Purpose of Act 170 MAIN FEATURES

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1 INDUCTION COURSE FOR NEWLY QUALIFIED ACCOUNTANTS PRESENTATION ON THE CHARTERED ACCOUNTANTS ACT, 1963 (ACT 170) ALISA HOTEL-16TH MARCH 2011 BY NENE AMEGATCHER Purpose of Act 170 The purpose of Act 170 is to establish an Institute of Chartered Accountants and to make provision for the conduct of examinations by the Institute and other matters connected with the accountancy profession. Such other matters are the establishment of the Council of the Institute, functions of the Council, officers of the Council, Regulations or restrictions on the practice, offences and penalties amongst others. MAIN FEATURES Part 1 consists of 12 provisions which provides for the establishment of the Institute, membership of the institute, establishment of the Council, its membership and functions. Section 1 and 2 establishes the Institute of Chartered Accountants (Ghana) and incorporates it as a body corporate that can sue and be sued in its corporate name. It also has perpetual succession. What this means is that the Institute has an independent legal personality and even though it is a public body its legal advisor is not the Attorney-General. The Institute can commence legal action or defend any legal action in court in its own name and choose its own legal representation. Further the Institute can buy or sell or acquire any property in its own name without authorization from the Government. All transactions entered into or executed for and on behalf of the Institute shall be done by any two council members and the seal of the institute shall be affixed on any document evidencing such transaction. E.g. a lease agreement (Indenture) MEMBERSHIP: Section 3 & 4 provides for the meetings of the membership of the Institute and for the eligibility of a person to become a member of the Institute. 1

2 Under Section 4(a) a person is eligible to become a member of the Institute if he passes the qualifying examinations by the Institute and completes practical training endorsed by the Council within a certain period. Under Section 4(b) a person who does not come within section 4 (a) but is a member of a professional accountancy body whose status the Council by Regulations recognizes to be equivalent to the institute is eligible to apply to the institute to be a member. If the application is granted such a person, subject to section 5 becomes a member of the institute but cannot use the title of Chartered Accountant (Ghana) unless and until he passes the qualifying exams of the institute. For e.g. members of ACCA who want to be members of ICA (Ghana) are entitled to apply to the Institute to become members. If the application is granted they will be members but cannot call themselves Chartered Accountants or write CA after their names (as provided by section 6) until they pass the Institutes qualification examination. They can however use any title that comes with the ACCA qualification. Approval for eligibility may be subject to a condition that the person has undergone practical training or has acquired such practical training in accountancy as approved by the Council. Further even though an association may be recognized as equivalent to the Institute, the Council may declare that the members of such association are not eligible for membership of the Institute. Having regards to these discretionary powers of the Council, the description of the required standard of practical experience as well as the grounds or reasons for refusing eligibility for membership to such persons must be provided expressly in the Regulations or Legislative Instrument which section 24 requires the Council to make. This Regulation must be made available or accessible to everyone who is interested. Failing this any such exercise of such discretion may be arbitrary and sin against principles of administrative law which states that exercise of discretionary powers by administrative bodies must be fair. Fairness includes transparency and 2

3 accesses to information that will enable a person make an informed decision. SUBSCRIPTION: Section 5 provides for the payment of fees to be qualified to be enrolled as a member of the Institute. The import of this section is that eligibility does not automatically make a person an enrolled member of the Institute. The person must first pay an entrance fee and an annual subscription. Therefore a member of the Institute in good standing is the one whose name is enrolled. GOVERNING COUNCIL: Section 7 establishes the governing body of the Institute as the Council which is made up of 11 members. 4 of the council members shall be nominated by the Minister for Education in charge of tertiary education. Apart from this 4 the remaining 7 of whom 4 shall be accountants in active practice shall be elected by the members of the Institute at a general meeting. The Council members will elect two of themselves as President and vice-president respectively. The Council could exercise their powers only after the President of Ghana by instrument appoints a day on which they shall start. Under section 8 the tenure of office of each council member is two years. Vacation of office may occur by: Written notice by the member to the Minister of Education; Death of the member; and Effluxion of time i.e. expiration of the two years. Where the member who vacates office was appointed by the Minister, the replacement shall be made by the Minister. Where the member was elected by members in general meeting the Council will co-opt another person until general meeting elects the replacement in the next annual general meeting. Only members who serve the full term of two years shall be eligible for reappointment or re-election. 3

