The Accounting Standard Challenges in the Hotel Industry in Ghana
CHAPTER ONE
General and Specific Objective
General Objective
The general objective of this study is to assess the challenges of implementation of accounting standards in the hotel industry in Ghana.
Specific Objective
The specific objectives are:
- To assess the challenges of the companies faces in implementation of accounting standards for Ghanaian hotels and other stakeholders
- To investigate the benefit of implementation accounting standards for companies and other stakeholders
- To examine the implementations of accounting standards in the hotel industry in Ghanaian hotels
CHAPTER TWO
LITERATURE REVIEW
The Concept of accounting standards
accounting standards stands for Accounting standards and they are standards for reporting financial results and are applicable to general purpose financial statements and other financial reporting of all profit oriented entities. The term accounting standards comprises accounting standards issued by IASB; IAS issued by IASC; and interpretations issued by the Standing Interpretations Committee (SIC) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB (Hoyle B., et al., 2009, Baker E. et al., 2009 and Larsen E. 2008).
Alistair (2010 cited in Ojeka and Mukoro, 2011, p.14) defined Accounting standards (accounting standards) as
“A series of accounting pronouncements published by the International Accounting Standards Board (IASB) to help preparers of financial statements, throughout the world, produce and present high quality, transparent and comparable financial information. “
Since 2001 Accounting standards (accounting standards) are being developed and approved by the International Accounting Standards Board (IASB). The IASB is a stand- alone, privately funded accounting standard setting body established to develop global standards for financial reporting. It is the successor to the International Accounting Standards Committee (IASC), which was created in 1973 to develop International Accounting Standards (IAS). Based in London the IASB assumed accounting standard setting responsibilities from the IASC in 2001 (Hoyle B., et al., 2009, Baker E. et al., 2009 and Larsen E. 2008).
One of the basic features of accounting standards is that it is a principle based standard and seeks to avoid a rule based mentality (Hlacuc et. al., 2009). Instead, the application of accounting standards requires exercise of judgment by the preparer and the auditor in applying principles of accounting on the basis of the economic substance of transactions. The IASB framework establishes a general requirement to account for transactions in accordance with their substance, rather than only their legal form. This principle comes through very vividly in many accounting standards. The ISAB intends not to permit choices in accounting treatment, as its objective is to require like transactions and events to be accounted for and reported in a like way, and unlike transactions and events to be accounted for differently.
According to IASB (2009), the IASB achieves its objectives primarily by developing and publishing accounting standards and promoting the use of those standards in general purpose financial statements and other financial reporting. Other financial reporting comprises information provided outside financial statements that assists in the interpretation of a complete set of financial statements or improves users‟ ability to make efficient economic decisions. The term financial reporting‟ encompasses general purpose financial statements plus other financial reporting.
accounting standards set out recognition, measurement, presentation and disclosure requirements dealing with transactions and other events and conditions that are important in general purpose financial statements. They may also set out such requirements for transactions, events and conditions that arise mainly in specific industries.
accounting standards are based on the Framework, which addresses the concepts underlying the information presented in general purpose financial statements. The objective of the Framework is to facilitate the consistent and logical formulation of accounting standards. It also provides a basis for the use of judgment in resolving accounting issues (IASB, 2009).
CHAPTER THREE
RESEARCH METHODOLOGY
Research Design
To achieve the aforementioned objectives, the study was presented through descriptive design and the data collected from interview and questionnaires. The data was analyzed through both qualitative and quantitative method. Quantitative research approach focuses primarily on the construction of quantitative data, and quantitative data is a systematic record that consists of numbers constructed by researcher utilizing the process of measurement and imposing structure (Kent, 2007). It was used to achieve the research objectives and to get complete data. The use of qualitative and quantitative data analysis method are better to understand a research problem by combining data from collected through both questioners and interview to neutralize limitations of applying any single information.
Descriptive study is helpful when a researcher wants to look into a phenomenon or a process in its natural contexts in order to get its overall picture instead of taking one or some of its aspects and manipulating it in a simulated or an artificial setting (Kent, 2007). Thus, descriptive study is chosen to investigate the extent of the implementation of accounting standards benefit and challenge in its natural settings in Ghana. Hence, the descriptive research design considered suitable for this study was presented descriptive case study.
