The Institute of Chartered Accountants (Ghana)

The Institute of Chartered Accountants

(Ghana)

Designed & Printed by: Primo Press Ltd. - 0208 153 856/ 0266 721 072

OFFICIAL JOURNAL OF THE INSTITUTE OF CHARTERED

ACCOUNTANTS (GHANA)

The Professional Accountant

Theme: The Faculty System – A significant Milestone for ICAG

ICAG

2026-5727ISSN:

The Professional AccountantOFFICIAL JOURNAL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS [GHANA] JANUARY/MARCH 2015

MEMBERS OF COUNCIL (2014 – 2016)

Prof. K.B Omane-Antwi - President

Mr. Christian Sottie - Vice President

Mrs. Angela Peasah - Member

Dr. Williams A. Atuilik - Member

Ms. Rebecca Atswei Lomo - Member

Maj. D. Ablorh-Quarcoo (Rtd) - Member

Prof. Kwame Adom-Frimpong- Member

Ms. Grace Adzroe - Member

Mr. Richard Q. Quartey - Member

Mr. Kwasi Asante -Member

Mr. Kwasi Gyimah-Asante - Member

Ms. Rebecca Atswei Lomo - Chairman

Mr. Joseph Hyde Jnr - Vice Chairman

Mr. Samuel Petterson Larbi - Member

Mrs. Esther Kenyenso - Member

Mr. Eric Oduro Osae - Member

Mr. Kwame Antwi-Boasiako- Member

Mr. Ibrahim Osmanu - Member

Mr. Fred N. K. Moore - Member/CEO

Ms. Abigail Armah - Member/Manager

Institute of Chartered Accountants (Ghana)

Okponglo, East Legon

P. O. Box GP 4268, Accra

Tel: +233(0)544336701-2/+233(0)277801422-4

In this issue

1.1 IFAC Issues ISA 701 – Communicating

key audit matters in the independent

auditor's report

1.2 IFAC-CIPFA Issue International

Framework on Good Governance in the

Public Sector

2.1 ICAG Inaugurates Faculty System

FEATURES

3.1 The faculty system and its operations

within ICAG

3.2 Strengthening financial markets and

institutions in Africa

3.3 The tax implications of implementing

IFRS

3.4. Tackling the menace of corruption –

The way forward

3.5. What do we need for a healthy

workplace culture?

4.1 Cyber Security, its effects and protection

against common cyber attacks

5.1 Arthritis: Its symptoms in your fingers

6.1 Revised Auditor's Report format – An

overview (ISA 701 Revised, ISA 705 Revised,

and ISA 706 Revised)

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MEMBERS OF PUBLICATIONS COMMITTEE

TECHNICAL MATTERS

YOU AND YOUR HEALTH

TECHNOLOGY CORNER

ICAG NEWS TITBITS

CONTENT

EDITORIAL

IFAC NEWS

QUOTE…

We cannot solve our problems with the same thinking we used when we created them.

(Albert Einstein)

Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning. (Albert Einstein)

The roots of education are bitter, but the fruit is sweet.

(Aristotle)

Anybody can become angry - that is easy, but to be angry with the right person and to the right degree and at the right time and for the right purpose, and in the right way - that is not within

everybody's power and is not easy.

(Aristotle)

We must develop and maintain the capacity to forgive. He who is devoid of the power to forgive is devoid of the power to love. There is some good in the worst of us and some evil in the best of us.

When we discover this, we are less prone to hate our enemies.

(Martin Luther King, Jr.)

The will to win, the desire to succeed, the urge to reach your full potential... these are the keys that will unlock the door to personal excellence.

(Confucius)

SECRETARIAL ADDRESS

Editorial The faculty system – another significant milestoneThe Institute of Chartered Accountants (Ghana), (ICAG) rounded its 2014 activities with the inauguration of the faculty system. This event, which took place at the Labadi Beach Hotel in Accra, was attended by a cross-section of members, past presidents, distinguished guests, staff and their spouses. The idea behind the formation of the faculty system, is to provide thought leadership in the Institute's effort to develop the competencies of professional accountants and to provide a mouthpiece and medium for advocacy, to influence and promote sound accountancy practice and accountability mechanisms in Ghana. The concept of the faculty system, was borne out of a vision, captured in the 2014-16 presidency agenda.

It is hoped that the faculties will provide members with up-to-date business ideas; latest management and decision-making tools; unbiased and independent information and also help CAs to become an effective part, infact, act as the 'DNA' in their work places. Chartered Accountants, are in a respectable profession and cannot be silent spectators to the happenings around them in this country, where economic/financial issues are dominated by politicians, journalists and commentators who may not have any knowledge in economics and finance but pose as experts or policy makers and mess up the issues involved. So far as money matters are concerned, CAs are into it and should do their part, whatever possible, to save resources and to ensure that the government's envisioned policy of inclusive growth is made possible.

Professional accountants in the calibre of CAs should not allow themselves to be marginalized for failing to respond to the needs of society. CAs through the faculty

system, can play their advocacy role by r e s p o n d i n g t o p u b l i c d e b a t e s o n accountancy/finance and also respond to government and regulatory bodies as well as influence domestic and international policy and legislation.

The faculties should be strategically placed in the activities of the Institute, and proactive measures should be put in place to make it functional. All necessary support and logistics needed to make the system effective should be provided by all the stakeholders; namely, the Council, management, staff, as well as the members. An efficient IT support system should be available and accessible to make the faculties run smoothly.

To be accepted as a force to reckon with, and a source of knowledge and expert advice, the government, the business community and the society at large, must see the value of CAs. Members must exhibit extemporary leadership, professionalism and eschew corrupt and negative tendencies at their work places, be it in government, in practice, in business or in academia. In essence the fundamental ethical principles of integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour should be the guiding principles in all the dealings of a CA.

Members in the faculties should approach their work with professionalism, objectivity, unbiasness, and devoid of any political consideration. Members must take the bull by the horn, and present issues starkly without fear or favour. Critical thinking and research must buttress whatever topical issues are commented on members must also choose the most appropriate platform to express their views, and as far as possible, advocate solutions to issues under consideration.

We urge every member to endeavour to join one or more of the faculties and let us all join forces to contribute our ideas to make Mother Ghana a success. To register go to www.icagh.com. Thank you

For the EditorOfori Frimpong Henneh

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1. IFAC NEWS

1.1 IFAC issues International Standard on Auditing (ISA) 701 – Communicating Key A u d i t M a t t e r s i n t h e Independent Auditor's Report (excerpts)

IFAC has issued ISA 701, Communicating Key Audit Matters in the Independent Auditor's Report which is effective for audits of financial

thstatements for periods ending on or after 15 of December, 2016. The scope of this standard deals with the auditor's responsibility to communicate key audit matters in the auditor's report. Its purpose is to address both the auditor's judgment as to what to communicate in his report and the form and content of such communication. Key audit matters are those matters that, in the auditor's professional judgment, were of most significance in the audit of the financial statements of the current period.

The purpose of communicating key audit matters is to enhance the communicative value of the auditor's report by providing greater transparency about the audit that was performed. Communicating key audit matters provides additional information to intended users of the financial statements, to assist them in understanding those matters that in the auditor's professional judgment, were of most significance. They also help users understand the entity and the areas of significant management judgment in the audited financial statements, and provide the basis to further engage with management and those charged with governance about certain matters relating to the entity.

Communicating key audit matters in the auditor's report is not:

A substitute for disclosures in the financial statements that the applicable reporting framework requires management to make, or that are

otherwise necessary to achieve fair

presentation;

A substitute for the auditor expressing a

modified opinion when required by the

circumstances of specif ic audit

engagement in accordance with ISA 705

(Revised);

A substitute for reporting in accordance

with ISA 570 (Revised), when a material

uncertainty exists, relating to events or

conditions that may cast significant doubt

on the entity's ability to continue as a

going concern; or

A separate opinion on individual matters.

a.

bb.

c.

d.

This ISA applies to complete sets of general

purpose financial statements of listed entities.

It also applies when the auditor is required by

law or regulation to communicate key audit

matters in his report. However, ISA 705

(Revised), prohibits the auditor from

communicating key audit matters when he

disclaims an opinion on the financial

statements, unless required by law or

regulation.

Requirement for reporting key audit mattersThe auditor shall determine, from the matters communicated with those charged with governance, those matters that require significant auditor attention in performing the audit. The auditor shall take the following into account:

Areas of higher assessed risk of material

misstatement, or significant risks

identified in accordance with ISA 315

(Revised);

Significant auditor judgments relating to

areas in the financial statements that

involved significant management

judgment , inc luding account ing

a.

b.

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estimates that have been identified as

having high estimation uncertainty;

The effect on the audit of significant

events or transactions that occurred during

the period.

c.

The auditor shall determine which of the

matters are of most significance in the audit of

the financial statements of the current period

and therefore are the key audit matters.

Communicating key audit matters

The auditor shall describe each key audit matter, using an appropriate subheading, in a separate section of the auditor's report under the heading “Key Audit Matters”. The introductory language in this section shall state that:

Key audit matters are those matters that in the auditor's professional judgment, were of most significance in the audit of the financial statements of the current period; andThose matters were addressed in the context of the audit of the financial statements as a whole, and in forming the auditor's opinion thereon, and the auditor does not provide a separate opinion on these matters.

b.

a.

The auditor shall not communicate a

matter in the Key Audit Matters section

when he would be required to modify the

opinion in accordance with ISA 705

(Revised) as a result of the matter. The

description of each matter in the Key

Audit Matters section shall include a

reference to the related disclosure(s), if

any, in the financial statements and shall

address:

Why the matter was considered to be one

of most significance in the audit and

therefore determined to be a key audit

matter; and

How the matter was addressed in the

audit.

a.

b.

The auditor shall describe each key audit matter in the auditor's report unless:

Law or regulation precludes public

disclosure about the matter; or

In extremely rare circumstances, the

auditor determines that the matter should

not be communicated in the report because

the adverse consequences of doing so

would reasonably be expected to outweigh

the public interest benefits of such

communication. This shall not apply if the

entity has publicly disclosed information

about the matter.

a.

b.

A matter, giving rise to a modified opinion in

accordance with ISA 705 (Revised), or a

material uncertainty related to events or

conditions, that may cast significant doubt on

the entity's ability to continue as a going

concern in accordance with ISA 570 (Revised),

are by their nature key audit matters. However,

these matters shall not be described in the Key

Audit Matters section. Rather, the auditor shall:

Report on these matter(s) in accordance

with the applicable ISAs; and

Include a reference to the Basis for

Qualified (Adverse) Opinion or Material

Uncertainty Related to Going Concern

section(s) in the Key Audit Matters

section.

a.

b.

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If the auditor determines, depending on the facts and circumstances of the entity and the audit, that there are no key audit matters to communicate or that the only key audit matters communicated are those matters addressed under other sections, the auditor shall include a statement to this effect in a separate section under the heading “Key Audit Matters”.

The auditor shall communicate with those charged with governance:

Those matters the auditor has determined

to be the key audit matters; or

The auditor's determination that there are

no key audit matters to communicate.

a.

b.

The auditor shall include in the audit

documentation:

The matters that required significant

auditor attention and the rationale for such

determination as to whether or not each of

these matters is a key audit matter;

Where applicable, the rationale for the

determination that there are no key audit

matters to communicate in the auditor's

report or that the only key audit matters to

communicate are those matters addressed

under different sections; and

Where applicable, the rationale for the

aud i to r ' s de t e rmina t ion no t t o

communicate in the report a matter

determined to be a key audit matter.

a.

b.

c.

1.2 IFAC - CIPFA issue International Framework on Good Governance in the Public SectorIFAC and the Chartered Institute of Public Finance and Accountancy (CIPFA) have jointly developed the International Framework on Good Governance in the Public Sector, to help improve and encourage effective public sector governance. The framework encourages better governed and managed public sector organizations by improving decision making and the efficient use of resources. Enhanced stakeholder engagement, robust scrutiny, and oversight of those charged with primary responsibility for determining an entity's s trategic direct ion, operat ions, and accountability leads to more effective interventions and better outcomes for the public at large.

Governance comprises the arrangements put in place to ensure that the intended outcomes for stakeholders are defined and achieved. The fundamental function in the public sector is to ensure that entities achieve their intended outcomes while acting in the public interest at all times.

Purpose of the FrameworkThe aim of Good Governance in the Public Sector is to encourage better service delivery and improved accountability by establishing a benchmark for aspects of good governance in the public sector. It is intended to apply to all entities that comprise the public sector.