4 Section 9: It is the function and duty of the Council to administer and manage the Institute in accordance with the provisions of Act 170. Such duties include provision and maintenance of a library of books related to accountancy, encourage research in accountancy, supervise and regulate the engagement, training and transfer of articled clerks, prescribe curriculum for the training of chartered accountants and conduct qualifying examinations for membership of the Institute and provide and maintain a register of chartered accountants and practicing accountants. FUNDING OF THE INSTITUTE: Section 11: The activities of the Institute shall be funded by contributions from members and grants-in-aid from Government. The Council shall have authority to borrow money at an interest for the purposes of the Institute. The Council also has power to invest the Institutes moneys in government bonds or other safe securities determined by the Council. The accounts of the Institute shall be audited by a member who is a chartered accountant but not a Council member. Such auditor shall be appointed yearly by AGM and the audited accounts shall be approved at the AGM. PRACTISING ACCOUNTANT-PART II Part II contains only 1 provision: Section 13 This section defines who is a Practising Accountant. According to this section Practising Accountants must also be registered as such by the Council upon payment of fees. A person registered as such is entitled to use the title PA. The import of this section is that even though Practising Accountants are registered by the Council under Act 170 they are not enrolled members of the Institute and therefore not Chartered Accountants. QUALIFICATIONS FOR MEMBERSHIP PART III 4

5 This part contains eight sections and is one of the most important Parts of Act 170. The reason is that it deals with qualifications and restrictions of the Accountancy profession. Section 14 This section provides for the general disqualification conditions. According to section 14 a person may be eligible to become a member of the Institute but such a person will not be qualified to be enrolled as a member of the Institute if: a. He is less than 21 years old; b. He has not paid the prescribed fees; c. A Superior Court has through a judicial process declared the person as insane; d. He has been judicially convicted for the offence of dishonesty and fraud like embezzlement, stealing, misappropriation of funds, bribery, e.t.c.; e. A judgment of a court declares that the person is unable to pay his debts as and when they fall due i.e. insolvent or bankrupt. The bankruptcy must occur through the doing or fault of the person, like mismanaging his finances, and not through unforeseen calamities or natural causes. DISCIPLINE: Section 15 According to this section the name of any member of the Institute or registration of any Practising Accountant will be struck off or cancelled, as the case may be, from the Register by the Council if the affected person becomes insane or a convicted criminal for the offence of stealing, embezzlement or misappropriation of monies, e.t.c Further if a member or a Practicing Accountant fails to pay the prescribed fees for more than 4months his name or registration, as the case may be, will be struck off the register. Also where the Council after a disciplinary hearing under section 16 is satisfied that a chartered Accountant or Practicing Accountant is guilty of professional misconduct, such a persons name or registration may be struck off or cancelled respectively for a period of time or permanently. 5

6 However the name or registration may be restored if the Council is satisfied that the person is now fit to practice the profession. Section 16 The Council is the final disciplinary authority. It has the power to appoint a disciplinary committee to investigate, upon a complaint or any instance of an alleged professional misconduct by any chartered or practicing accountant. In other words the Council is not limited to investigating only formal complaints of professional misconduct but can also on its own volition investigate any instance of such allegation. Further the Council can decide not to appoint any disciplinary committee but will itself hold the inquiry into the conduct of the affected person. The procedure to be followed by the Disciplinary committee is provided under the third schedule. Section 17 As a means of punishment the Council has power under this section to suspend a Chartered Accountant or suspend the registration of the practicing accountant for a period of time instead of striking off the name or registration. Section 18 A person whose name or registration is struck off by the Council as a result of disciplinary proceedings and is not satisfied with the decision can appeal within 3 months by way of a petition to the High Court. Failure to file the petition within the stated period will render the petition out of time. The petition must be in writing. Section 19 This section defines and gives the scope of professional misconduct as any act stated in the 4th schedule to Act 170. Sections 20 and 21 These two sections impose restrictions on the practice of accountancy by Chartered and Practising accountants. No person who is not a member of the Institute or registered by the Institute as a Practising accountant can carry on the practice of accountancy. Every Chartered or Practising 6

