedure and practices.
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TABLE OF CONTENTS
DECLARATION ........................................................................................................... ii
DEDICATION ..............................................................................................................iii
ACKNOWLEDGMENT............................................................................................... iv
ABSTRACT ................................................................................................................... v
TABLE OF CONTENTS .............................................................................................. vi
LIST OF TABLES ....................................................................................................... xii
LIST OF FIGURES ....................................................................................................xiii

CHAPTER ONE .......................................................................................................... 1
INTRODUCTION........................................................................................................ 1
1.0 Background of the Study ...................................................................................... 1
1.1 Statement of the Problem ..................................................................................... 4
1.2 Research Objectives ............................................................................................. 4
1.2.1 General objective............................................................................................... 4
1.2.2 Specific objectives............................................................................................. 4
1.3 Research Question ................................................................................................ 5
1.4 Justification of the Study. ..................................................................................... 5
1.5 Scope of the Study................................................................................................ 6
1.6 Limitations of the Study ....................................................................................... 6
1.7 Organization of the Study. ................................................................................... 7

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CHAPTER TWO ......................................................................................................... 8
LITERATURE REVIEW ........................................................................................... 8
2.0 Introduction .......................................................................................................... 8
2.1 Definitions of Accounting .................................................................................... 8
2.2 Accounting History and Reference ...................................................................... 9
2.3 Basic Accounting Concepts ............................................................................... 10
2.4 Accounting Procedures and Practices in Public Entities .................................... 11
2.4 The Basic Accounting Cycle, ............................................................................. 12
2.5. Accounting Standards and International Financial Reporting Standards.......... 14
2.5.1 Background and Development ........................................................................ 14
2.5.2 Scope and Application .................................................................................... 16
2.6 Adoption of IFRS by Ghana............................................................................... 16
2.6.1 Application of Regulatory Frameworks Governing Public Financial
Management. ............................................................................................................ 17
2.7. The Developments of Public Sector Accounting .............................................. 17
2.7.1 Regional Grouping of Associations ................................................................ 18
2.7.2 Consultative Committee of Accounting Bodies (CCAB) ............................... 18
2.7.3 The Use of Exposure Draft (ED) and Letter of Intent (LOI) .......................... 19
2.7.4 Setting Accounting Standards ......................................................................... 19
2.7.5 Training, Workshop and Seminars .................................................................. 19
2.7.6 Information and Communication Technology (ICT) ...................................... 20
2.8 Review of Relevant Theories of Accounting Procedures and Practices ............ 20
2.8.1 Business Entity Assumptions (BEA) .............................................................. 20
2.12.2 Going Concern Assumption (GCA) .............................................................. 21
2.8.3 Stable Monetary Unit Assumption (SMUA) ................................................... 22
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2.8.4 Accounting Period or Periodicity Assumption (PA) ....................................... 23
2.8.5 Other Theories of Accounting Procedures and Practices ................................ 24
2.8.5.1 Parent Company Theory............................................................................... 24
2.8.5.2 Entity Theory................................................................................................ 25
2.8.5.3 Traditional/Hybrid Theory ........................................................................... 26
2.8.5.4 Multiple Theories of Accounting Procedures and Practices ........................ 27
2.9 Problems of Accounting Procedures and Practices in Public Entities ............... 28
2.9.1 Cultural Diversity ............................................................................................ 28
2.9.2 Language Barrier or Linguistic logy ............................................................... 28
2.9.3 Early practitioners were not research oriented ................................................ 29
2.9.4 Disagreements between academicians and practitioners ................................ 29
2.9.5 Diversity and Complexity in government policies .......................................... 29
2.9.6 Judicial Application and Interpretation of Business Transactions .................. 30
2.9.7 Money as a unit of measure............................................................................. 30
2.9.8 Non-Unification of Various Ideological taught by various Bodies................. 30
2.9.9 Illiteracy .......................................................................................................... 31

CHAPTER THREE ................................................................................................... 32
RESEARCH METHODOLOGY AND PROFILE OF GWCL............................. 32
3.0 Introduction ........................................................................................................ 32
3.1 Research Approach ............................................................................................ 32
3.2 Research Design ................................................................................................. 32
3.3 Sources of Data Collection ................................................................................. 33
3.4 Population........................................................................................................... 33
3.5 Sample Size and Sampling Technique ............................................................... 33
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3.6 Methods of Primary Data Collection ................................................................. 34
3.6.1 Conducting the Interview ................................................................................ 34
3.7 Data Analysis ..................................................................................................... 34
3.8 Ethical Considerations........................................................................................ 35
3.9.2 Historical Perspective ...................................................................................... 36
3.9.3 Governance structure of Ghana Water Company Limited .............................. 37

CHAPTER FOUR ...................................................................................................... 38
DATA ANALYSIS AND DISCUSSION OF RESULTS ........................................ 38
4. 0 Introduction ....................................................................................................... 38
4.1 Nature of Accounting Procedure and Practices Adopted by Ghana Water
Company Limited ..................................................................................................... 38
4.1.1 Source Documents........................................................................................... 38
4.1.2 Procurement Requisition Form ....................................................................... 39
4.1.3 Invoices ........................................................................................................... 40
4.1.4 Local Purchasing Order (LPO) ....................................................................... 40
4.1.5 Payment Voucher (PV) .................................................................................. 41
4.1.6 Cheque Voucher .............................................................................................. 41
4.1.6 Receipts ........................................................................................................... 41
4.1.2 Books for Records Keeping ............................................................................ 42
4.1.2.1 General Ledger ............................................................................................. 42
4.1.2.2 Cash Book .................................................................................................... 42
4.1.3 Internal Controls Systems for Records Keeping. ............................................ 43
4.1.3.1 Personnel ...................................................................................................... 44
4.1.3.2 Authorization Procedures ............................................................................. 45
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4.1.3.3 Segregation of Duties ................................................................................... 46
4.1.3.4 Physical Restrictions .................................................................................... 46
4.1.3.5 Accounting and Arithmetic .......................................................................... 47
4.1.3.6 Organization ................................................................................................. 47
4.1.3.7 Supervision ................................................................................................... 48
4.1.3.8 Monitoring Operations ................................................................................. 49
4.1.4 The Role of the Internal Audit Department .................................................... 49
4.1.5 The Role of External Auditors ........................................................................ 50
4.2 Standards and Regulatory Frameworks Adopted and Applied By GWCL ........ 50
4.2.1 Compliance with the International Financial Reporting Standards (IFRS) .... 50
4.2.2 Basis for Keeping Financial Records .............................................................. 52
4.2.3 Compliance with the Applicable Regulations of the Laws of Ghana ............. 52
4.3 Challenges in Accounting Procedures and Practices ......................................... 53
4.3.1. Failure to Identify /Quantify all Material Risks ............................................. 53
4.3.2. Failure to Obtain Multi-level Management Commitment.............................. 54
4.3.3. Failure to Integrate the Programme Among all Functions ............................. 54
4.3.4. A Failure to Provide Mechanism to Incentivize Employees .......................... 54
4.3.5. Failure to Monitor Effectiveness ofPprogramme ........................................... 55
4.3.6 Failure to Properly and Thoroughly Train Employees .................................... 55
4.3.7 Failure to Report Violation ............................................................................. 56

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