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The framework is not intended to replace national and sectorial governance codes. Instead, it is anticipated that those who develop and set governance codes for the public sector will refer to the framework in updating and reviewing their own codes. The real challenge for public sector entities, however, remains in the implementation of such codes and frameworks, as it is often their application that fails in practice. The aim of this framework is to assist public sector entities in interpreting the principles in a way that is appropriate to their structures, taking account of the legislative and constitutional arrangements that underpin them.

Principles for Good Governance in the Public SectorTo deliver good governance in the public sector, both governing bodies and individuals working for public sector entities must try to achieve their entity's objectives while acting in the public interest at all times, consistent with the requirements of legislation and government policies, avoiding self-interest and, if n e c e s s a r y, o v e r r i d i n g a p e r c e i v e d organizational interest. Acting in the public interest implies primary consideration of the benefits for society, which should result in positive outcomes for service users and other stakeholders.

Implementing the Principles

Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of lawPublic sector entities are accountable not only for how much they spend, but also for how they use the resources under their stewardship. This includes accountability for outputs, both positive and negative, and for the outcomes they have achieved. Public sector entities are accountable to legislative bodies for the exercise of legitimate authority in society.

This makes it essential that each entity as a whole can demonstrate the appropriateness of all of its actions and has mechanisms in place to encourage and enforce adherence to ethical values and to respect the rule of law.

Ensuring openness and comprehensive stakeholder engagementAs public sector entities are established and run for the public good, their governing bodies should ensure openness in their activities. Clear, trusted channels of communication and consultation should be used to engage effectively with all groups of stakeholders, such as individual citizens and service users, as well as institutional stakeholders.

Defining outcomes in terms of sustainable economic, social, and environmental benefitsThe long-term nature and impact of many of the public sector's responsibilities mean that it should define and plan outcomes and that these should be sustainable. The governing body should ensure that decisions further the entity's purpose, contribute to intended benefits and outcomes, and remain within the limits of authority and resources. Input from all groups of stakeholders, including citizens, service users, and institutional stakeholders, is vital to the success of this process and in balancing competing demands when determining priorities for the finite resources available.

Determining the interventions necessary to optimize the achievement of the intended outcomesThe public sector achieves its intended outcomes by providing a mixture of legal, regulatory, and practical interventions. Determining the right mix of interventions is a critically important strategic choice that governing bodies of public sector entities have to make to ensure they achieve their intended outcomes. Public sector entities need robust decision-making mechanisms to ensure that their defined outcomes can be achieved in a way that provides the best trade-off between

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the various types of resource inputs while still enabling effective and efficient operations. Decisions made need to be reviewed continually to ensure that achievement of outcomes is optimized.

Developing the entity's capacity, including

the capacity of its leadership and the

individuals within it

Public sector entities need appropriate structures and leadership, as well as people with the right skills, appropriate qualifications and mind-set, to operate efficiently and achieve their intended outcomes within the specified periods. The governing body must ensure that it has both the capacity to fulfil its own mandate and to make certain that there are policies in place to guarantee that an entity's management has the operational capacity for the entity as a whole. Because both individuals and the environment in which an entity operates will change over time, there will be a continuous need to develop the entity's capacity as well as the skills and experience of the leadership of individual staff members.

Managing risk and performance through robust internal control and strong public financial management

The governing bodies of public sector entities

need to ensure that the entities they oversee

have implemented – and can sustain – an

effective performance management system

that facilitates effective and efficient delivery

of planned services.

I m p l e m e n t i n g g o o d p r a c t i c e s i n transparency, reporting, and audit to deliver effective accountability

Accountability is about ensuring that those making decisions and delivering services are answerable for them, although the range and strength of different accountabil i ty relationships varies for different types of governing bodies. Effective accountability is concerned not only with reporting on actions completed, but also ensuring that stakeholders are able to understand and respond as the entity plans and carries out its activities in a transparent manner. Both external and internal audit contribute to effective accountability.

Source:www.ifac.org

Risk management and internal control are important and integral parts of a performance management system and crucial to the achievement of outcomes. They consist of an ongoing process designed to address significant risks involved in achieving an entity's outcomes. A strong system of financial m a n a g e m e n t i s e s s e n t i a l f o r t h e implementation of public sector policies and the achievement of intended outcomes, as it will enforce financial discipline, strategic allocation of resources, efficient service delivery, and accountability.

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2. ICAG NEWSThe Institute of Chartered Accountants (Ghana) inaugurates Faculty System

The President of the Institute of Chartered

Accountants (Ghana), Professor Kwame

Boasiako Omane-Antwi, has inaugurated the

much-touted faculty system at a colourful

ceremony at the Labadi Beach Hotel in Accra thon the 12 of December 2014. The ceremony

which was attended by a cross-section of the

members, past presidents, management, staff,

invited guests and spouses. One of Ghana's

renowned musicians, Kwabena Kwabena,

treated the gathering to some music.

*********

The following members are the founding Deans and Vice Deans who were accordingly inducted into office.

NAME� � � FACULTY� � DEAN/VICE DEAN1. Mr. Ferdinand Gunn Audit & Assurance Dean2. Mr. Oseini Amui Audit & Assurance Vice Dean 3. Prof. Edward Marfo-Yiadom Corporate Financial Management Dean 4. Dr. Joe France Corporate Financial Management Vice Dean5. Nana Sackey Financial Reporting Dean6. Mrs. Nana Abena Adu-Gyamfi Financial Reporting Vice Dean7. Nii Adumansa Baddoo Corporate Governance Dean8. Mr. Bernard Adade Corporate Governance Vice Dean9. Mr. Emmanuel Asiedu Taxation & Fiscal Policy Dean10. Mr. Isaac Nyame Taxation & Fiscal Policy Vice Dean11. Mr. Michael Gyamfi Public Financial Management Dean12. Mrs. Roberta Quarshi Public Financial Management Vice Dean

The President was optimistic that members of the Institute will lend their support to the faculties and

help make them functional and successful. He added that members are strategically positioned to

assist with the transformation of the accountancy landscape in Ghana. He urged members to take bold

steps now so as to be part of the newly-established ICAG's faculty system.

He ended with warm felicitations of the season and a New Year of successes and accomplishments.

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Figure 1 - Some past presidents congratulating the deans & vice deans after their induction.

Figure 2 - Deans and Vice Deans swearing the oath of office.

Figure 3 - Mr. Ben Korley interacts with Hon. Albert Kan-Dapaah, a past president

Figure 4 - Nana Sackey, Dean, Financial Reporting addressing the gathering after swearing im

Figure 5 - Some past presidents congratulating the deans &vice deans after swearing the oath of office.

Figure 6 - Past presidents - Hon. Kan-Dapaah, Prof. Nana Ato Ghartey, Mr. S.O. Annan

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3. FEATURES

3.1 The faculty system and its operations within ICAG

By Ofori Frimpong Henneh

The faculties and special interest groups will

be specialist bodies within ICAG which will

offer members networking opportunities,

influence and recognition within clearly

defined areas of technical expertise. As well as

providing accurate and timely technical

analysis, they will lead the way in many

professional and wider business issues through

stimulating debate, shaping policy and

encouraging good practice.

The faculties will exist to enhance professional

development of members. They will give one

all the technical resources one needs to carry

out his/her role, as a member, to the highest

standard, and stay ahead of the competition.

The faculties will be coordinated by the

Technical and Research Directorate of the

Institute and will provide secretarial support

and relevant information to run the faculties

smoothly. The work plan of the faculties would

be approved by the Technical and Research

Committee and the Council of ICAG. The

faculties will run on the IT infrastructure of the

Institute and a dedicated websites will be

available for each faculty. Faculty members

will basically meet online but may meet at a

convenient place to discuss issues. They may

also meet at least once a year for a conference.

The faculties will operate independently just

like the District Societies, but will need support

from the Institute.

Benefits of Faculty Membership

Access to a dedicated website with the

latest information plus a library of

publications and guides. Each faculty will

give each member a dedicated access code

to access all the information and library

materials at their website and will also be

given the opportunity to access or visit

other faculties' sites.

Magazines, e-bulletins and practical

guides to keep you up-to-date with the

latest developments and legislation. The

faculties would issue newsletters,

journals, articles, holding seminars,

public lectures, to educate their members

and the public at large.

Nationwide events to help you stay in

touch and share knowledge and

experience with other members. These

include social and other events to keep

members knowledgeable, active and

healthy.

Help with your professional development

through CPDs. The faculties would

organise CPDs and training programs for

its members and run courses that will earn

the participants a specialised certificate in

their field of endeavours.

Create the chance to be heard. The

faculties will dialogue, interact and

respond to government and regulatory

bodies on their policies and programs and

influence domestic and international

policy and legislation. They will also

make representations on behalf of the

Institute to the government and other

relevant bodies on topical issues.

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The faculties may partner with the

government and public agencies to

implement their programs and policies.

For instance the Public Finance Faculty

may partner with the Controller and

Accountant General's Department and the

Ministry of Finance in implementing the

International Public Sector Accounting

Standards (IPSAS) and the Ghana

Integrated Financial Management

Information Systems (GIFMIS). The

faculties would serve as a knowledge

powerhouse where they will come for

technical knowledge and expert advice

whenever they have implementation

challenges.

Te c h n i c a l u p d a t e s : p r o v i d e a

comprehensive review of relevant

pronouncements from accountancy

bodies and other state institutions. The

faculties will provide up to date

professional advice and support to its

members, give them fresh ideas and ease

them the burden of searching for these

innovations and ideas on their own. The

faculties provide an avenue to share

knowledge and experience, and network

within a closed community of like-

minded business professionals.

The faculties will also serve as a referral

point for members and the profession

where expert advice would be provided by

members for members often free of

charge. This could be done via, telephone,

email, social media networks, etc.

For example, the Financial Reporting faculty is

the focus for chartered accountants working on

financial reporting. It will represent the

Institute on financial reporting matters, making

representations to the government and

other authorities, and public pronouncements

on major financial reporting issues. The

faculties will be free stand-alone bodies with

their own constitution.

Six faculties that have been established

Ø Audit and AssuranceØ Taxation and Fiscal PolicyØ Financial ReportingØ Corporate Financial ManagementØ Public Financial ManagementØ Corporate Governance

Other international professional bodies such as

ICAEW, ICAN, SAICA, ICAI, etc. have

similar faculties which are performing

enormous activities to enhance the images of

their institutes and helping upgrade the skills

and knowledge of their members. Some of the

faculties within these institutes organise

training and post qualification courses for their

members and issue to them certificates which

are well accepted and accredited by their

institutes and countries at large. This is where

ICAG wants to move the faculties to. ICAEW

for instance, has similar faculties which are

organized under:

Audit and AssuranceCorporate FinanceFinancial ManagementFinancial ReportingFinancial ServicesInformation TechnologyTax

Apart from the faculties, ICAEW also has other

special interest groups (SIG) which provide

prac t ica l suppor t , in format ion and

representation for chartered accountants

working within a range of industry sectors

including:

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Ø Charity and Voluntary sectorØ Entertainment and MediaØ Farming and Rural BusinessØ Forensic auditØ HealthcareØ Interim ManagementØ Non-Executive DirectorsØ Public SectorØ SolicitorsØ Tourism and HospitalityØ Valuation

ICAG would in future carry the faculty system

to the next level where specialised interest

groups around occupations, professions, etc.

similar to what ICAEW has got, would be

formed, so that members within a particular

profession or occupation can form their groups

and meet more frequently to discuss issues

pertaining to their areas of operation. Members

are therefore encouraged to register for faculty

membership of any of the areas they have

interest and expertise free of charge. You can

r e g i s t e r a t t h e I C A G w e b p a g e

www.icagh.com.

3.2 Strengthening financial markets and institutions in Africa ByAdu Anane Antwi, Director-GeneralSecurities and Exchange Commissionat the 2nd Africa Congress of Accountants (ACOA), Accra, May 14, 2013

Introduction

Economists have long recognised the

importance of the financial sector in the

economy. The financial sector plays a

central role to support the real economy.

•

A financial market is described as a market

in which financial assets such as shares

and bonds can be bought or sold.

Financial institutions facilitate the

purchase and sale of the financial assets by

allocating capital to meet the transactions.

Financial institutions in general

intermediate by accumulating capital

from excess funding units and giving it out

as loans to deficit funding units like

individuals, businesses and governments.

The financial sector has a vital role to play

in the ongoing transformation of our

society, and our desire to bring a better life

to all of our people.

Over the years strong, robust and

comprehensive financial systems have

played very vital roles in the economic

growth and development of many

countries.

Well-functioning and efficient financial

institutions and markets are central to the

optimal allocation of capital to new areas

of growth and to facilitate economic

transformation.

Strengthening financial markets and

institutions means promoting principles

and sound practices for financial stability

through the development of well-

functioning financial systems and market

discipline.

