Accounting in Africa: Volume 12 Part A

The focus of the first two papers in this volume is controls. Egbe, Tsamenyi and Sa’id investigate the operations of formal and informal controls in a multinational subsidiary in Nigeria using a case study approach. This involved semi-structured interviews, observation, document analyses and a focus group discussion. The paper concludes that formal internal controls such as budgets, performance evaluation and rewards and staff recruitment operate alongside informal internal controls including beliefs systems, values and existing norms. In particular the study reports that forms of informal controls such as trust were found to be important in the organisation where superiors in certain instances assigned responsibilities to members of their teams not on the basis of their abilities or skills but because the member could be trusted. Egbe, Tsamenyi and Sa’id conclude that such informal controls could have a controlling effect and influence the formal organisational controls. The findings have significant implications for understanding the design of management controls in LDCs in general, and Africa in particular.

Purpose – This paper reports on the results of a case study that investigates the operations of formal and informal controls in a multinational-subsidiary in Nigeria.

Design/methodology – Data has been gathered by way of semi-structured interviews, observation, document analyses and a focus group discussion.

Findings – Findings suggest that although issues relating to budgets, performance evaluation and rewards, staff recruitment and other formal aspects of controls were built on the platform of formality, these systems operated alongside informal controls in the organization. We suggest that beliefs systems, values and norms existing within the local community where the subsidiary is located could have a controlling effect and influence the formal organizational controls. Forms of informal controls such as trust were found to be prominent in the organization where superiors in certain instances assigned responsibilities to members of their teams not on the basis of their abilities or skills possessed by the member but because the member could be trusted.

Implications – The findings as reported here have significant implications for understanding the design of management controls in less developed countries (LDCs).

Purpose – This study examines the effectiveness of internal control systems of listed firms in Ghana. The recent (especially international) financial reporting scandals have caused regulators to place a lot of attention on internal control systems as a mechanism that could help improve the quality of financial reporting.

Design/methodology/approach – The study examined annual reports of a sample of 33 firms listed on the Ghana Stock Exchange. In measuring the level of internal control effectiveness, 23 items relating to internal control categorised under control environment, information and communication, risk assessment, control activities and monitoring were operationalised and the effectiveness score was determined based on the items.

Findings – Overall internal control system showed an average level of effectiveness in this study, which implied an overall low level of effectiveness. Of the five categories assessed under internal control system, control environment showed a higher level of effectiveness.

Originality/value – The study makes a contribution to the academic research activities relating to internal controls in Ghana.

Limitations – Inherent in the measurement process is an element of estimation error as a result of the use of subjective judgement for some items operationalised in assessing internal control effectiveness.

Purpose – The overall purpose of this study is to investigate whether literacy levels and external user-pressure by the Uganda Revenue Authority affect the perceived quality of accounting information of Ugandan SMEs.

Design/methodology/approach – A postal questionnaire survey of 98 SMEs drawn from Kampala, Uganda was undertaken. Ordinary Least Squares (OLS) regression was used to determine whether literacy levels and external user-pressure affect the quality of accounting information controlling for firm size, accounting qualification and firm age.

Findings – The findings suggest that literacy levels and external user-pressure influence the perceived quality of accounting information. Accounting qualification and firm age were also found to be positively associated with the quality of accounting information. However, there is no significant relationship between firm size and quality of accounting information.

Originality/value – The study provides evidence of the effect of literacy and external user-pressure on the quality of accounting information in a developing country where such evidence does not currently exist.

Implications – Since accounting information is important for economic growth, the Ugandan government needs to spend more resources to improve the literacy especially among the SMEs. The Uganda Revenue Authority also needs to maintain pressure on SMEs to improve the quality of information provided by SMEs since such information is important for assessing tax payable.

Purpose – This study analyses the various skills needed by today's accounting graduates in order to be suitable for the Ghanaian banking industry.

Design/methodology/approach – The study adopted a simple random sampling technique to select 15 of the 27 banks currently in the banking industry, a sample selected as first part of a total banking industry study. Questionnaires were used, supported with interviews, to collect the data from the responding 13 banks.

Findings – The study revealed that variables (in order of preference) such as; positive attitude, communication skills, strong work ethics, team work, good interpersonal skills, analytical and problem-solving skills, flexibility and adaptability, management and organizational skills and strong IT skills are some of the key skills employers expect accounting graduates to have in order for them to be deemed ready for the banking industry.

