According to the 2005 World Bank assessment of accounting and auditing in Tanzania, the National Board of Accounting and Auditing (NBAA), the national accounting and auditing standard-setter, adopted International Standards on Auditing (ISAs) "wholesale" as Tanzanian standards effective July 2004. The World Bank observed, however, that although there is sufficient legal backing for adherence to the NBAA standards for auditors in Tanzania, compliance was not enforced effectively. Lack of implementation guidelines further hindered the application of auditing standards. Also, since the 2005 assessment, the International Auditing and Assurance Standards Board has issued new or revised some of the existing ISAs, and there is insufficient publicly available information whether Tanzania has incorporated the latest pronouncements. 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 the 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), consultants for the project, the first stage of the project entails the 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

In 2005 the World Bank conducted an assessment of auditing and accounting practices in Tanzania and noted that the National Board of Accounting and Auditing (NBAA), the national accounting and auditing standard-setter, adopted International Standards on Auditing (ISAs) "wholesale" as Tanzanian standards, effective July 2004. Prior to the adoption of ISAs, the NBAA issued 17 national standards that were based on the international equivalents and, according to the World Bank, in areas where there were no local standards, the international standards became mandatory. However, despite the wholesale adoption of ISAs and adequate legal backing for adherence to NBAA standards for auditors in Tanzania, the World Bank observed that compliance was not enforced effectively, and lack of implementation guidelines further hindered application of auditing standards. Moreover, some of the ISAs were subsequently revised and there is insufficient publicly available information whether Tanzania has incorporated the latest pronouncements.

The 2005 World Bank report recommended making the original text of ISAs legally mandatory for application by all public interest entities. Among other recommendations, the World Bank suggested establishing an oversight body to ensure compliance with international standards and 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 World Bank assessment, a stakeholder workshop was held in March 2006. 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 the 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 legal framework for accounting and auditing requirements in Tanzania is largely based on the Companies Act of 2002 which, according to a PricewaterhouseCoopers (PWC) report available on its website, became operational in March 2006. The 2002 Companies Act specifies filing requirements for audited financial statements of public and private companies and also empowers the Minister of Finance to apply to court for revision or audit of financial statements deemed unsatisfactory. As noted in 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 its 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. With regards to auditing, one of the major weaknesses mentioned was that 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.

Empowered by the Capital Markets and Securities Act of 1994, the main regulator for the securities market is the Capital Markets and Securities Authority (CMSA). The World Bank assessment noted that "the financial information contained in the prospectus of a company seeking listing has to comply with IFRS/IAS and be audited in accordance with ISA" (p. 5). Furthermore, the assessment observed that, including suspension from trading, 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. Audited financial statements have to be filed with the DSE, and the World Bank noted that the standards to be applied to prepare and audit the accounts are not "plainly spelled out" (p. 5).

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 World Bank pointed out that the Independent Auditors Regulation (2000) required auditors to ensure that financial statements are in compliance with NBAA standards or IFRSs. The insurance sector is regulated by the Insurance Supervisory Department, which is empowered by the Insurance Regulations of 1998. The World bank noted that audits must comply with provisions of the Company Ordinance of 1932 and/or international auditing standards. The Commissioner of Insurance is legally required to approve the appointment of the auditor of an insurance company. Both banks and insurers, the World Bank noted, were subject to adequate legal sanctions in case of non-compliance. 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 for non-compliance.

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 although 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

ISA 200 Objective and General Principles Governing an Audit of Financial Statements (effective 2006)

II

According to the NBAA website, effective from July 1, 2004, ISA 200 Objective and General Principles Governing an Audit of Financial Statements was adopted in Tanzania. However, the International Auditing and Assurance Standards Board (IAASB) subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 210 Terms of Audit Engagements (effective 2006)

II

According to the NBAA website, effective from July 1, 2004, ISA 210 Terms of Audit Engagements was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 220R Quality Control for Audits of Historical Financial Information (effective 2005)

NC

As of 2007, ISA 220R Quality Control for Audits of Historical Financial Information has not been adopted in Tanzania.

ISA 230R Documentation (effective 2006)

II

According to the NBAA website, effective from July 1, 2004, ISA 230 Documentation was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 240 The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements (effective 2004)

II

As of 2007, ISA 240 The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements has not been adopted in Tanzania.

ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 260 Communications of Audit Matters With Those Charged With Governance (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 260 Communications of Audit Matters With Those Charged With Governance was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 300 Planning an Audit of Financial Statements (effective 2004)

NC

As of 2007, ISA 300 Planning an Audit of Financial Statements has not been adopted in Tanzania.

ISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (effective 2004)

NC

As of 2007, ISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement has not been adopted in Tanzania.

ISA 320 Audit Materiality (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 320 Audit Materiality was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 330 The Auditor’s Procedures in Response to Assessed Risks (effective 2006)

NC

As of 2007, ISA 330 The Auditor's Procedures in response to Assessed Risks has not been adopted in Tanzania.

ISA 402 Audit Considerations Relating to Entities Using Service Organizations (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 402 Audit Considerations Relating to Entities Using Service Organizations was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 500 Audit Evidence (effective 2004)

NC

As of 2007, ISA 500 Audit Evidence has not been adopted in Tanzania.

ISA 501 Audit Evidence - Additional Considerations for Specific Items (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 501 Audit Evidence - Additional Considerations for Specific Items was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 505 External Confirmations (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 505 External Confirmations was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 510 Initial Engagements — Opening Balances (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 510 Initial Engagements--Opening Balances was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements. .

ISA 520 Analytical Procedures (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 520 Analytical Procedures was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 530 Audit Sampling and Other Selective Testing Procedures (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 530 Audit Sampling and Other Means of Testing was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 540 Audit of Accounting Estimates (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 540 Audit of Accounting Estimates was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 545 Auditing Fair Value Measurements and Disclosures (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 545 Auditing Fair Value Measurements and Disclosures was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 550 Related Parties (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 550 Related Parties was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 560 Subsequent Events (effective 2006)

II

According to the NBAA website, effective from July 1, 2004, ISA 560 Subsequent Events was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 570 Going Concern (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 570 Going Concern was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 580 Management Representations (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 580 Management Representations was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 600 Using the Work of Another Auditor (effective)

NC

As of 2007, ISA 600 Using the Work of Another Auditor has not been adopted in Tanzania.

ISA 610 Considering the Work of Internal Auditing (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 610 Considering the Work of Internal Auditing was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 620 Using the Work of an Expert (effective 2005)

II

According to the NBAA website, effective from July 1, 2004, ISA 620 Using the Work of an Expert was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 700 The Auditor’s Report on Financial Statements (effective 2006)

NC

As of 2007, ISA 700 The Auditor's Report on Financial Statements has not been adopted in Tanzania.

ISA 701 Modifications to the Independent Auditor's Report (effective 2006)

NC

As of 2007, ISA 701 Modifications to the Independent Auditor's Report has not been adopted in Tanzania.

ISA 710 Comparatives (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 710 Comparatives was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 720 Other Information in Documents Containing Audited Financial Statements (effective 2004)

II

According to the NBAA website, effective from July 1, 2004, ISA 720 Other Information in Documents Containing Audited Financial Statements was adopted in Tanzania. However, the IAASB subsequently revised or issued new ISAs and there is insufficient information publicly available whether Tanzania made changes in accordance with the international requirements.

ISA 800 The Auditor’s Report on Special Purpose Audit Engagements (effective 2006)

NC

As of 2007, ISA 800 The Auditor's Report on Special Purpose Audit Engagements has not been adopted in Tanzania.