•

•

•

•

•

•

•

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Financial Sector Reforms

In recent years several African countries

have undertaken extensive restructuring

and transformation of their financial

sector.

Ghana's financial sector has for example

undergone extensive restructuring and

transformation starting with the

implementation of the Financial Sector

Adjustment Programs (FINSAP I and II),

from the late 1980's through to the mid

1990's.

The implementation of FINSAP I and II

resulted in the privatization of the banking

sector and the establishment and licensing

of several new banks and non-bank

financial institutions.

The Ghana government in the early 2000's

developed the Financial Sector Strategic

Plan (FINSSP).

After the implementation of the FINSSP

r e c o m m e n d a t i o n s t h e r e w e r e

improvement s in the coun t ry ' s

macroeconomic performance.

In order to consolidate the gains of the

FINSSP and address emerging challenges

including regulatory issues arising from

the global financial crisis, the Government

in 2012 adopted the second phase of the

Financial Sector Strategic Plan (FINSSP

II) to serve as the blueprint for Ghana's

financial sector development.

The FINSSP II document identified the

following weaknesses in the financial

system of Ghana:

Low Capital Market liquiditySubstantial amount of money outside the banking system.Low financial capacity of banks and insurance companies to undertake large deals. e.g. financing of the oil and gas sector.Relatively few listed equities Mostly cash based transactionsLittle activity in corporate and Government bonds.Small size of many rural and community banksVery little medium to long term credit

The FINSSP II report also identified the following six key objectives to be pursued to enhance the financial sector to which various strategic initiatives have been designed to facilitate the achievement of the objectives and strengthen the financial market and institutions in the country:

To make the domestic financial sector the

preferred source of finance for Ghanaian

companies.

To promote efficient savings mobilization.

To enhance the competiveness of

Ghanaian financial institutions within a

regional and global setting.

To ensure a stronger and more facilitative

regulatory regime.

To promote a diversified financial sector

within a competitive environment

To promote education, public awareness,

capacity building and financial literacy

With many African countries sharing similar economic characteristics with Ghana, it is believed the above issues identified in the FINSSP II report are relevant for other African countries.

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Making Financial Markets and Institutions Strong

Various researchers have studied the financial

sector in many countries around the globe and

have made several recommendations to make

financial markets and institutions stronger and

m o r e e f f i c i e n t . S o m e o f t h e s e

recommendations and others that can

strengthen financial markets and institutions in

Africa are discussed below.

Further financial sector reforms

There is still a need for more reforms in many African countries.Pensions Reform R e f o r m s s h o u l d p r o m o t e t h e establishment of new financial institutions and the introduction of new financial products.Reform should be geared towards setting up a system of rewards and penalties such that market participants perceive (correctly) that it is in their own best interest to behave in efficient and prudent ways.

Strengthen corporate governance in financial institutions and the role of market discipline in ensuring effective oversight over financial institutions. Good corporate governance and an appropriate corporate structure are vital for ensuring that the incentives of managers of finance contribute to the soundness of the institution and reflect a professional assessment of all risks involved.Enhance production and dissemination of information. A crucial component of financial sector reform is improvement in the quality and quantity of reliable and timely information.

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Strengthen corporate governance in financial institutions

Removal of barriers to entry into the financial sector

Barriers to entry in various financial

sectors remain high, both within countries

in the region and across borders. This

leads to higher costs and inefficiencies.

In view of the key role of the financial

sector in allocating savings and

investment, this represents a significant

constraint on growth prospects in Africa

and must be addressed.

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Strengthen the foundations for a sound risk culture in the financial sector

A strong risk culture that promotes prudent risk taking and the long-term viability of financial institutions will become more important in the future financial landscape which is expected to be more diverse and competitive. This can be advanced through; a) implementing measures to promote more risk-aligned executive compensation, and b) developing codes and practices, and training programmes that support a sound risk culture.

Develop the capacity of financial industry workforce

The capacity of industry workforce should

be built through training. Upgrading the

skills and competencies of the existing

workforce will ensure that they are able to

meet the changing needs of the financial

industry as it undertakes higher value-

added services moving forward and to

enable them to perform in a more

competitive and globalised environment.

15

More industry-ready entry-level graduates

must be produced through enhanced

collaboration and coordination between

the financial industry and institutions of

higher learning to ensure seamless

transition of graduates into the financial

industry workforce.

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Improve efficiency in payments, settlement and clearing systems

Financial systems—either banking or securities markets—cannot function without efficient systems for payments, settlement and clearing, as these form the essential “plumbing” of the system. All countries should work to improve these systems. E-payments infrastructure should be enhanced in various countries in the region by introducing improvements and new services that will significantly improve user convenience and access to payment services to further facilitate the adoption of e-payments.

Enhance the mobile banking channel

Enhance the mobile banking channel by

driving the adoption of the mobile phone

as a simple and convenient channel to

c o n d u c t b a n k i n g a n d p a y m e n t

transactions, by encouraging greater

participation of financial service providers

and merchants in the mobile banking and

payments ecosystem.

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Promote financial education

Financial markets can hardly develop

when all stakeholders are not well

informed and educated to understand their

functions, instruments/products and how

they work.

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Financial education must be used to

empower the population to understand the

financial market and use the products and

services of the market.

Financial capability must be promoted

through education as an essential life skill

from an early age through the integration

of financial education into the formal

curriculum at schools and higher learning

institutions.

Enhanced financial education will

increase the participation of all segments

of society in the financial system.

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Promote Financial Inclusion

As a developing region, the financial systems in African countries have serious limitations, because it makes beneficial financial services available only to a minority of people. Poor people – who, unfortunately, still constitute the vast majority of the region's population – have only limited or no access to financial services. Efforts (including the use of microfinance concept) should be made at promoting financial inclusion in the region.

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Strengthen the informal financial sector

Governments should exploit the comparative advantage of the informal financial sector and strengthen the complementarity between the formal and informal financial sectors.Ghana's example of strengthening microfinance, susu, money lending, etc institutions.

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Develop depositor protection schemes (including deposit insurance)

Deposit protection schemes should be

developed. This will provide a mechanism

that ensures that small depositors (i.e.

those whose deposits fall within an

explicit ceiling) do not suffer when the

institutions keeping their deposits fail.

Promote the bond market

Governments in the region should use infrastructure bonds to finance their infrastructural needs. The issue of municipal bonds by local authorities should be encouraged.Private sector companies must be encouraged to issue bonds to raise huge capital for their expansion.

Encourage self-policing in the sector

Through the history of trade and finance, market participants have established institutions that ensure honest and prudent behaviour, lower transactions costs, and reduce risks. Some of these self-policing bodies may eventually develop into full-fledged self-regulatory organizations. The government can help by providing the supporting legal and supervisory infrastructure.

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Promote regional financial institutions

These institutions play key role in the growth of intra regional trade and direct intra regional investment flows. Regional financial institutions are complements for global financial institutions. They are better able to coordinate with other international financial institutions in order to promote initiatives with a view to furthering the region's financial development.

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Encourage the mobilization of regional savings

The issue of regional bonds must be promoted within the region. Regional bonds would allow companies and governments to raise huge capital outlays from the region to finance their expansion and infrastructure without depending on donors. Such bonds would attract international investors resulting in capital inflows into the region. To the companies, the huge capital outlays would see them become larger and more competitive by serving larger and better diversified markets.

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Strengthen prudential regulation and supervision

Governments should complement the

creation of franchise value by adopting a

regulatory regime based on rules designed

to align the private incentives of market

players with the social goal of financial

s tab i l i ty, and by s t rengthening

supervision.

Build the capacity of financial regulators

and ensure their independence.

The use of peer review mechanism must

be encouraged within the region. This

process may have the potential to broaden

the pool of experts available. Peer review

will ensure the development of the

financial supervisory and regulatory

systems in the region.

Strengthen regional and international financial integrationCountries in the region must strengthen ties

with regional and international economies as

these are key foundations in various African

countries' transition towards becoming high

value-added and high-income economies.

17

Stronger cross-border linkages will serve

to enhance trade and investment

opportunities by expanding the market for

final demand, increasing capital

accumulation and improving factor

productivity.

Such cross-border linkages will also

enhance opportunities for African

countries to capitalise on the diverse

comparative advantages in the region.

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Deepen cross-border coordination and cooperation among financial regulators

To promote the orderly provision of financial services in the region,cross-border coordination and cooperation among regulators must be deepened. This will ensure financial stability within the region is preserved while realising efficiency gains from increased activities of local financial institutions abroad as well as promote regional and international financial conglomerates in the various countries.Countries in the region must pursue cross-border arrangements with other regulatory authorities with a view to achieve mutual recognition or to promote consistency of prudential and market conduct standards.

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Conclusion

As the world economy becomes more interlinked and more complex the nature of financial institutions has to evolve. But is has to evolve with care. Given the economic importance of the financial sector and the dangers when it functions poorly, it is not surprising that governments in both developed and emerging market countries alike take a keen interest in regulating and supervising financial institutions and markets.

Sharing lessons, experiences, and challenges among policy-makers and regulators in the region will further enhance co-operation, which will eventually strengthen financial markets and institutions in Africa and lead to greater financial stability in the region.

References

Cœuré,B. (2012). Challenges facing

financial integration and financial

stability

Financial Sector Strategic Plan II Report,

Ghana, (2012)

Fullani, A. (2009). Financial supervision

and measures to strengthen financial

stability

Junbo, X. (2005). Medium-term strategy

to strengthen financial stability and

promote financial development

Kawai, M. (2013).Strengthening the

As ian F inanc ia l Sec tor toward

Sustainable and Inclusive Growth

Kuroda, H. (2002). How to Strengthen

Banks and Develop Capital Markets

Morgan, P. J. and Lamberte. M. (2012).

Strengthening Financial Infrastructure.

Mulya, B. (2009).The need to strengthen

Indonesian financial market

Nienhaus, V. (2010). Capacity Building in

the Financial Sector: Strategies for

Strengthening Financial Institutions

Pomerleano, M., Litan, R. E. and

Sundararajan, V. (2002). Strengthening

Financial Sector Governance in Emerging

Markets

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3.3The tax implications of implementing IFRSBy R. O. JEGEDE, FCA

INTRODUCTION

What is IFRS?

International Financial Reporting Standards

(IFRS) are a set of accounting standards

developed by the International Accounting

Standards Board (IASB) that is becoming the

global standard for financial accounting and

reporting.

THE IASB OBJECTIVES BEHIND INTRODUCTION OF IFRS

To develop in the public interest, a single

set of high quality, understandable and

enforceable global accounting standards

that require high quality, transparent and

comparable information in financial

statements and other financial reporting to

help participants in the various capital

markets of the world and other users of the

information to make economic decisions;

a.

c.

b.

d.

MAIN FOCUS OF IFRS

The key focus is to provide financial

information to investors, creditors and other

stakeholders, which may not necessarily

satisfy the need of the tax authorities.

The Global move towards IFRS

Over 120 nations and reporting jurisdictions

permit or require IFRS for domestic listed

companies.In addition, more than 90 countries

have fully conformed to IFRS as promulgated

by the IASB and include a statement

acknowledging such conformity in audit

reports. The remaining major economies have

established timelines for convergence with, or

adoption of IFRS.In Africa, over 30 countries

have adopted IFRS as at 2013.

To promote the use and rigorous

application of those standards;

In fulfilling the objectives associated with (a) and (b), to take account of, as appropriate, the special needs of the small and medium- sized entities and emerging economies; and

To bring about convergence of national accounting standards and IFRSs to high quality solutions'’

Rambarran, J. (2012). Strengthening financial stability in Trinidad and Tobago – staying ahead of the curveSin, N. N. (2012). Strengthening Asia Financial Markets Through Regional Collaboration Stiglitz, J. (1998). The Role of the Financial System in DevelopmentWinkler, A. (2010). The Financial Crisis: A Wake-Up Call for Strengthening Regional Monitoring of Financial Markets and Regional Coordination of Financial Sector Policies.

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IFRS- Its Global Acceptability

Figure 1: IFRS adoption map of the world

IFRS & AFRICAN

SN Jurisdiction IFRSs notpermitted

PartialAdoption

IFRSs permitted

IFRSs required for some

IFRSs required for all

Year Legally accepted/started to

adopt

31323334

123456789101112131415161718192021222324252627282930

AngolaAlgeriaBeninBotswanaBurkina FasoBurundiCameroonEgyptEritreaEthiopiaGambiaGabonGhanaKenyaLiberiaLesothoLibyaMali

MalawiMauritiusMoroccoMozambiqueNamibia

Madagascar

NigeriaRwandaSeychellesSierra LeoneSouth AfricaSwazilandTanzaniaUgandaZambiaZimbabwe

xx

xx

x

x

x

x x

x

x

x

x

x

x

x

x

x

x

No s tock exchange i n t he gamb ia

x

xx

x

xx

x

xx

xxx

xx

x

x

2009200920082007201220042009200620102009

20092007

2007200220122001

2001

no date20102005

20052004

2004

2006200520102008

2009

200320052009

200520062009

Figure 2: Countries in Africa which have adopted IFRS

20

IFRS and TAX LAWS

IFRS is a global standard. With exception of IFRS on SMEs, there is only one IFRS for all entities irrespective of the operating jurisdictions. The tax laws are territorial in nature. The tax laws in one country may differ significantly from the other. For example, Nigerian Tax Laws differ significantly from the Ghanaian Tax Laws. The tax implications of IFRS differ from one country to the other.

