Perception on fair value measurement in Ghana: Evidence from account personnel
Perception on fair value measurement in Ghana: Evidence from account personnel
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Date
2016
Authors
Amanamah, Richmell Baaba
Owusu, E.K.
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Publisher
AFRICAN JOURNAL OF APPLIED RESEARCH (AJAR)
Abstract
The mandatory adoption of the International Financial Reporting Standards (IFRS) in
Ghana, increases the use of fair value as a measurement basis for financial reporting. This is
a real challenge for preparers of the financial statement, given the standards' emphasis on
fair value as measures to improve the true and fair presentation of the financial
statements. This study solicited the perception of Accounts personnel on fair value
measurement. The study used 200 sampled respondents using purposive sampling methods
from Account personnel in different sectors of Ghana's economy. Data was collected from
respondents using a well-structured questionnaire. Data was analysed using descriptive
statistics with the help of SPSS software. The findings indicated that 72% of Ghanaian
account personnel approved fair value over historical cost because it provides useful and
accurate information for economic decision making. Though, many respondents were of the
view that measuring methods available were not accurate, 60% claim that majority of the
assets do not have an active market making it difficult to accurately determine their fair value
while 21% were neutral. Furthermore, 52% assert there is lack of skilled and qualified
valuers while 60% said there is no strong regulatory body to carry out the valuation and
manage the measurement methods. 47% of the respondents indicated that Ghanaian stock
markets are young and not efficient; therefore, the cost of shares in most listed companies
might not represent the true and fair value of the company’s shares. The results suggest that
simply requiring fair value as the reported measure for financial instruments may not
improve the quality of information unless appropriate estimation methods or guidance for
financial instruments that are not traded in active markets can be established. The study
recommends that standard setters must factor the inefficient market of developing market to
enhance the efficient application of fair value measurement hence comparability.
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Citation
Amanamah, R., & Owusu, E. K. (2016). Perception on fair value measurement in Ghana: Evidence from account personnel. African Journal of Applied Research, 2(2).