7 Accountant must be certified as such by the Council. Certification is valid for a year and is based upon the payment of annual fees. A person recognized by Act 170 as a Chartered Accountant can use that title. However a Firm of Accountants whose partners are all members of the Institute as Chartered Accountants can title the Firm as Chartered Accountants. The same applies for Practising Accountants. OFFENCES: PART IV Section 22 It is a criminal offence for anyone to contravene any of the provision of Act 170. For instance if a person who is not a Chartered Accountant uses such a title the person commits a criminal offence and upon conviction by a court he is liable to suffer imprisonment for not more than one year or to a fine or to both. Also if a Council member vacates office without a written notice he commits an offence. Section 23 According to this section an accountant in practice is a person who works in an accounting firm and not a person who is a salaried employee of the Government or any other employee irrespective of the fact that such a person does what accountants do in an accounting firm. Section 24 The Council has the duty to, with the prior approval of the Minister of Education; make Regulations that expressly provides for the implementation of the Act. Section 25 The Minister of Education is the only person who has authority to amend, alter, add or revoke any provision in this Act. However he may do this upon the recommendation of the Council. Therefore the Minister can do this without the recommendation of the Council. This is not the best and must be amended. Section 26 7

8 This section deals with the transitional provisions at the time Act 170 was introduced. Amongst other things this section vested in the Council all the assets and liabilities of the erstwhile Association of Accountants in Ghana and the Society of Ghanaian Practising Accountants. It also saved any existing contract between the erstwhile Association of Accountants in Ghana or the Society of Ghanaian Practising Accountants and any other party. Section 27 This section is the interpretation section. It seeks to define the meaning of certain words as used in the context of the Act. FIRST SCHEDULE Meetings of the Institute The Institute shall have an AGM once every year to transact the ordinary business of the Institute. The meeting, unless otherwise decided by Council, shall be held on every 30th Day of April in Accra or elsewhere in Ghana. In any case the latest an AGM should be held should not be more than 15months from the date of the previous AGM. E.g. if an AGM is held on 30th April 2010 and for a reason it cannot be held on 30th April 2011 the latest date that it must be held shall be 30th July members can requisition a special meeting by giving the secretary a written notice to that effect. However it is the Council which shall decide if such meeting shall be convened. This is not in accordance with best practice. Notice of any meeting shall state the agenda and it (Annual or special) shall be sent to every member within not less than 14 days or more than 21 days. Proceedings of meetings shall not be invalidated if a member does not receive notice of the meeting. Even though they are not members of the Institute Practising Accountants are entitled to notice of the meeting and also entitled to speak and vote. The Council President or Vice shall chair every meeting and in their absence an elected member amongst the members present shall chair. The quorum for an annual meeting shall be 10 members. If within 15 minutes the meeting does not have a quorum it shall be adjourned for two weeks at the 8

9 same time and venue or as the Council may determine if the venue is not available. On the adjourned date however, the meeting will go on if members present are less than ten. Fifteen members shall form a quorum for special meetings. If no quorum is formed within 15 minutes the meeting shall be dissolved. All adjournments shall be made by the chairman of the meeting with the consent of the members. Decisions taken at meetings shall be by voting of hands and in case of a tie the chairman shall have a casting vote. In any case or matter, at least 25 members present can demand for a poll to be taken except that a poll cannot be taken on any resolution for the appointment of a chairman, scrutineers or adjournment. DISCIPLINARY PROCEDURE: THIRD SCHEDULE This provision deals with the disciplinary procedure. Where the Council s preliminary investigations discloses prima facie that a member or registered Practising Accountant has committed a professional misconduct, it shall appoint a 5 member disciplinary committee to conduct a hearing or inquiry. The 5 member committee shall consist of not less than 3 members of the institute. If the respondent is a Practising accountant at least a member of the committee shall be a Practising accountant. The respondent shall be given all the information regarding the hearing, like the charges, date, time and venue for the hearing as well as any relevant document to enable him prepare adequately for his defence. The secretary shall be the secretary of the committee. The disciplinary committee shall have a lawyer or counsel who shall lead the evidence in any investigation. The Council has the power to compel anyone relevant to the case to give evidence or to produce any document relevant to the case. If the person fails to attend or produce the document that person commits an offence. All witnesses shall be required to take an oath or affirm and any witness who refuses to take an oath or affirm or answer any questions put to him commits an offence. This provision is unconstitutional and must be reviewed. Under the laws of Ghana a witness has a right to remain silent and also a right not to answer any question if such an answer would 9