As a result of wide gap between the bases of preparing IFRS Financial Statements (a raw material for tax returns) and tax law, many countries that have adopted IFRS have no choice than to amend their tax laws and bridge the gap between IFRS and their respective tax laws.

Some countries have taken steps to bridge the gap between the IFRS and their tax laws. For example, in UK, the provisions of S25 ITTOIA, 2005 and S46 CTA 2009 have been introduced that, where there is no explicit provisions under the legislation, the way profits are arrived at under the commercial accounting is acceptable for determining the tax position of the taxpayer.

HMRC PRESS RELEASE 137/99 DATED 20/07/1999; TAX BULLETIN OF DECEMBER 1999, PP 707-709

Following the court ruling on Herbert Smith case, HMRC issued a press release stating that:

‘We accept that the case establishes generally that there is no longer a tax rule which denies provisions for 'anticipated' losses or expenses. This means in particular that accurate provisions for foreseen losses on long- term contracts (for example in construction industry) made in accordance with correct accounting practice will be tax- deductible'

HERBERT SMITH (A FIRM) V HONOUR, CH. 1999, 72, TC 130 (1999) STC 173

A firm of solicitors appealed against two assessments, claiming that a substantial provision for future rents, which it was obliged to pay in respect of premises which it was vacating, should be allowed as a deduction. The Ch. D accepted this contention and allowed the appeal. Lord J held that the provision was required by the concept of 'prudence', in accordance with the generally accepted principles of commercial accountancy. There was a general rule that 'accounts prepared according to generally accepted principles of commercial accounting are, in general, the guide to the amount of those profits. There was no 'general exception prohibiting the deduction of sums entered in the debit side of the accounts by way of a provision in accordance with the prudence concept as set out in paragraph 14(d) of SSAP

The firm's accounts should be accepted for tax purposes as a true statement of the firm's profits for the relevant period.

TAX IMPLICATIONS OF CONVERTING TO IFRS

IFRS requires that entity should prepare an

opening statement of financial position on the

date of transition. This will require

adjustments to be made to the comparative

statement of financial position previously

prepared under the national GAAP to IFRS

using the 4 important rules listed below,

subject to mandatory exceptions and optional

exemptions to full retrospective application:

The 4 important rules of IFRS transition are:

21

Recognize all assets and liabilities whose recognition is required by IFRSs.Derecognize items as assets or liabilities if IFRSs do not permit such recognitionReclassify items that are recognised under previous GAAP as one type of asset, liability, or component of equity, but are a different type of asset, liability, or component of equity under IFRSMeasure all recognised assets and liabilities according to the principles enshrined in IFRS.

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TAX IMPLICATIONS RECOGNITION

Transition from the previous GAAP into IFRS requires that we recognise certain assets/ liabilities which were not previously recognised under the national GAAP.

EXAMPLE (DECOMMISSIONING- IAS 16: 16c)IFRS requires a decommissioning cost to form part of the cost of Property, Plant and Equipment (PPE). The Present Value of the decommissioning cost (a future cost) is added to the cost of the asset and adjustment is made to retained earnings in respect of this future cost (depreciation, impairment etc.)

Such provision will have the following tax effects.

The difference between the carrying value

of the asset and the tax base will create a

deferred tax adjustment.

The decommissioning provision has not

created any asset. So, it is doubtful

whether or not any tax relief will be

granted on the recognition of the cost.

Future depreciation of the cost will not be

tax deductible.

2.

1.

TAX IMPLICATIONS OF DERECOGNITION

IFRS requires derecognition of some

assets/liabilities which were recognised under

the previous GAAP.

EXAMPLE (INTANGIBLE ASSETS- IAS

38: 54-56)

IAS 38: 52-56 requires a derecognition of the

internally generated research expenditure

which was recognised as asset under the

previous GAAP. Such expenditure will be

taken to retained earnings.

In some tax jurisdictions, expenditure on R &

D is a Qualifying Capital Expenditure (QCE)

and there is no distinction between

development cost and research cost. Rather

they are regarded as a single QCE.The cost/

Tax Written Down Value (TWDV) will

continue to enjoy capital allowances. This will

create a temporary difference between

accounting and tax base and it will create

adjustment in deferred tax account.

TAX IMPLICATION OF RECLASSIFICATION

IFRS requires the reclassification of asset or

liability from one type of asset or liability in

previous GAAP. For Example:Returnable

packaging materials may have been

previously recognised as stock, but which

meets the definition of an asset under IFRS.

This will have to be reclassified as plant under

IFRS.

Tax Implications:

What will be the value of the QCE on the

date the asset is reclassified? At

Historical Cost or Fair Value?

1.

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The asset may be deemed to be an addition to QCE and may begin to enjoy Capital Allowances and may attract investment allowance creating more benefit for the tax payer.

2.

TAX IMPLICATIONS- MEASUREMENT

Measurement in conformity with IFRS

requires that some assets or liabilities in some

instances be valued with reference to the

market as practicable as possible. This will

usually result into wider disparity between the

accounting and the tax base and create

adjustment into the deferred tax account.

EXAMPLE

IAS 39:14 requires that on transition to IFRS,

the financial assets designated through profit or

loss be measured at fair value (market value).

TAX EFFECT.

The adjustment would be made through retained earnings. Being an appropriation, the adjustment will not result into a payment of tax.

Financial asset is a circulating asset, therefore it is not a QCE and there is no tax base. This will not give effect to any adjustment in the deferred tax account.

2.

1.

The subsequent measurement recognized in Profit or Loss will not be allowed for tax purposes

TAX IMPLICATION OF CONVERTING TO IFRS

DEFERRED TAX- IAS 12: 7-10 - The adjustment made to assets and liabilities of the entity at the transition reporting period may create deferred tax assets or liabilitiesTAX IMPLICATION - The increase/decrease in the deferred tax accounts will not be of

any significant interest to the Tax Authorities

(TA) as it will not affect the current tax

position of the entity.The review of the details

of the deferred tax account will grant the TA a

wide window of accounting entries that may

lead to future tax assessment.

TAX IMPLICATIONS OF CONVERTING TO IFRS – ON RETAINED EARNINGSTransition adjustment to retained earnings may increase or decrease it. What is the tax effect of making distribution, in the form of bonus or dividends from such retained earnings?

GENERALTax Implication –Disclosure

Disclosure requirements of IFRS are enormous, and these may trigger series of tax audit and investigation on companies.This may be an eye-opener to tax authorities to issues that some entities have not been disclosing before, which may lead to discovery of additional taxes. The reporting requirement will impact on transfer pricing because of the necessary disclosure that will be made.

GENERAL TAX IMPLICATIONS

Generally, conflicts will arise between the

accounting and tax treatments of the

following in most, if not all the various

tax jurisdictions of the world;

Conversion costs;Fair value; andImpairment losses

IFRS CONVERSION COSTS

Adoption of IFRS by various corporate

entities will no doubt have some attendant cost

implications. Some of these costs may include

the following: cost of re-measuring all the

IFRS required equity, current and non-current

assets; financing the conversion costs from

National GAAP to IFRS.

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Big Question?How will the tax inspectors treat

these costs?Capital or Revenue?

TAX IMPLICATIONS – EFFECTS ON IT

The IT systems and processes must be reviewed such that it can capture all information required for financial reporting as well as for tax computation.

Componentization: It is important that the accounting information system (IT) should be able to aggregate such information required for tax purposes.

TAX IMPLICATION OF FAIR VALUE

IFRS 13 defines Fair Value as the price that will be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following, though not exhaustive are some of the IASs and IFRSs which require assets and liabilities to be stated at their fair values at each reporting date:

IAS 16 –Property, Plant and Equipment (para. 31- 32)IFRS 3 – Business Combinations (para. 18 -20)IFRS 13 – Fair Value Measurement (para. 9 – 10)IAS 36 – Impairment of Assets (para. 25 -29)IAS 38 –Intangible Assets (para. 35 – 41)

The question then arise, what is the tax

treatment of fair value adjustments of assets

and liabilities by reporting entities? Any Fair

Value adjustment to assets or liabilities at

transition date to IFRS that does not affect the

current profit may be disregarded by most tax

jurisdiction and will not have any tax

effect.Any subsequent Fair Value adjustment

to assets and liabilities of the entities will also

be disregarded by the tax authorities but it will

create a deferred tax adjustment.

The only time Fair Value is used for tax purposes at the initial recognition of an asset/liability is when the transaction is between connected persons.On the initial recognition of an asset arising from a transaction at arm's length, the cost, even when lower or higher than the market value, will be used.Increase/decrease in the fair value of an entity's net assets may create a higher/lower minimum tax in jurisdictions where accounting figures are used to calculate minimum tax.

TAX IMPLICATION OF IMPAIRMENT LOSS

These represent the differences between the carrying amounts of assets and their recoverable amounts where the former is higher than the latter. Impairment losses are usually charged as expenses in the profit or loss for assets carried at costs or treated as revaluation decrease for assets carried at revalued amounts. For example, the estimation of recoverable amount of assets according to IAS 36 should be based on reasonable and supportable assumptions made by the management of companies. The following are some of the Standards in which impairment losses are discussed;

IAS 36 – Impairment of Assets (paragraphs 80 -99)IFRS 9 – Financial Instruments (paragraph 5)

Despite various requirements by accounting

standards that assets PPE, Goodwill and

Financial Instruments should be tested for

impairment, tax provisions in different

jurisdictions may not allow such impairment

losses as tax deductible expenses.

PREFERENCE SHARES

IAS 32.11, based on substance over form classifies preference share as a financial liability rather than equity instrument because the issuer has an obligation to pay fixed

24

amount of interest periodically and the principal at the end of maturity ( where it is a redeemable preference shares). Divide nt payable to preference shareholders should be treated as part of operating expenses.

In jurisdictions where Companies Act still

classifies preference shares as part of owners'

equity, and the tax authorities interpret the

payment made to holders to be dividends, it

will create the following tax implications:

The interest will be disallowed and

regarded as dividends.

There are implications on Withholding

Tax (WHT), Personal Income Tax (PIT)

and Corporate Income Tax (CIT).

The addition of the dividends may trigger

off excess dividends tax liability.

GROUP TAXATION

IFRS 3 defines business combination as a

transaction or other event in which an acquirer

(parent) obtains control of one or more

businesses (subsidiaries) to form a group.IAS

27.4 – Consolidated and Separate Financial

Statements: defines consolidated financial

statements as the financial statements of a

group presented as those of a single economic

entity. IAS 27.9 - requires a parent to present

consolidated financial statements in which it

consolidates its investments in subsidiaries. In

jurisdictions where group taxation is not

allowed, separate tax returns will be filed with

tax authorities and this may have tax

implications on the minimum tax as share of

the group profit may be taxed twice.

Employee Benefits

These include short term, post-employment,

other long and terminal benefits. Recognition

and disclosure of these benefits must be in the

IFRS transition financial statements.In

Jurisdictions, where the approval is required,

such accrued or current benefits may not be tax

deductible. IAS 19.10 requires an entity to

recognise the undiscounted amount of benefit

expected to be paid in exchange for a

service.For instance, when the reporting entity

gives employees interest free loan or

beneficial interest loan (loan with interest rate

below the market rate).

The tax authority will take the differential as income (benefit in kind) - (BIK) in the hands of the employee. This may have the following tax effects:

The recognition of the arrears of such benefits on transition to IFRS may attract back duty taxes.

The subsequent charge of such benefits to employees' cost may create tax on BIK

1.

2.

Other tax implications may arise where:

Entity enters into PAYE settlement arrangement(PSA) with its employees. Such payment will constitute a taxable benefits.Tax authorities decide to do a back duty assessment of the company relying on the new IFRS Financial statements.

