According to the 2005 World Bank assessment of accounting and auditing in Tanzania, the National Board of Accounting and Auditing (NBAA), the national accounting standard-setter, adopted International Financial Reporting Standards (IFRSs) "wholesale" as Tanzanian standards, effective July 2004. However, it is unclear as to which entities are required to follow IFRSs. The World Bank observed that legislation governing listed companies, insurance companies, parastatals, and executive agencies did not provide clear legal backing for the use of the NBAA prescribed standards. The World Bank also observed that, in general, accounting requirements specified in Tanzanian laws are largely incompatible with IFRSs requirements. A few of the major recommendations included but were not limited to, adopting IFRSs without any modifications and making these legally mandatory for all public interest entities; setting up an oversight body to ensure compliance with accounting and auditing standards; and strengthening the capacity of the regulatory bodies and the NBAA. Following the assessment, a stakeholder workshop was held in March 2006 and a World Bank-funded project on updating accounting and auditing legislation in Tanzania was initiated the same year. In a November 2006 speech delivered at a stakeholders' conference, A. Khatibu, the Tanzanian deputy Minister of Finance confirmed that World Bank-approved consultants were working on updating accounting and auditing legislation in Tanzania. According to the website of the Emerging Market Group (EMG), the consultant for the project, the first stage of the project entails an overview of the accounting profession in Tanzania. The EMG will also make a proposal for restructuring the NBAA, including its framework, and draft new laws for ensuring compliance with accounting and auditing standards along with effective monitoring and enforcement arrangements. The second stage of the project focuses on preparing manuals and providing on-the-job training for the NBAA staff.

General Overview

The legal framework for accounting and auditing requirements in Tanzania is largely based on the Companies Act of 2002 which, according to PricewaterhouseCoopers (PWC), became operational in March 2006. Per the PWC publication, "the new law repealed the Companies Ordinance (Cap. 212), 1932, an archaic piece of legislation based on the English Companies Act 1929, and aims to put in place a relevant and modern legal framework" (p. 1). In a 2005 assessment the World Bank observed that the Companies Act addresses many weaknesses in the old legislation which include but are not limited to (1) "requiring private companies to file audited financial statements with their annual returns"; (2) "clarifying filing deadlines"; and (3) "removing certain balance sheet disclosures and requirements for the valuation of assets to better align with developments in accounting standards" (p. 4). However, the World Bank pointed out that many flaws still persisted. First, the Act did not identify accounting standards to be adhered to, and the "wording [of the Act] is vague and ambiguous" (p. 5). Second, some of the accounting requirements are incompatible with the requirements of the International Financial Reporting Standards (IFRSs). Finally, the qualifications of the auditors mentioned in the Companies Act are not in line with the Auditors and Accountants Act, which has different specifications for qualified auditors. Moreover, the World Bank observed, in addition to the Companies Act most of Tanzanian legislation is also incompatible with IFRS requirements. The various acts include: Capital and Markets and Securities Regulations (2003); Dar es Salaam Stock Exchange Blueprint (2003), interim financial statements; Insurance Act (1996); Collective Investment Schemes Act (2002); and the Public Corporations Act 1992.

Empowered by the Capital Markets and Securities Act of 1994, the main regulator for securities market is the Capital Markets and Securities Authority (CMSA). According to the 2005 National Board of Accountants and Auditors (NBAA) self-assessment, the CMSA monitors compliance with accounting and disclosure requirements by reviewing financial statements of listed companies. The World Bank assessment noted that the Capital Markets and Securities (Accounting and Financial Requirements) Regulations of 1997 (last amended in 2003) requires brokers, dealers, and investment advisors to use Tanzania Financial Accounting Standards (TFASs) in preparation of financial statements. Per the assessment, "the format prescribed in the Regulations is not in line with IFRS/IAS" (p. 5). However, the World Bank pointed out that there were adequate legal sanctions available for the CSMA. The Dar es Salaam Stock Exchange (DSE), the World Bank noted, is a self-regulating body and supports the CMSA in monitoring and regulating financial reporting and disclosures requirements by listed entities in accordance with the DSE Blue Print of 2003.