Research limitation – The only targeted respondents were the human resource and branch managers. The result could have been different if the sample had been widened to cover a greater number of the banks in the industry and included other responding groups like accountants.

Practical implications – The findings offer guidance to those involved in the training of accountants in tertiary institutions and graduates of accounting seeking to develop skills necessary for the banking industry.

Originality/value – This is a major contributor to skills-analysis-requirement of specific jobs, looking at the banking industry. The case can be extended for other job-specific industries like insurance.

Purpose – Effectiveness of teaching at universities, in general, has been the focus of many researchers for decades. The public concern about the quality of first year accounting education, in particular, is worth the attention of researchers at tertiary institutions. Student evaluation is the primary tool used by accounting administrators to evaluate teaching effectiveness.

This study aims to determine the effect on teaching of perceptions of first year financial accounting students on a specific module and the lecturer characteristics that they consider effective in their learning process. Further aims are to provide useful information to lecturers on teaching methods and lecturer characteristics that could enhance effectiveness of teaching.

Methodology – In this study, various aspects on teaching methods and lecturer characteristics are investigated. Student feedback data is collected for a full time lecturer. Surveying methodology using questionnaires is utilised to conduct the study. A pool of questions is created accompanied by a five-point Likert scale. A statistical analysis (descriptive statistics, Pearson correlation and regression analysis) is applied to these questionnaires.

Findings – From this analysis, the findings reveal that all independent variables (knowledge, personality and attitude in general) have a positive influence on enhancing effectiveness of teaching. The results of the study highlight that course content, knowledge, personality and attitude of a lecturer play an important role in determining effectiveness of teaching in financial accounting.

Value – The results of the study would be useful to the accounting lecturers, students, education departments and academic researchers to better understand the needs of accounting students in their learning process. Results of student evaluations not only provide valuable information which could be used for managing the course and study content but it could also be used for individual improvement by the lecturer. For the students, the improvement of teaching effectiveness based on the evaluation process may ultimately enhance knowledge acquisition.

Purpose – This chapter examines the extent to which ethical issues are integrated in accounting education at a university in a developing country. It also explores the perception of a broad spectrum of stakeholders on the need to integrate ethics into the accounting curriculum.

Methodology/approach – The study adopts multiple data collection tools. Questionnaires were predominantly used to solicit information from students, faculty and alumni of University of Ghana Business School (UGBS) as well as accounting firms. There was a content analysis of the course outlines of the accounting major subjects. In addition, policy makers and a professional accountancy body were interviewed to obtain additional insights.

Findings – The accounting course outlines reveal limited ethical issues; confirmed by majority of respondents that the level of ethics in accounting education is woefully inadequate. With regard to integrating ethics, there was consensus among stakeholders. Accounting firms argue that ethical issues are crucial to the practice of accountancy, thus the need for their integration into the curriculum. Moreover, the dearth of ethics in the curricula of universities in Ghana is attributed to the limited collaboration between academia and professionals.

Research limitations – This study focused on only one university, and some aspects of ethics in accounting education; not examining the quality of ethics, how and at what level it must be taught, and therefore generalising the findings must be done cautiously.

Practical implications – The varying stakeholders’ perceptions offer invaluable suggestions for managers and policy makers in developing the human resource for accountancy in Ghana and possibly, other developing countries. The need to reconsider ethics fully is overwhelming.

Originality/value – This study is first of its kind in a developing country.

Purpose – The purpose of this paper is to investigate transition road map problems encountered by the Nigerian authorities in moving from local Statements of Accounting Standards (SAS) to International Financial Reporting Standards (IFRS).

Design/methodology/approach – A postal questionnaire survey of 50 accounting professionals which includes Nigeria's Financial Reporting Council and other industrial specialists was undertaken. Descriptive statistics were used to determine the most common problems. Independent t-tests were employed to determine whether there were any significant differences in the perception of the problems according to job type, experience, sector and gender.

Findings – The questionnaire findings suggest that many problems have been encountered in the as yet unfinished transition from SAS to IFRs. These include lack of training on IFRS at tertiary institutions and the fact that Nigerian regulators do not have sufficient capacity to drive the transition process. The results also show that there are some significant differences in the perception of the transition road map implementation problems according to job type, experience, sector and gender.