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TAX IMPLICATION OF CASH SETTLED SHARE-BASED PAYMENT

The gain or loss arising from the re-

measurement of the fair value of the goods or

services at the end of each reporting period will

be treated as follows:

Ÿ Gains will not be taxed.Ÿ Loss will not be allowed. Ÿ Because they are unrealised.Ÿ SHARE APPRECIATION RIGHT

(SARs) PARA 32Ÿ Share appreciation rights may be granted

to employees.Ÿ The SARs may vest immediately or carry

vesting conditions which may be:Ÿ Service based orŸ Performance based,Ÿ The entity will recognise the fair value of

the services received using option model at the initial measurement and re- measured at the end of each reporting period using fair value.

Ÿ TAX IMPLICATIONŸ GRANT DATE: EMPLOYER:

Not deductible as employment cost (in some tax jurisdiction, the grant date which is the date the employee has an enforceable legal right is the date the tax should arise) ABBORT V PHILBIN 39 TC 82

EMPLOYEE:Not a taxable employment income

EXERCISE DATE: EMPLOYER:Excess of market value over exercise price is deemed to be the employment cost of the reporting period. The charge will be tax deductible.

EMPLOYEES:The excess of market value over the exercise price is taxable.Employer has the obligation to deduct PAYE and pay over to Tax Authorities (TA). On transition to IFRS, entities are required to re- measure all share appreciation rights of employees and debit retained earnings. The TA may pick this amount and regard it as BIK. Back duty assessment may be raised on such recognition if the previous GAAP did not recognise it.

ONLINE TAX RETURN FILING

The number of pages of IFRS financial statements must have doubled than the financial statements under national GAAP. This will translate to high cost of printing. To cut cost, entities have starting using electronic media to make the financial statements available to the shareholders. It may not take more time for TA to also move towards electronic filing of tax returns to save cost of producing audited financial statements and other tax required statements and documents.

IFRS and Tax Planning

Once an accounting policy is adopted by an entity it should be applied consistently from period to period IAS 8.13. Therefore, entities

SHARE- BASED PAYMENTS IFRS-2

MEASUREMENT, CASH BASED TRANSACTIONS- PARA 30 Requires goods or services to be measured at fair value until the liability is settled.The fair value of the goods or services should be re- measured at the end of each reporting period. The gain or loss to be recognised in P or L of the entity.The fair value of the goods or services should be re-: the goods or services shall be measured at cost, i.e. bargain price between a willing buyer and seller in a transactions conducted at arm's length.The only time a market value can be used instead of cost (most tax jurisdictions) is when the transaction is between connected persons.

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TAX CONCERNS FOR STAKEHOLDERS

TAX REGULATORS:

Tax laws may need to be amended to give specific direction to treatments of items as a result of IFRS adoption.Decision on Tax audit of relevant years (year of adoption and comparatives) may have to be based on restated figures.Revised tax computation based on IFRS may result in over/under payment of taxes. Will this be demanded from or refunded to tax payer?

Tax Payer:

Most corporate organizations that found

themselves in countries that are adopting IFRS

have seen the transition as government induced

(forced) and not voluntary. By implication,

systems and processes need to be changed in

order to comply. On the cost implication i.e.

costs of conversion; various tax authorities may

have made different pronouncements on its

treatment for tax purposes. IFRS adoption, may

also result in the organization having to pay

more taxes or being refunded by way of cash or

tax credits.

Tax Consultants:

Tax practitioners may have to contend with

varying degree of pressures from other

stakeholders (tax regulators and the payers).

They have the obligation of ensuring within

the confine of the law, payment of least tax

payable by their clients and as well as meet the

ever increasing demands of tax authorities.

The dynamism of IFRSs in contemporary

financial world is a prerequisite for the tax

practitioners to always endeavour to regularly

update their knowledge in meeting current and

future challenges. Will the tax laws allow IFRS

conversion tax related expenses as tax

deductive?

Smith's Potato Estate Ltd v Bolland HL 1948, 30

TC 267 ( 1948) AC 508'A company incurred

legal and accountancy expenses in connection

with a successful excess profits tax appeal (

which concerned the deductibility of increased

remuneration paid to senior employee). It

claimed that the expenses should be allowed as a

deduction in computing its profit. The special

commissioners rejected this contention, and the

company appealed, contending that it had

pursued the appeal in order to retain the services

of the employee concerned. The CA upheld the

commissioner's decision and HL dismissed the

company's appeal by 3-2 majority.

As good as the motive of IFRS adoption is, tax

laws of various jurisdictions being territorial

differ among countries. Secondly, tax laws in

most countries of the world are outdated and

need to be reviewed and updated to meet

current economic and financial realities. The

implication of the foregoing is that most

companies operating in countries where tax

Conclusion

27

should be careful in the choice of application of accounting policies (e.g in standards that allow alternative methods (IAS 40, IAS 20 e.t.c)) as this will have various tax implications. And this area may be reviewed for tax efficient planning, in order to minimise tax exposures of entities.

Smith's Potato Estate Ltd v Bolland HL 1948, 30 TC 267 ( 1948) AC 508 Lord Simonds held that: ' neither the cost of ascertaining taxable profit, nor the cost of disputing it with the Revenue authorities, is money spent to enable the trader to earn profit in his trade'. As a matter of principle, the fact that the company had an ulterior motive for contesting the claim could not make it deductible.'

3.4 Tackling the menace of corruption -The way forwardBy: Bernard Abeka BaidenBsc. Admin, CA, MBA.

IntroductionThe term corruption is defined by the concise Oxford dictionary as willing to act dishonestly in return for money or personal gain.

This means that all types of dishonest gains are corrupt practices. Corruption is therefore the abuse of public office for personal gains. The public quoted here implies any responsible position which serves the interest of the public or citizens. This includes positions in private organizations and governmental organizations. Corruption is everywhere in this world, however, its entrenchment in the society hinders socio-economic development. Some claim that corruption can help economic development since those who enrich themselves through corrupt practices re-invest the money in the society. A lot of current literature will disagree with this assertion because, there will be no need to run efficient systems and therefore, there will be chaos in the economy if corruption is given this kind of credit.

For instance, bribing a city official to endorse a poorly built sky scraper may end up in a disaster when the building finally collapses and kills several people. The misuse of company property for self-interest can increase overheard cost and in the long run collapse the business.

Governments all over the world are living with this harmful socioeconomic problem. Although industrial countries have less of its presence, they also have to deal with corruption. No country can claim to have overcome corruption totally. This is the reason why we should tackle it with some kind of unity and cohesion that it deserves. The World Bank and other development partners have been so much concerned that, they have sponsored programs that are aimed at reducing corruption.

One of such sponsorship was in the area of

access to information where the World Bank

has provided funding and technical support for

Government to pass a bill. This is aimed at

ultimately assisting to reduce corruption.

When the bill comes into force, information

and activities of Government and organisations

which previously were not accessible will

become accessible. In this way, citizens will be

empowered to demand better accountability

from officials and Governments.

The purpose of this article is to discuss the

causes of corruption and how to tackle it from

the roots. The article identifies causes of

corruption and suggests possible solutions. The

solutions suggested may have inherent

weaknesses that may be dealt with by

additional suggestions that may consolidate the

solutions. This may drive some repetition that

is necessary to address the weakness in the

suggested solutions otherwise the solution may

not seem effective.

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laws are not regularly reviewed/updated are

unduly exposed to excessive taxes simply

because they have adopted IFRS in presenting

their financials. All hands must be on deck to

ensure that tax laws are regularly reviewed and

updated so as not to stifle the companies with

huge tax payments. Individual entity should

know that the choices of accounting policies or

selection of which standards to implement will

have far-reaching effects on taxes. Hence

careful decision needs to be taken now on the

choices or election of accounting policies and

exemptions.

Causes of corruption:

Income levels and extended family System

In developing countries such as Ghana, where

income levels are low with an extended family

system, technocrats whose education was

sponsored by family members and who have

the desire to pay back the effort of their

sponsors, face the challenges of making up for

the low income through corrupt practices in

order to satisfy the funding of the extended

family. This situation enhances collusion of

public office holders making corruption more

difficult to handle. The pressure from the

Ghanaian society is so intense that one is likely

so succumb to social pressure and becomes

corrupt. This does not mean that people who

have higher income are not corrupt.

This category of persons may engage in corrupt practices that to the average Ghanaian, may involve relatively huge sums of monies. Historically, Ghanaian society believes that the well-educated should be in the position to support the extended family with the assumption that the technocrats earn enough to do this. Failure to do so may result in isolation of the technocrat by the extended family. This situation calls for seriousness on the part of the state to undertake a long term educational plan that is aimed at changing behaviour of the citizens regarding this mind-set.

The theory of economic crime There have been some theories on drivers of corruption. One such theory is the theory of economic crime. According to Gary Becker (1968), economic crime thrives best when the gains exceed the costs. In tax evasion for example if penalty for tax evasion is very severe then the perpetrators will count the cost and avoid the crime. In other words, the severity of the punishment that is associated with corruption, may deter office holders from engaging in it.

The tax payer for instance, will evade tax as long as the benefit of evading tax is greater than the prescribed penalties. In tax administration the appropriateness of tax levied will be a contributory factor for tax evasion. If the tax is too high, the payer will be motivated to evade it. Cost benefit analysis will apply in this case. If the effort of evading tax is too much but the tax rate is reasonable, then the tax payer will not see the need to pay bribe and therefore evade tax. Secondly tax collectors will not have the incentives to take bribes as there will be no need to take the bribe at all because the amount of bribe may then be insignificant.

The salary of office holders may also influence how corrupt they could be. Some might argue that corruption may be an inherent character of those who engage in it. However, very low salary may compel office holders to make up for the difference through corrupt practices since they may have little time to undertake a second job to beef up their incomes or the second job may not be available at all. The higher the salary of the office holder the more expensive the bribe that must be paid and therefore bribe givers may want to do the right thing instead of paying any bribe. It must be noted that higher salary alone may not deter bribe takers from taking bribes. A good and efficient system that exposes corruption will be a major hindrance to corruption. This must go hand-in-hand with severe punishment and transparent efficient judicial system to facilitate execution of corrupt cases.

From the discussions above the state should fight corruption on all fronts. First they should fix penalties and punishment to a deterrence l e v e l . S e c o n d l y, G o v e r n m e n t a n d management of organizations should increase the likelihood of detection of corrupt practices through efficient administration which means

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attention should be paid to the processes involved in tax administration, revenue mobilization, execution of contracts and all other public business processes. This will mean enhanced transparency in these areas.

Principal agent approachKlitgaard (1988) postulated that, citizens are the principal, and officials are agents. He established the formula C = M + D – A. Where C denotes corruption and M represents monopoly, D stands for discretion, whilst A is accountability. In other words, he was simply explaining by the logic behind this formula that corruption is the combination of too much powers concentrated in the hands of the state and its apparatus and the excessive discretion exercisable by the agent who administers the law. Corruption will therefore decrease when accountability is enhanced and the state monopoly powers are reduced whilst discretion is also minimized in execution of responsibility. Tax collection is the responsibility of the state. As a result, there is not much that can be done in the case of monopolistic power of the state that affects the tax system. Other areas such as law enforcement also falls into the same category that the state has the sole responsibility. However the state should consider privatizing some functions in revenue generation such as collection of tolls and the maintenance of the roads that the tolls are located. They may also privatize utility services to enhance its efficiency. Although for a different reason, Ghana has experienced a lot of privatizations but the efficiency gains are hard to find. However in some sec tors such as telecommunications, Ghana has chalked considerable success.

Privatization is aimed at weakening the monopolistic power of the state and ensures accountability when private participation is encouraged in some government business.

This does not mean that supervision should be relegated to the background. There should be a system of auditing, monitoring and supervising the activities of the private sector that may be involved in the execution of Government business. Naturally, accountability is enhanced when supervision is strict and effective. Discretion can be minimized when processes and laws are simplified and easily verifiable government business processes are established whilst efficiency is also enhanced at the same time. Decentralization may be seen as a solution to corruption when the decentralized units are made responsible for the allocation of the very resources they collect but according to Shah (2006:485) there is no evidence to prove this since there is enough evidence that decentralized units also involve in corrupt practices.

Inefficient use of resources and poor accountability Another fertile ground for people to become corrupt, is an environment where leaders misuse organization and state resources. For example, in developing countries where political leadership and civil servants are seen to be leading ostentatious lifestyles and misusing state resources, business owners tend to connive with public officers to engage in corruption. The law enforcers also tend to join the bribery menace and go on money-making spree. Leadership's inefficient use of resources creates a culture where citizens out of desperation also connive with officials to dupe the state. Management of companies who misuse resources and are indisciplined, also tend to preside over lose system that trigger excessive corrupt practices. For instance, if the citizens do not see that their taxes are put to good use then there will be no motivation for them to be tax compliant. The propensity to support corrupt practices is very high in developing countries where administrative systems are weak and accountability is poor.