Population of the study
The population of researcher was used in all the staff of finance department who have knowledge about accounting standards and they have good understanding about the benefit and challenge accounting standards. The population of the studies used finance department staffs which are CFO, Controllers , finance Directors, auditors and accountants of the companies which implement accounting standards. The researcher was used the whole finance staff of the companies which were collected from human resource of each organization and all of them were included in the research.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
Introduction
This chapter explains and discusses the results of findings based on the analysis done on the data collected. The results of the study are presented the data collected from different sources results: questionnaire results, interview and document review results. The discussion attempts to accomplish the objectives of the study and answer the research questions and test the hypotheses. A total of 70 questionnaires which dealt with regarding the implementation of Accounting standards were distributed to a sample of companies which implement this international standard more than four years. However, only 63 questionnaires were collected out of which 70 questionnaires had usable responses (90 % response rate). Compared to other accounting standards adoption studies and considering the difficulty of collecting data in developing countries such as Ghana, 90 % response rate was reasonably good.
As indicated in the previous chapter, survey was the main strategy of inquiry adopted to investigate the implementation of accounting standards in the hotel industry in Ghana. To this end, the results obtained from the survey are analyzed through descriptive method.
CHAPTER FIVE
Conclusions and Recommendation
Introduction
This chapter presents conclusions and recommendation to the results. It has three parts; the first part presents conclusions of the study, the second part presents recommendation and the last part of this chapter is further research area.
Conclusion
Based on the analysis result the researcher concludes the following points:
accounting standards provides the efficiency, effectiveness, reliable and comparable of financial reporting, greater reporting transparency and enhanced competitiveness of the companies which apply accounting standards in the hotel industry in Ghana. accounting standards improved economic prospects for the companies, effectiveness of the internal audit and reduce fraud on audit reduce the load of consolidate financial report, get external financing sources and consistency of finance health to Ghanaian hotels.
The benefit of accounting standards provide to investors by Reduced information cost to investors, reduced asymmetric between investors and managers, better understanding of risk and return to investors and provides better information for investors and increases confidence of investors to making decision capabilities and also lead enhance investment opportunity and increase share price of investor.
The benefit of accounting standards provide to mangers to easily manage all operation system, improves management information and timely decision making, better to risk management , help to make realistic planning experiences, easy to forecast capability about future and promotes cross border investment.
The benefit of accounting standards provide to other stake holders a higher standard of financial disclosure information, provides accurate and transparent information to customers, creditors, suppliers and other stakeholder and also the implementation of accounting standards improves regulation oversight and enforcement to regulatory body and transparent information to global market.
The main challenges in the process of implementation accounting standards are costly to implement , lack of availability of competent specialists, lack of comprehensive of training periodically, complex nature of implement guidelines, increases the complexity of financial reporting and lacks of an independent oversight body to monitor and enforce accounting and auditing standards and codes.
The other challenges faces this companies are lack of fair value accounting in Ghana market , tax driven nature of the country, increasing of volatility of earnings and negative balance of retained earnings on financial report. And also institutional structure, problem with the IT system in handling the transition to accounting standards.
Recommendation
As the conclusions reveal since the benefits of implementing accounting standards have so many benefit to the companies, mangers and other stake holders. This implies that the government of Ghana should appreciate the companies which implement the accounting standards by preparing prize like some percent of deduction from annual tax payment, giving priority on bid and make like a criteria or qualification to credit process for bank to encourage adoption of accounting standards. This result attract the other companies which dint implement accounting standards.
The conclusions also reveal that there are so many challenges faced in the implementation of accounting standards in the hotel industry in Ghana. So the concerned party should solve the problems by preparing implement guidelines according understandable way of the companies because one of the critical elements in the implementation of accounting standards is the rigorous enforcement of standards. And also this body should focus on technically qualified personnel, practical training of inspectors/reviewers and administrative support to reduce the high cost of implementation, complexity of preparing financial report and to solve the volatility of earning and negative balance sheet to solve the challenges faced of the companies on financial report in the implementation of accounting standards.
In the other point of the challenges of implement accounting standards are fare value and tax natures of the country are the serious challenge. This implies that concerned body should amend the tax nature of the country and other application law according to accounting standards principles and procedures. This body also should make appropriate fare value accounting by assessing Ghanaian market and by analyze the market environment to apply accounting standards fully in Ghana. On the other side this body should advise and consult the companies using follow the step of accounting standards through preparing annual financial report.
On the other hand to fine tune with the main problems of accounting standards implementation, the companies should strength their office structure before implement accounting standards by hiring professional on the area, giving training to their staff by making linking with the training center, and strength the soft ware and IT system of the companies which can handle the transaction of accounting standards.
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