Research limitations/implications – The study's results are based on responses from 50 out of a possible 500 accounting professionals surveyed and therefore cannot be generalised. The problems documented in the results should therefore be regarded as indicative rather than exhaustive.

Practical implications – This paper has practical implications for the Nigeria's Financial Reporting Council as it may want to review why the road map was not achieved and assess whether any lessons could be learnt for the future. The results are also important especially for those listed companies that failed to meet the January 2012 deadline for IFRS reporting.

Originality/value – This paper identifies Nigeria transition problems that are peculiar to Nigeria in its bid to be IFRS compliant some of which have not been documented by existing literature. Second, it is the first study to document accounting standards transitional problems in the African context.

Purpose – The purpose of the study is to investigate the role of the internal audit function in the public sector entities in Ghana and the factors limiting the effectiveness of internal audit in the sector.

Design/Methodology/Approach – The study collected the data from 120 internal auditors in 40 ministries, departments and agencies (MDAs) through a self-administered questionnaire. A semi-structured interview with a senior manager of the Internal Audit Agency, the oversight body was also carried out as a follow up.

Findings – The scope of internal audit services in the sector is limited to regular audit activities, mainly pre-audit of payment vouchers which take estimated 74% of the average productive audit time. The effectiveness of internal audit in the Ghanaian public sector is hampered by several factors: low professional proficiency of internal auditors; lack of management ownership and support for internal audit activities, lack of budget authority of the internal audit units and weak functioning of audit committees, among others. Some remedial programmes are ongoing.

Research limitations – Inherent in the study result is the limitation associated with non-probability sampling methods because of the use of purposive sampling technique to select the internal auditors and the organisations.

Practical implication – The result of the study may have policy implication for government in the design of programmes for improving the effectiveness of internal audit as an element of public financial management reforms.

Originality/Value – Despite several studies on internal audit effectiveness in the public sector organisations, none relates to Ghana. This study fills the gap.

Purpose – This chapter examines developments in public sector accounting practices using evidence from a developing country (Ghana), and explores the motivations for such developments from post-independence to date. This stems from the limited research in public sector accounting particularly on developing countries despite the rich empirical context that they provide for the global research community.

Design/methodology/approach – Advocating for institutional theory, data was gathered from multiple sources including interviews, discussions and documents to achieve the above objectives.

Findings – Evidence gathered shows gradual shift from cash accounting to accrual accounting practices (modified), including computerization of the entire public sector accounting and reporting processes. Indeed, the World Bank and IMF sponsored reform (PUFMARP) instigated many of the major developments in the public sector accounting practices, including the adoption of accrual accounting and deployment of integrated financial management information system.

Research limitations/implications – Findings on developments during the post-colonial period were only based on the analysis of few documentary sources.

Originality/value – The study contributes to the limited studies in public sector accounting from developing countries and Africa in particular. It also extends the application of institutional theory in public sector accounting research.

Implications – Findings inform practitioners and policy-makers on the context-specific factors worth considering in the adoption of public sector accounting practices.

Purpose – The objective of this paper is to examine how state-owned entities (SOEs) engage with the requirements of the corporate governance code in an African developing economy (Mauritius).

Approach – A content analysis of the annual reports of SOEs and National Audit Office (NAO) reports is undertaken. This is supplemented by semi-structured interviews with relevant directors and regulatory bodies.

Findings – We report a substantial non-implementation of the code and identify several impediments to the transposing of the corporate governance model to the state-owned entities. The salient issues relate to the inadequate definition of SOEs in the code, the different conceptualisations of ownership and accountability, the influence of political rivalries and the low level of financial accountability in SOEs. We also consider our findings in relation to the theoretical perspectives of ‘efficiency gains’ and ‘social legitimation’.

Originality/value – Very few studies have looked into the applicability of codes of corporate governance in SOEs. In spite of the prominence of SOEs in many African developing countries, empirical evidence on corporate governance implementation in such entities has been scant.

Recommendations/implications – The findings are of relevance to policy-makers and regulators who seek to rely on mainstream corporate governance principles and practices to enhance the accountability and transparency of SOEs. Key enabling conditions for corporate governance implementation involve a depoliticisation of board appointments and a redefinition of the accountability relationships between SOEs and their ultimate owner (i.e. elected representatives and taxpayers).