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Leadership should pay particular attention to value for money expenditure and remain accountable. Leaders should be more open in their dealings with subordinates. Political leaders should do same to citizens. This means they should act like servants and be willing to respond to questions posed by those they serve. This practice may enhance good governance and accountability. It must be noted that being good transparent leader will not stop corrupt office holders from engaging in their nefarious activities. Policy makers, managers and the political leadership should ensure that they operate a system that is reliable and much more difficult to circumvent. In addition a more efficient supervision and monitoring system should be put in place. At least office holders both in private organizations and public sector will know that someone is watching. This kind of system should be operated alongside effective disciplinary system for culprit that will serve as a sufficient deterrent.

Further suggestions to combat corruption

New Public Management techniques (NPM)

The public sector governance and operational

culture, present an environment where short-

term contract appointment may create

commitment for high performance when office

holders know that they need to justify their

contract extension at the end of their contract

period. Employees on contract may work

harder than those who are assured continuing

employment. A public officer for example,

may indulge in rent-seeking financial

advantage instead of working hard to achieve

the business objective of his employers or the

public interest if he does not need any effort to

sustain his continuing employment. This

means their personal interest may outweigh the

interest of the organization or the state if the

assurance of job security is there.

Some also contend that a short term contract

may rather result in the employee seeking

maximum accumulation of funds for himself

as a way of insuring himself against possible

job loss in the shortest possible time. This will

rather aggravates corruption. Therefore a

system that is designed to expose corrupt

practices should be maintained. In addition, the

already explained efficient judicial system of

addressing corruption should be put in place.

The system of audit and internal review should

also be enhanced whilst supervision is

improved.

The New institutional economies

According to (Shah 2007) the proponent of this

model contends that officials find it more

comfortable to engage in opportunistic

behaviour when citizens are not positioned to

question them. If the people have a strong say

in the activities of office holders and can

potentially bring them to book, officials will

not be operating on “corruption fertile

ground”. This is because there will be checks

and balances. Access to information and

democratic election that are genuine can help

in empowering the citizens in this regard.

Access to information that works hand-in-

hand with a strong media can gradually reduce

corrupt practices. I strongly believe that the

recent Ghana'sWorld Cup participation in

Brazil, and the committee set up by the

president to investigate it with its associated

wide media coverage, will in the long run put

office holders on their toes so that they will be

careful when dealing with public funds.

Devolution can help strengthen the grassroots

and empower citizens as well. Officials will

come face-to- face with the reality that they are

serving the interest of the public and they know

they have to account to the ordinary man at the

local level.

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Good Governance

Shah (2006) again emphasized that good

governance system may reduce corruption to a

considerable extent. This is because in most

democratic societies where quality governance

is in place corruption is not very wide spread. A

high level of corruption goes with poor

governance. Therefore to curb corruption,

organizations and the state should be prepared

to adopt best practices in good governance

systems. The rule of law and empowering

citizens through devolution and access to

information are all the tenets of good

governance systems.

Incentives for office holders

As already indicated in the previous sections,

incentives given to office holders can help stem

corruption as it will make bribery more

expensive. A well-paid public official for

example, may not feel comfortable taking small

amounts of money as bribe or dishonest gain to

the detriment of a well-remunerated job. One

will argue that it does not matter the salary that

one receives, a corrupt person will remain

corrupt. However it must be noted that simple

logic will tell us that a poorly paid man can

easily succumb to bribe for survival. Therefore

a good salary will make the bribe much more

expensive to the giver. This must work hand-in-

hand with other suggestions already

mentioned. It is with the combination of such

practices that will make incentive system work

favourably. The use of bonus system for

example to tax officials or officers of the state

when well-structured to motivate him to do

better will help reduce corrupt practices. This is

because, the official will concentrate his energy

to help achieve the objectives of which ever

organization that he or she is working for.

Stricter punishment such as dismissal and

suspension depending on the gravity of the

offence in an environment where corruption is

easily exposed due to efficient transparent

administrative system will reduce corruption

drastically.

Dichotomy of office holders from political

activism

Bureaucrats must not be members of a political

party. Countries should consider revising their

laws to disallow office holders of certain

critical positions involving approval authority

to engage in politics. In developing countries,

the legal authorities are often reluctant to deal

with party members who may be found

culpable in corrupt issues. Such people might

have sponsored the party to an appreciable

level. Allegations of corruption may be

dropped on grounds of no concrete evidence

when authorities have not even attempted to

investigate at all. This happens in countries

where the political leadership welds so much

power. Therefore the constitution should be

amended to debar heads of various agencies

from engaging in politics. This will save the

country from losses that could have otherwise

been investigated. It must be noted that, the

laws of the land in many developing countries

work perfectly on opposition members and

ordinary men on the street. However, the laws

of the land in most African countries work

slowly when it affects party members.

Public Private Partnership and automation

of procedures

As already indicated, privatization has been

known to improve efficiency in many

countries.

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If Government institutions that can be handed

over for participation, are given up to private

organization, efficiency and productivity will

improve. The most important arrangement is to

set up strong institutions that will monitor and

supervise the operations of the private

institution. In Ghana, a perfect example is the

privatization of the telecommunication sector.

Today, the state does not sell bonds to

recapitalize any telecommunication company

and yet they are able to operate efficiently,

whilst at the same time workers have better

conditions of service. The fact is that state

interference in the form of selecting party

members as board members without regard to

expertise negatively affects performance.

Instructions from political authority normally

conflict with best practices due to political

expediency thus facilitating the collapse of

Government businesses.

Automation of procedures and processes is also

another solution. For instance, where tax

systems are automated to calculate penalties,

no human interference can bring about any tax

losses. Computer systems are well designed to

include controls that are difficult to circumvent.

Staff who operate computer systems, if they are

well informed to manage computer protocol

religiously, will help expose anybody who

temper with the system. For example, anybody

who records data in the computer will have his

ID recorded making it difficult to manipulate

the system. Even though computer specialists

may be in a position to manipulate the system,

very few people have that extensive skill to do

so, thereby minimizing opportunistic

manipulation of systems to the detriment of

organizations.

Restructuring the Educational System

from the primary level to tertiary level to

include patriotism and ethical behaviour

There should be a long term plan to educate

and train pupils and students from the primary

level to accept patriotism as part of national

culture. When this is done it will form part of

the students' character as they will grow with

it. Students will see the importance of

considering the national interest first in all

decisions when they join the working masses.

This is a long term plan as it will inculcate in

children positive behavioural pattern that will

increase productivity in the long run.

If academic curricula are structured to include

positive ethical studies, citizens will grow to

have good ethical behaviour in them that will

help reduce corruption in the next generation

to come. This is because the restructured

educational system will aid in modifying the

culture of the people. Values can only be

modified through long term education and

knowledge acquisition. A syllabus could be

developed by the ministry of education with

stakeholders input, so that from the primary

level to the university, pupils and students

could study as one of their compulsory

subjects. The main objective of such a syllabus

should be to enhance students' patriotic

values.

Improving efficiency in the judicial system

The weakness in the judiciary processes, such

as delays,is one of the major reason why office

holders may not be deterred to be corrupt. It

will be inaccurate and one-sided to conclude

that increasing the penalties for corrupt cases

will deter public office holders from being

corrupt.

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The truth is that when punishment is too severe

the judiciary may be tempted to rely on the

slightest weakness in evidence to free the

culprit. In developing countries, literature on

the subject points to the fact that though there is

suspicion that there exists a considerable

degree of corruption, yet few people are

arrested and prosecuted. In the US for instance,

corrupt practices in business is very low

compared to Ghana because of the high

likelihood of detection. To help dispose of

corruption cases, the judiciary must be

appropriately resourced to handle legal cases.

Computerization of cases as a reference point

must be done. The legal administration must

computerize its processes to reduce

manipulations of legal documentations. These

changes to the judiciary will facilitate

disposition of corrupt cases. Legal proceedings

must be open to the public whilst judges must

be made to be accountable to the public. The

judiciary staff themselves must be made

accountable and purged from corrupt elements.

There should be an established procedure to

remove judges who are found to be corrupt.

People found to be corrupt must be put before

court and jailed if found guilty. This should

apply to every citizen irrespective of social

standing or political affiliation. When there is

no selective treatment of corrupt cases,

individuals will be concerned about their own

reputation in the society and avoid being

embarrassed when caught in corrupt practices.

Conclusion

Corruption must be combated through a

multifaceted approach as anyone can easily be

corrupted in an environment where controls are

poor with weak administrative systems

combined with feeble whip.

To minimize corruption, a total approach that

embodies all the areas discussed in this article

must be considered in any anti corruption

strategy. Any bias in favouring any particular

strategy to the detriment of others will not work

effectively. Strategies bordering on good

governance, transparency, access to

information, private participation, effective

supervision and monitoring, auditing,

accountability to the public, empowering the

media, new public management framework,

new institutional economies, and automation of

administrative procedures, simplification of

legal procedures to deal with corrupt official,

better remuneration and incentives, among

others, will help minimize corruption.

3.5What do we need for a healthy workplace culture?Imagine you worked for a small organization

that was effecting change on a national level.

The company was known for excellence,

vision, and world-class leadership. It has a clear

mission and strategy. With your acceptance into

this organization came the respect of your

friends and family for the achievement of such

an honour.

But within a few months, you began to realize

that the department where you were placed did

not represent the values of the overall

organization. The leadership was more

interested in saving face than making decisions

based on integrity. Staff members talked about

one another in highly negative terms.

Complaining and whining were the most

common modes of communication. There was

little respect for the contribution of others on

the team.

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You and your friend tried to swing things back

to a positive place, but you were sarcastically

branded “too known” since you would not

participate in the negativity. Efforts to make

central leadership aware of the toxic nature of

the culture were directed back to department

leadership – which, of course, was where the

problems began. The department completely

fractured toward the end of your assignment,

and most team members left the organization

hurt and disillusioned. Richard Dore, the

director of Proteus Leadership Centres,

expla ins what happened th is way:

“Having a great workplace culture can

appear to be rare – and creating one is elusive

and near impossible for some managers.

People are often frustrated by their culture,

with some describing their workplace as being

domina ted by nega t i ve and tox i c

personalities, with underhanded and

manipulative infighting that stifles growth,

innovation and results”.

There is nothing worse than working in an

organization that has a bad culture. It does not

matter how much money you make or how

many weeks of vacation you are given; when

you work in a toxic environment, you still come

home tense and stressed at the end of each day.

And that is not worth it. I am sure this list is not

exhaustive, but here are twelve signs that a

great culture exists in your organization:

People are waiting in line to join your team: - It is not because you are offering more money than could be found somewhere else. Many times the pay is less but people have heard about your team, and they would give anything to be a part of it.

1.

2.

Top leaders are not insecure about other leaders succeeding: - If the top leaders are not afraid to train people into leadership position, but rather encourage their subordinates to train themselves and acquire what it takes to be in leadership, then there is a good work culture in that organization.

Gossip is not tolerated: - Leaders do not encourage gossip, back-biting or speaking about people in order to gain promotion, favour, to be seen a good persons, etc. from the top management. At every level, g o s s i p i s s h u t d o w n w i t h a n encouragement to speak directly to the individual concerned.

Lateral leadership is outstanding: - Leading people below you is easy. That is, it is easy compared to leading people next to you over whom you have no authority. A great culture sees people coming alongside their peers to encourage, or occasionally to correct and redirect others in different departments, functions and levels.

Team members are energized by the mission: - Clear lines of communication, transparency and strong sense of direction from the top management are crucial in order for the team to remain energized and secure in the knowledge that their jobs are not in jeopardy. You hear leaders at all levels of the organization talking about the mission. It gives them energy, and they are constantly thinking of ways to get it done.

3.

4.

5.

6.

Turnover is low: - You should especially pay attention to the entry-level and mid-level jobs. Often top leaders will stay forever because it is safe and the pay is good. But if you see people staying for an unexpectedly long t ime in the organization at all levels and departments, you are probably looking at a healthy culture.

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In addition to these factors, workers' health and well-being are crucial to a company's culture. A healthy workplace is more likely to be a productive one. Placing great importance on employees engaging in health and wellness activities should be encouraged. Healthy employees can lower health care costs, reduce absenteeism, and reshape the company's culture toward health.

Different wellness programs which support these benefits should be introduced and should include multiple components which promote a healthy workplace culture. These customized programs include wellness interventions, health coaching, and health screenings, and when combined, have the ability to change at-risk behaviours and keep employees involved in healthier activities.

This list might be discouraging if you are not working in an environment with such a healthy culture. To that person I would suggest: You have the power to change the culture, one day at a time! Building a healthy culture starts with a few determined people. Workplace culture is essentially about authentic caring. The company cares about making some aspect of life better for the people who use its products and services. The company leaders must support the people who work there, not just for the sake of success and increased revenue, but because they actually care.