10 incriminate him. If a person refuses to swear or affirm it is his right. What the committee can do is to treat the witness or person s evidence with suspicion and give it less weight. But to make it a criminal offence is inconsistent with our constitution and law of Evidence. Giving of false testimony or information by a witness is an offence. The Committee may be assisted by a lawyer who is appointed by the Council. The accused person or respondent also has a right to be represented by a lawyer. The committee shall decide any issue on a simple majority and unless otherwise directed by Council all enquiries shall be conducted in camera. The recommendation of the committee is not binding on the Council who shall be the final disciplinary authority. FOURTH SCHEDULE This schedule contains the various professional misconducts in respect of Chartered Accountants and Practising Accountants. This list includes: Allowing a non Accountant to Practise in the C.A. name Entering into partnership with or securing the services of a non-c.a. Paying to a non C.A. any commission or share of fees from services. Accepting part of profit of the professional work of a Lawyer, Auctioneer, broker or other agent not a C.A. Advertising professional achievement of services. Soliciting clients by advertising Disclosing client information to a third party without the consent of the client. Accepting the position of Auditor previously held by a C.A. without communicating first with the C.A. in writing Expressing opinion on any business in which the C.A. or his firm has an interest unless disclosed. Negligence in the course of professional services. "A solicitor[accountant] holds himself out to his clients as possessing adequate skill, knowledge and learning for the purpose of properly conducting all business that he undertakes, If, therefore he causes loss or damage to his client owing to want of such care as he ought to exercise, he is guilty of negligence giving rise to an action for damages by his client." So every C.A. is bound, under pain of being made responsible in 10

11 an action, to bring a fair and reasonable amount of care and skill to the performance of his professional duty. Thus in undertaking a client's business, an attorney[accountant] undertakes on his own part for the existence and the due. employment of skill and diligence. Where an injury is sustained by his client in consequence of the absence of either, he is responsible to his client for the injury. Failing to keep clients monies in a separate Bank Account or to use it for the purpose to which they were intended. QUALITIES OF A GOOD CHARTERED ACCOUNTANT 1. Practice and Industry: 2. Courage There must be no timidity about the performance of the work of an advocate. You will find sometimes that those in the position of authority seek to test you occasionally, to dominate or bully you. 3. Self Control: One of the most unpleasant sights is to see a professional like a Chartered Accountant and a client engaged in a row (exchange of words). The Accountant who is quick-tempered or easily embarrassed will show signs of losing control of himself and respect from the public. However emotionally overheated one may become, members of the legal fraternity[chartered Accountants] have a duty to conform to the time honoured practice of comporting themselves always with decorum and dignity. This must be reflected in the language they employ which should be of measured elegance and sobriety (per Francois JSC in Botchway v Odonkor SC 9TH Feb ) 4. Honesty: This is by far the most important quality an advocate should attain in the cause of his professional life. Without it, an Accountant may secure a practice but will not sustain it. This must be adhered to, no matter the cost to one s reputation or self-esteem and sometimes regardless of the cost to your client. An Accountant must see himself as a medium or a channel for 11

12 the truth. Accountants involve in dishonesty are the dregs of the profession since they aim to achieve by deceit what they cannot achieve by good and honest practice. 5. Presence: This is the impression or influence made by one s imposing bearing. wellcut suits, polished manners and pleasant demeanour are all hallmarks. Presence of a true kind can be truly intimidating and there is much to be said for beginning a case with that rare impact. 6. Language: A sound command of the English Language is an essential. Command of language must include the ability to choose the right words at the right moment. 7. Humanity: This is the nature peculiar to human beings i.e. the kind of feelings of man. Accountants must always know their audience i.e. persons to whom they are talking or dealing with and try to see whatever they do in terms of how their audience will understand them. THANK YOU 12