Viewpoint: Joseph Sheffu, Country Managing Partner, EY
As part of its economic transformation in the 2000s, Tanzania recognised that a robust and reliable financial reporting framework, in both the public and private sectors, would play a vital role in mitigating fiscal and fiduciary risks, thereby stimulating further local and foreign direct investments. On July 1, 2004, the National Board of Accountants and Auditors (NBAA), the regulatory body for the accountancy profession in the country, introduced both the International Financial Reporting Standards (IFRS) and the International Standards on Auditing (ISAs). Parallel to the adoption of IFRS, Tanzania also adopted the International Public Sector Accounting Standards (IPSAS). Local government authorities effectively started producing accrual-based IPSAS financial statements from June 30, 2008, while the central government started implementing the global rules by adopting cash-basis IPSAS financial statements from the same date and graduated into accrual IPSAS statements from June 30, 2013.
The accounting profession in Tanzania is regulated by the Auditors and Accountants (Registration) Act, 1972, which established the NBAA. Membership of the NBAA is mandatory for all professional accountants who want to practise in Tanzania. Foreign-qualified professional accountants must first secure authorisation and be registered with the NBAA to be able to practise in the country. The NBAA has signed reciprocation agreements to recognise professional accounting qualifications of other EAC members, namely Kenya, Uganda and Rwanda, thus enabling free movement of accountants from across these member states.
The NBAA register indicated that as of July 1, 2017 there were a total of 1864 certified public accountants (CPAs) practising in Tanzania, with a further 3058 graduates who have passed their final professional accounting examinations but have yet to complete the mandatory practical training to attain the full CPA title.
The main legislation governing companies, including financial reporting, is the Companies Act, 2002, which requires all entities to prepare IFRS-compliant financial statements which show the true state of fiscal affairs in each accounting period. The act also requires that these statements must be subjected to an independent audit by NBAA-registered auditors.
There are other specialised legislations that govern various industries, sectors and functions of the government, some of which specifically require the use of IFRS and ISAs. These include regulations issued by the Capital Markets and Securities Authority governing the companies whose shares are listed on the Dar es Salaam Stock Exchange; by the Bank of Tanzania overseeing banks operating in the country; and those issued by the Tanzania Insurance Regulatory Authority concerning insurance companies. The country’s income tax laws further require that companies must file with the Tanzania Revenue Authority with respect to their audited annual financial statements along with their annual tax returns. Other regulations impacting monetary reporting include legislation dealing with pension schemes and cooperative societies.
With the aim of enhancing transparency in corporate reporting, the NBAA has prescribed the director’s report which must be published by all entities together with their annual economic statements. This report provides information that enables users to better understand an entity’s corporate governance framework and key operational performance indicators, as linked to the firm’s fiscal position and performance shown in its financial statements.
To ensure they are compliant with best practices in Tanzania, EY ensures all its professional personnel have periodical, structured internal training in both technical and soft skills such as IFRS and ISAs. Other opportunities include external training and a staff secondment programme. The government, the NBAA, academia, the business community and practitioners in general are all actively engaged in concerted efforts to further advance the accounting profession in the country.
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