Different wellness programs which place emphasis on the health of employees are more likely to be a productive one.

The team believes they are more important than the task: - Being valued and knowing what you do is worthwhile is a sign of a good company. There is a sense that, as employees, they really matter. They are not just people filling tasks, but the culture, systems, language, and structure communicate value. Even in tough times with salary freezes or benefit changes, the vibe is still, “You matter”.

People are smiling: - Walk the hallways, corridors, staircases, offices, car parks, canteens, and you will see people smiling, enjoying conversations, and having a good time in the midst of high productivity and intense focus.

Fear is missing: - people don't fret if they say the wrong thing in front of the wrong p e r s o n . T h e r e a r e n o t h u s h e d conversations because of the fear of what will happen if they are overheard. Employees in an organization with a great culture can walk into the boss's office with a concern and walk out knowing they were heard.

Communication is strong: - From the top to the bottom, people communicate. The staff is not surprised with information they didn't hear until it was announced at an official durbar or came out in the news media or a new product brochure. It is communicated well in advance, with leaders even asking the staff to help find solutions.

8.

9.

10.

11.

12.

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It is not just a job: - People go to movies, funerals, birthday parties, weddings, hang out at one another's homes, and sometimes even vacation or excursions together. This does not mean they don't have other friends, but they really enjoy the company of the people they work with.

7. Change is welcome: - People are not afraid of change. It is not that everyone likes change, but most have been through it so many times and have seen the leaders manage change with care and dignity that they no longer dread it. Identifying the evidences of a great culture is all fine and good.

ReferenceTim, Stevens (2015), Fairness Is Overrated, and 51 Other Leadership Principles to Revolutionize Your Workplace

www.thomasnelson.com/fairnes-is-overated www.linkedin.com/groups/what-do-we-need-healthy-workplace-culture

Placing great importance on employees engaging in health and wellness activities should be encouraged. Healthy employees can lower health care costs, reduce absenteeism, and reshape the company's culture toward health.

In just one department, in one corner of the building, a new culture can begin to emerge. As others interact with the healthy department, they are attracted to it. At their core, no one wants to live in a culture of negativity. People want to love their job. They might not know how to act in a positive environment, and they might resist as you call them out of a place of mediocrity, but ultimately love and positivity always win out. Get others with the same desire, and take that first step!

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4. TECHNOLOGY CORNER

4.1 Cyber security, its effects and protection against common cyber attacks

As more companies report cybercrimes and many of us learn we have been a victim – compromised credit card information or data breaches online – cyber risk is increasingly recognized as a serious threat that companies need to address. Recent events demonstrate that cybercrime is increasing rather than decreasing. Therefore, additional and concerted effort from all parties involved (perhaps even the cyber criminals themselves) is required to stem the tide.

It is evident that enhanced cyber security is not only a technical issue, but equally a behavioural issue. People and their motivations are behind every threat but people also make or break the lines of defence. Here are some examples:

Ingrained in all our actions:It is important organizations regularly talk about cyber security with their staff to give them a baseline understanding of the risks involved and the potential consequences, as well as what they can and should do to address it. However, many people and organizations alike, seem to separate the management of cyber risk from their regular decision-making and activities. As if cyber security is something separate, often to be dealt with by others.

Maybe we should, therefore, not look at cyber threats as an individual risk category, but instead at how these risks might affect the achievement of an organization's objectives. After all, technology and the resulting risks to a company's processes and data are infused throughout the enterprise.

As a consequence, not only the IT team but everyone in the organization – and its external counterparts – should take cyber risk into account while making business decisions, integrating the notion of cyber security into all organizational decision-making and operations that involve the company's computer networks and data.

Maybe we should, therefore, not look at cyber threats as an individual risk category, but instead at how these risks might affect the achievement of an organization's objectives. After all, technology and the resulting risks to a company's processes and data are infused throughout the enterprise. As a consequence, not only the IT team but everyone in the organization – and its external counterparts – should take cyber risk into account while making business decisions, integrating the notion of cyber security into all organizational decision-making and operations that involve the company's computer networks and data.

It is a little bit like driving a car. Safety is an issue all the time you are driving. The same applies with risk management and taking care of cyber risk. With employees connecting to a firm's systems from remote locations, often from a mobile phone or tablet, it is not something that you do only on the afternoon when we have our cyber risk meeting. It is something you need to integrate in every decision we take and in everything we do.

Us vs. them?And what about the cyber criminals themselves? In the fight against cyber threats, is it really the good guys against the bad guys? Who are the bad guys? Can you easily recognize or identify them? Who tells us that the good guys cannot turn bad or, alternatively, that the bad guys cannot turn good?A clear theme in the discussion about cyber security is not “us versus them” scenario where the line is clearly drawn between “us” and rogue employees and/or external hackers who are threats. Every login to the network bears some associated risk and the responsibility for risk assessment is as incumbent on the users as it is on the IT staff.

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The current approach against cyber security seems predominantly focused on “end-of pipe” solutions: countering rather than reducing the threat, for example by building ever “higher” firewalls. However, we know from combating other forms of crime that a multifaceted approach is often more effective. For example, organizations may also need to pay attention to the front end through lowering the incentive to commit cybercrimes, decreasing the opportunity to carry out the crime, rewarding good behaviour, and discouraging bad behaviour. Perhaps it is even better engaging former cyber criminals in the fight against cybercrime. At least, they will bring their knowledge and experience to bear on the effort to combat cybercrime.

Cyber-attacks have become commonplaceCostly cyber-attacks have become so frequent across industries that cyber-security is top of mind among executives and customers worldwide. Some of the cyber-attacks are as follows:

Crimeware: - The public sector, utilities, manufacturing, and information industries are particularly at risk of malware that compromises systems such as servers and desktops. To make it harder for crimeware attack, patch anti-virus programmes and browsers, avoid Java browser plugins as much as possible, use two-factor identification, and implement configuration-change monitoring.

Insider and privilege misuse: - Misuse of computer access privileges is widespread among industries and within companies. To better protect your data, find out who has access to every aspect of it, review user accounts, set up controls to watch for data transfers out of the organization, and publish anonymised results of audits.

Physical theft and loss: - The public and health-care sectors are threatened by the loss or theft of laptops, USB drives, or printed documents. To prevent theft or loss, encrypt

devices, backup data regularly, lock down IT equipment to immovable fixtures, and store sensitive documents in secure areas.

Web app attacks: - Utilities and companies in the information, manufacturing, and retail sectors face risks from web application attacks. To prevent misuse of stolen credentials or exploitation of vulnerabilities, use two-factor authentication, consider switching to a static content-management system, lock accounts after repeated failed login attempts, and monitor outbound connections.

Denial-of-service attacks: - The finance and retail sectors are particularly at risk of being attacked by botnets and powerful servers trying to grind business operations of systems and applications to a halt. To fortify against malicious traffic attacks, ensure that servers are patched promptly, buy a small backup circuit and segregate key servers, test your anti-DOS service, and make sure key operations teams know what to do in case of an attack.

Cyber-espionage: - Professional services, transportation, manufacturing, mining, and the public sector are popular targets. To protect a g a i n s t b r e a c h e s , p a t c h s o f t w a r e vulnerabilities, update anti-virus software, train users to recognize and report danger signs, and keep good logs of system, network, and application activity.POS intrusions: - Retail and the hospitality sector are particularly at risk. To reduce the risk, limit remote access to POS systems by third-party companies; enforce strong password policies; do not allow staff to use POS systems to browse the web, check email, or play games; and use two-factor authentication.

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Miscellaneous errors: - Industries that deal in information dissemination are threatened by security mistakes such as accidentally sending private data to a public site, sending information to the wrong recipients, or failing to dispose of documents or assets securely. To minimize such mistakes, implement data-loss prevention software, strengthen controls on publishing, and train staff on asset disposal.

Source: www.cgma.org www.ifac.org

Payment card skimmers: - Banks, retailers, and hospitality companies are particularly at risk of skimmers reading payment cards as customers pay. To prevent the installation of skimmers on, for example, petrol pumps or ATMs, use tamper-resistant terminals, train employees to spot skimmers and recognize suspicious behaviour, and use tamper-evident controls, such as seals over gas pump doors or automated video monitoring.

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5. YOU AND YOUR HEALTH

5.1 Arthritis: It's symptoms in your fingers

Arthritis is a condition that causes

inflammation of the joints. While arthritis can

invade any joint, the first symptoms of arthritis

are visible in the fingers. Tenderness, warmth

and redness around the joints are common in

arthritis. Osteoarthritis and rheumatoid

arthritis are two common types of arthritis that

affect the finger joints. Arthritis of the fingers

usually affects the joints located in the fingertip

and knuckles of the mid finger. Swelling and

joint pain in fingers occurring for more than six

weeks may indicate arthritis. Some of the

common symptoms of arthritis in fingers

include painful fingers, warm stiff joints,

swollen knuckles and trouble in moving

fingers.

Osteoarthritis symptoms

Symptoms of arthritis in finger joints can be

clearly noticed as these body parts are the worst

affected.

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Stiffness of finger is the most common

symptom associated with osteoarthritis. It is

accompanied by pain and swelling. In

osteoarthritis, bending the fingers becomes a

difficult task. Due to inflammation, the joints

do not work properly, thus restricting the

motion of the fingers. The person may

experience persistent pain within the thumb

base which is indication of osteoarthritis of the

basilar joint.

In some cases osteoarthritis of fingers causes

development of nodules or lumps around the

knuckles. As a result, the knuckles get stiff,

swollen and enlarged. People suffering from

arthritis of fingers often find that their grip

strength has reduced considerably. They are

not able to hold objects firmly. Opening a jar or

turning a key is no more a simple task. This loss

of strength is a warning sign of finger

osteoarthritis. The wrist joint is also affected

and interferes with the mobility of the arms.

Rheumatoid arthritis symptomsInitially, rheumatoid arthritis (autoimmune disorder) affects the middle finger joints but over time the condition progresses and spreads to other fingers. Morning stiffness is a common complaint in the rheumatoid arthritis patients. So, after getting up the first thing they notice, is that the joints have become stiff. This usually lasts for about an hour, making it difficult to start your daily schedule. Due to stiffness in joints, the person finds it impossible to straighten out his fingers. This is a disease that affects the same joints of both hands. Tingling or numbness in the fingers can also occur. Complex deformities are also observed in the hands which signal rheumatoid arthritis. D e f o r m i t i e s l i k e “ s w a n n e c k ” o r “Boutonniere” are also noticed. This causes shifting of the fingers from their normal position. As a result, finger movement gets distorted and is away from the thumb.

Psoriatic arthritis symptomsSausage-like shape of fingers id often seen in people affected with psoriatic arthritis (autoimmune disorder). In this form of arthritis, the small joints that are close to the nails are damaged. Changes in the appearance of the nail such as ridging, thickening, pitting, and yellow-orange discoloration are prominent. This type of arthritis is very rare and generally occurs in men.

Causes Osteoarthritis occurs due to gradual deterioration of cartilage (part of aging), tough elastic tissue attached at the end of the bone. Due to loss of cartilage, the affected bones rub against each other, causing inflammation of the joints. However, the onset of arthritis is not always due to wear and tear of cartilage. Unhealthy eating habits and diet lacking in nutrition can cause toxic matter to accumulate in the joints.

The build-up of toxic matter is what causes the

immune system to overreact and attack the joint

tissues, leading to inflammation and pain.

Relieving arthritis symptomsHealthy dietDid you know that a change in diet will help improve pain? As aforementioned, many times arthritis pain is due to accumulation of toxins in our body that impede cell function. In order to get rid of these toxins and promote cell regeneration, one has to specifically follow a raw diet. Raw foods do an excellent job of neutralizing toxins, which in turn provides relief from pain.

Completely switching to raw diet temporarily is necessary to eliminate toxins. One can include raw vegetables, fruits, buttermilk and coconut water in the diet but cooked food and milk should be strictly avoided. Eat only raw food just for three weeks and one can expect the pain to fade away. Even after the pain vanishes ensure that 50% of your meal is made up of raw food.

Another food which can help prevent/cure arthritis is apple cider vinegar. Apple cider vinegar is prepared from cider or apple must. It is a well-known traditional remedy for a number of ailments, including arthritis. Organic and unrefined vinegar contains many beneficial enzymes, cellulose, and the acetobacter, which are known as the 'mother of vinegar'. The 'mother of vinegar' has several health benefits, but it is usually removed during the refining process. Apple cider vinegar is also known as cider vinegar, and is prepared from apple must. To make this vinegar, apples are first crushed to squeeze out the liquid, after which yeast is added to it in order to induce the process of alcoholic fermentation. In alcoholic fermentation, sugar is turned into alcohol, which is then converted into vinegar by adding acetobacter or acetic acid-forming bacteria.

