- 10 Marks
Question
In the audit of financial statements, auditors consider the regulatory requirements. These cover professional standards promulgated by the International Federation of Accountants (IFAC) in the form of International Standards on Auditing (ISAs), International Standards on Quality Control (ISQC) as well as the International Ethics Standards Board for Accountants (IESBA). The other consideration involves legal requirements.
Required:
Identify THREE (3) regulatory authorities in Ghana whose requirements may be taken into account in the conduct of an audit and discuss their roles. (10 marks)
Answer
- Bank of Ghana:
- Role: The Bank of Ghana (BoG) is the regulatory authority overseeing financial institutions in Ghana. It grants operating licenses to financial institutions and ensures that these entities comply with various financial and operational requirements, such as liquidity ratios, capital adequacy ratios, and the submission of returns on foreign currency transfers.
- Audit Implications: Auditors must ensure that the financial institution being audited is licensed by the BoG and complies with its regulations. Non-compliance with BoG requirements can lead to significant legal and financial risks, which must be reflected in the audit report.
- Securities and Exchange Commission (SEC):
- Role: The SEC regulates the securities industry in Ghana, including companies listed on the Ghana Stock Exchange (GSE). It sets listing requirements, mandates the filing of annual audited financial statements, and enforces disclosure requirements.
- Audit Implications: Auditors must ensure that the entity complies with SEC regulations, including accurate and timely disclosures in the financial statements. Non-compliance can result in penalties, suspension, or delisting from the GSE, which must be considered during the audit.
- Insurance Commission:
- Role: The Insurance Commission regulates insurance companies in Ghana, ensuring that they operate within the law and maintain adequate capital reserves. It categorizes insurance companies into general, life, and reinsurance, each with specific operational guidelines.
- Audit Implications: Auditors must verify that the insurance company complies with the Insurance Commission’s regulations, including maintaining adequate capital reserves and adhering to specific operational guidelines. Any deviations from these regulations should be highlighted in the audit report.
- Uploader: Kwame Aikins