Banks and nonbanking financial institutions are regulated by the Bank of Tanzania (BoT) governed by the Banking and Financial Institutions Act (BFIA) of 1991 and the Bank Supervision Regulations. According to the BoT website, a new BFIA was enacted in 2006. The Banking Supervisory Department within the BoT, monitors prudential regulation through regular on-site and off-site supervision. The insurance sector is regulated by the Insurance Supervisory Department which is empowered by the Insurance Regulations of 1998. The World Bank observed that legal requirements for insurers' were not in line with IFRSs. However, the World Bank noted that both banks and insurers were subject to adequate legal sanctions in case of non-compliance. Furthermore, public and statutory corporations (parastatals) are regulated by the Treasury Registrar and, per the assessment, a number of inconsistencies were observed in the reporting requirements along with a lack of effective sanctions regime.

The World Bank observed that there is no clear legal backing for the use of the NBAA prescribed standards. Prior to the adoption of international standards, local accounting standards were based on IFRSs and, in areas where no local standard existed, use of international standards was mandatory. The World Bank explained that "the NBAA had issued 30 local accounting standards, 17 auditing standards, and 3 statements of recommended practices. These were more or less based on IASB and IAPC standards, but lagged behind IAS/ISA" (p. 11). The NBAA adopted IFRSs "wholesale" as Tanzanian standards, effective July 2004. The World Bank pointed out that the adoption of IFRSs was a "positive development." However, it recommended adopting the official text of IFRSs and making them legally mandatory for all public interest entities, including government business enterprises. Among other recommendations, the World Bank suggested establishing an oversight body to ensure compliance with international standards. It also recommended agreeing upon a simplified reporting framework for Small and Medium-sized Enterprises (SMEs). According to the Financial Sector Reform and Strengthening Initiative website, following the assessment, a stakeholder workshop was held in March 2006 and a World Bank-funded project on updating accounting and auditing legislation in Tanzania was initiated the same year. In a November 2006 speech delivered at a stakeholders' conference, A. Khatibu, the Tanzanian deputy Minister of Finance, confirmed that World Bank approved consultants were working on updating accounting and auditing legislation in Tanzania. According to the website of the Emerging Market Group (EMG), the consultants for the project, the first stage of the project entails an overview of the accounting profession in Tanzania. The EMG will also make a proposal for restructuring the NBAA, including its framework and draft new laws for ensuring compliance with accounting and auditing standards along with effective monitoring and enforcement arrangements. The second stage of the project focuses on preparing manuals and providing on-the-job training for the NBAA staff.

The NBAA was established by the Auditors and Accountants Act as the regulator of the accountancy profession and has a legal mandate for setting accounting and auditing standards. The NBAA reports to the Ministry of Finance. The World Bank recommended strengthening NBAA's capacity and observed that professional education was inadequate in Tanzania. According to the 2007 NBAA self-assessment, the NBAA adopted the International Federation of Accountants (IFAC) Code of Ethics, with modifications. In the 2005 assessment, the World Bank pointed out that the NBAA Code of Ethics needed to be updated. The NBAA is listed as a member on the IFAC website.

The Principles

IFRS 1: First-time Adoption of International Financial Reporting Standards (effective 2006)

II

According to the NBAA website, effective from July 1, 2004, IFRS 1 was adopted in Tanzania. However, there is no further publicly available information as to Tanzania's compliance with this standard.

IFRS 2: Share-based Payment (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IFRS 2 was adopted in Tanzania. However, there is no further publicly available information as to Tanzania's compliance with this standard.

IFRS 3: Business Combinations (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, IFRS 3 was adopted in Tanzania. However, there is no further publicly available information as to Tanzania's compliance with this standard.

IFRS 4: Insurance Contracts (effective 2006)

II

According to the NBAA website, effective from July 1, 2004, IFRS 4 was adopted in Tanzania. However, there is no further publicly available information as to Tanzania's compliance with this standard.

IFRS 5: Non-current Assets Held for Sale and Discontinued Operations (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IFRS 5 was adopted in Tanzania. However, there is no further publicly available information as to Tanzania's compliance with this standard.