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HerbsHerbs such as ginger and garlic display anti-inflammatory properties hence can be extremely effective to treat inflammatory conditions like finger arthritis. Including these anti-inflammatory foods is one of the best ways to prevent flare-ups. You can simply grate any of these herbs and sprinkle it over your salad. Preparing tea made from these herbs can also contribute in controlling arthritis. Turmeric, a frequently used condiment is well-known for its potent anti-inflammatory activity. So, using it as a salad dressing can also work to combat arthritis effectively.

Exercise Hand arthritis does restrict your movement of fingers but keeping the fingers immobile all the time can make matters worse.

So, in order to improve flexibility of joints and muscles, it is crucial to do little bit of exercise. Opening and closing the palm and stretching the fingers wide apart are some of the exercises that may help to increase mobility in joints.

MedicationConventional treatment that involves the use of anti-inflammatory medications (ibuprofen) may help to decrease joint pain and inflammation. Cortisone injections may help to control arthritis symptoms. Surgical treatment such as joint replacement surgery is essential if the aforementioned treatment options fail to relieve arthritis symptoms.

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By Ofori Frimpong Henneh

An auditor's report is culmination of the work of the auditor. It is like a mouthpiece of the auditor and a medium of communication with the various stakeholders. The ISA 700 laid down the basic principles governing the formation of auditor's opinion on the truth and fairness of the financial statements as also the basic elements of the auditor's report. One of the objectives was to bring in uniformity in auditor's reporting practices. The Standard (ISA 700) contained guidance on various types of audit opinions that could be issued; which are qualified, adverse and disclaimer of opinions. For the first time, it also introduced the concept of Emphasis of Matter paragraph in the auditor's report.

The 2008 financial crisis brought to the fore, the increasing demand from stakeholders globally, for greater clarity and information in the auditor's report. Particularly, a need was felt to clearly bringing out the duties and responsibilities of the management vis-à-vis the auditors and also the scope of the audit. According to responses to these needs of the stakeholders and to strengthen the guidance to the auditors in the use of different types of audit opinions, the International Auditing and Assurance Standards Board (IAASB) split the erstwhile ISA 700 into three separate International Standards on Auditing (ISAs) as follows:

6. TECHNICAL MATTERS

6.1 Revised Auditor's Report Format – An Overview (ISA 700 Revised, ISA 705, and ISA 706)

ISA 700 (Revised): Forming an Opinion and Reporting on Financial Statements,

ISA 705: Modifications to the Opinion in the Independent Auditor's Report,

ISA 706: Emphasis of Matter Paragraphs in the Independent Auditor's Report.

The ISA 700 (Revised), as the name makes clear, deals with the auditor's responsibility to form an opinion on the financial statements. It also deals with the form and content of the auditor's report issued as a result of an audit of financial statements. The ISA 700 (Revised), unlike its predecessor dealt only with situations where a clean opinion was being issued by the auditor. The concepts of qualified, adverse, and disclaimer of opinion are dealt with by a separate standard, ISA 705.

In forming an opinion, the auditor shall take into account whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. In forming that opinion, the auditor shall conclude as to whether he has obtained reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. That conclusion shall take into account; the auditor's conclusion in accordance with ISA 330, whether sufficient appropriate audit evidence has been obtained; and the auditor's conclusion, in accordance with ISA 450, whether uncorrected misstatements are material, individually or in aggregate.

The auditor shall evaluate whether the financial statements are prepared, in all material respects, in accordance with the requirements of the applicable financial reporting framework. In particular, the auditor shall evaluate whether, in view of the requirements of the applicable financial reporting framework:

44

The financial statements adequately disclose the significant accounting policies selected and applied;

The accounting policies selected and applied are consistent with the applicable financial reporting framework and are appropriate;

The accounting estimates made by management are reasonable; the information presented in the financial statements is relevant, rel iable, comparable, and understandable;

The financial statements provide adequate disclosures to enable the intended users to understand the effect of material transactions and events on the information conveyed in the financial statements; and

The terminology used in the financial statements, including the title of each financial statement, is appropriate.

a. a.

a.

b.b.

c.

d.

e.

When the financial statements are prepared in accordance with a fair presentation framework, the evaluation shall include whether the financial statements achieve fair presentation. The auditor's evaluation as to whether the financial statements achieve fair presentation shall include consideration of:

The overall presentation, structure and content; and

Whether the financial statements, including the related notes, represent the underlying transactions and events in a manner that achieves fair presentation.

a.

a.

b.

b.

Form of opinion

The auditor shall express an unmodified

opinion when he concludes that the financial

statements are prepared, in all material

respects, in accordance with the applicable

financial reporting framework. If the auditor:

Types of Modified Opinions

ISA 705 establishes three types of modified

opinions, namely, a qualified opinion, an

adverse opinion, and a disclaimer of opinion.

The decision regarding which type of modified

opinion is appropriate depends upon:

Concludes that, based on the audit evidence obtained, the financial statements as a whole are not free from material misstatement; or

Is unable to obtain sufficient audit evidence to conclude that the financial statements as a whole are free from material misstatement; the auditor shall modify the opinion in the auditor's report in accordance with ISA 705 (Revised).

The auditor concludes, based on the audit evidence obtained, that the financial statements as a whole are not free from material misstatement; or

The auditor is unable to obtain sufficient audit evidence to conclude that the financial statements as a whole are free from material misstatements.

The ISA 705, Modifications to the opinion in

the independent auditor's report, deals with the

auditor's responsibility to issue an appropriate

report in circumstances when, in forming an

opinion in accordance with ISA 700 (Revised),

the auditor concludes that a modification to the

auditor's opinion on the financial statements is

necessary. The objective of the auditor is to

express clearly an appropriately modified

opinion on the financial statements that are

necessary when:

The nature of the matter giving rise to the

modification, that is, whether the financial

statements are materially misstated or, in

the case of an inability to obtain sufficient

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appropriate audit evidence, may be

materially misstated; and

The auditor's judgment about the pervasiveness of the effects or possible effects of the matter on the financial statements.

b.

a.

b.

The auditor expresses a qualified opinion

when:

The auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in aggregate, are material, but not pervasive, to financial statements; or

The auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive.

Adverse opinion is expressed when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in aggregate, are both material and pervasive to the financial statements. Likewise, disclaimer of opinion is issued when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive. The auditor shall disclaim an opinion, in extremely rare circumstances involving multiple uncertainties, he concludes that, notwithstanding having obtained sufficient appropriate audit evidence regarding each of the individual uncertainties, it is not possible to form an opinion on the financial statements due to the potential interaction of the uncertainties and their possible cumulative effect on the financial statements.

If, after accepting the engagement, the auditor becomes aware that management has imposed a limitation on the scope of the audit that the auditor considers likely to result in the need to express a qualified opinion or to disclaim an opinion on the financial statements, the auditor shall request that management remove the limitation. If management refuses, the auditor shall communicate the matter to those charged with governance, unless they too are involved in managing the entity. The auditor should consider if there are any alternative audit procedures to perform to obtain sufficient appropriate audit evidence.

If the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive, he shall qualify the opinion; or if the undetected misstatements could be both material and pervasive so that a qualification of the opinion would be inappropriate to communicate the gravity of the situation, the auditor shall, (i) withdraw from the audit where practicable and possible under applicable law or regulation; or (ii) disclaim an opinion on the financial statements.

If the auditor withdraws from the engagement, he should communicate to those charged with gove rnance any ma t t e r s r ega rd ing misstatements identified during the audit that would have given rise to a modification of the opinion.

The ISA 706, Emphasis of Matter Paragraphs in the Independent Auditor's Report, deals with additional communication in the auditor's report when the auditor considers it necessary to:

Ÿ Draw users' attention to a matter or matters presented or disclosed in the financial statements that are of such importance that they are fundamental to users' understanding of the financial statements; or

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The ISA 706 envisages two types of such

additional communications; one, through an

Emphasis of Matter Paragraph and the second,

through the Other Matter Paragraph. As per

ISA 706, an Emphasis of Matter Paragraph is a

paragraph included in the auditor's report that

refers to a matter appropriately presented or

disclosed in the financial statements that, in the

auditor's judgment, is of such importance that it

is fundamental to users' understanding of the

financial statements. If the auditor considers it

necessary to draw users of the financial

statements attention to these matters, then he

should obtain sufficient appropriate audit

evidence that the matter is not materially

misstated in the financial statements. When the

auditor includes an Emphasis of Matter

paragraph in the auditor's report, he shall

Include it immediately after the Opinion

paragraph;

Use the heading “Emphasis of Matter”, or

appropriate heading;

Include in the paragraph a clear reference

to the matter being emphasized and to

where relevant disclosures that fully

describe the matter can be found in the

financial statements; and

Indicate that the auditor's opinion is not

modified in respect of the matter

emphasized.

a.

b.

c.

d.

Examples of circumstances where the auditor

may consider it necessary to include an

Emphasis of Matter paragraph are:

An uncertainty relating to the future outcome of exceptional litigation or regulatory action;

Early application of a new accounting standard that has a pervasive effect on the financial statements in advance of its effective date;

A major catastrophe that has had, or continues to have, a significant effect on the entity's financial position.

a.

b.

c.

a.

b.

The inclusion of an Emphasis of Matter

paragraph in the auditor's report does not affect

the auditor's opinion. An Emphasis of Matter

paragraph is not a substitute for either:

The auditor expressing a qualified opinion or adverse opinion, or disclaiming an opinion; or

Disclosures in the financial statements that the applicable financial reporting framework requires management to make.

Further, ISA 706 also introduced the concept of Other Matter paragraph. It is a paragraph included in the auditor's report that refers to a matter other than those presented or disclosed in the financial statements that, in the auditor's judgment, is relevant to users' understanding of the audit, the auditor's responsibilities or the auditor's report. If the auditor decides to communicate a matter other than those presented or disclosed in the financial statements and are not prohibited by law or regulation, he shall do so with the heading “Other Matter,” or other appropriate heading. The auditor shall include this paragraph immediately after the Opinion paragraph and any Emphasis of Matter paragraph, or elsewhere in the auditor's report.

Ÿ Draw users' attention to any matter or matters other than those presented or disclosed in the financial statements that are relevant to users' understanding of the audit, the auditor's responsibilities or the auditor's report.

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Circumstances in which an Other Matter paragraph may be necessary include where the auditor is unable to withdraw from an engagement even though the possible effect of an inability to obtain sufficient appropriate audit evidence due to a limitation on the scope of the audit imposed by management is pervasive, and the auditor considers it necessary to include an Other Matter paragraph in his report to explain why it is not possible for him to withdraw from the engagement. Again, law or regulation or generally accepted practice in a jurisdiction may require or permit the auditor to elaborate on matters that provide further explanation of the auditor 's responsibilities in the audit of the financial statements or of the auditor's report thereon. Where relevant, one or more sub-headings may be used that describe the content of the Other Matter paragraph.

In so far as the basic principles relating to elements of the auditor's report and their presentation is concerned, they are still retained in the ISA 700 (Revised), albeit, some improvements to the format of the auditor's report prescribed by the Revised ISA 700 to address the stakeholders' information needs. These are:

Ÿ Extensive description with respect to the

responsibilities of the auditor;

Ÿ Segregation of auditor's opinion on

financial statements to stand out distinctly

from auditor's report on other aspects as

may be required by the relevant

laws/regulations.

The following titles should be given to the relevant sections of the audit report:

Ÿ Management's responsibility for the

financial statements;

Ÿ Auditor's responsibility;

Ÿ Basis of opinion, unqualified or

qualified/adverse/disclaimer of

opinion (if so required in terms of ISA

705)

Ÿ Opinion;

Ÿ Emphasis of Matter (if so required in

terms of ISA 706)

Ÿ Other matter (if so required in terms of

ISA 706)

Ÿ Report on Other Legal and Regulatory

requirements, (such as the Companies

Act of 1963 as amended)

Source:

www.ifac.org

www.iasplus.com

www.icaew.comŸ Additional description with respect to the

responsibilities of the management for the

financial statements;

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...UNQUOTE

By three methods we may learn wisdom: First, by reflection, which is noblest; second, by imitation, which is easiest; and third by experience, which is the bitterest.

(Confucius)

Success is not final, failure is not fatal: it is the courage to continue that counts.

(Winston Churchill)

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.

(Winston Churchill)

Some are born great, some achieve greatness, and some have greatness thrust upon them.

(William Shakespeare)

Nearly all men can stand adversity, but if you want to test a man's character, give him power.

(Abraham Lincoln)