IFRS 6: Exploration for and Evaluation of Mineral Resources (effective 2006)

NC

According to the NBAA website this standard has not been adopted in Tanzania.

IFRS 7: Financial Instruments: Disclosures (effective 2007)

II

There is insufficient publicly available information addressing this principle.

IAS 1: Presentation of Financial Statements (effective 2007)

II

According to the NBAA website, effective from July 1, 2004, IAS 1 was adopted in Tanzania. However, the 2005 World Bank assessment noted that "the financial statements of some companies use outdated terminology" (p. 14). There is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 2: Inventories (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 2 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 7: Cash Flow Statements (effective 1994)

II

According to the NBAA website, effective from July 1, 2004, IAS 7 was adopted in Tanzania. However, the World Bank noted that "in some instances, required reconciliations were omitted" (p. 14). There is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 8 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 10: Events after the Reporting Period (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 10 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 11: Construction Contracts (effective 1995)

II

According to the NBAA website, effective from July 1, 2004, IAS 11 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 12: Income Taxes (effective 2001)

II

According to the NBAA website, effective from July 1, 2004, IAS 12 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 14: Segment Reporting (effective 1998)

II

According to the NBAA website, effective from July 1, 2004, IAS 14 was adopted in Tanzania. However, the World Bank noted that most listed companies assessed for segment reporting were not in compliance with the disclosure requirements. There is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 16: Property, Plant and Equipment (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 16 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 17: Leases (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 17 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 18: Revenue (effective 1995)

II

According to the NBAA website, effective from July 1, 2004, IAS 18 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 19: Employee Benefits (effective 2006)

II

According to the NBAA website, effective from July 1, 2004, IAS 19 was adopted in Tanzania. However, the World Bank noted that "some companies failed to provide the required disclosures" (p. 15). There is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 20: Accounting for Government Grants and Disclosure of Government Assistance (effective 1984)

II

According to the NBAA website, effective from July 1, 2004, IAS 20 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 21: The Effects of Changes in Foreign Exchange Rates (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 21 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 23: Borrowing Costs (effective 1995)

II

According to the NBAA website, effective from July 1, 2004, IAS 23 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 24: Related Party Disclosures (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 24 was adopted in Tanzania. However, the World Bank noted that " many companies did not disclose information on related party relationships, and some companies that reported related party transactions failed to provide the required detailed information" (p. 15). There is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 26: Accounting and Reporting by Retirement Benefit Plans (effective 1998)

II

According to the NBAA website, effective from July 1, 2004, IAS 26 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 27: Consolidated and Separate Financial Statements (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 27 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 28: Investments in Associates (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 28 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 29: Financial Reporting in Hyperinflationary Economies (effective 1990)

II

According to the NBAA website, effective from July 1, 2004, IAS 29 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 31: Interests in Joint Ventures (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 31 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 32: Financial Instruments: Disclosure and Presentation (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 32 was adopted in Tanzania. However, the World Bank noted that "there was significant noncompliance with financial instruments requirements, especially disclosures relating to interest rate risk, credit risk, and information about fair values" (p. 15). There is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 33: Earnings per Share (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 33 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 34: Interim Financial Reporting (effective 1999)

II

According to the NBAA website, effective from July 1, 2004, IAS 34 was adopted in Tanzania. However, the World Bank noted that "interim financial statements are required to be filed with the DSE within 3 months of period-end, although the disclosure requirements are not in line with IAS 34, Interim Financial Reporting" (p. 6). There is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 36: Impairment of Assets (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, IAS 36 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1999)

II

According to the NBAA website, effective from July 1, 2004, IAS 37 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 38: Intangible Assets (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, IAS 38 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 39: Financial Instruments: Recognition and Measurement (effective 2006)

II

According to the NBAA website, effective from July 1, 2004, IAS 39 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 40: Investment Property (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, IAS 40 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.

IAS 41: Agriculture (effective 2003)

II

According to the NBAA website, effective from July 1, 2004, IAS 41 was adopted in Tanzania. However, there is no further publicly available information regarding Tanzania's compliance with this standard.