Updating Accounting
and Auditing Legislation
Restructuring the NBAA
and establishing ICPAT
Agenda
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Project Background and Objectives
Approach and Methodology
NBAA/TAA (ICPAT)
Financial Reporting Act
Discussion
2
Project Background and
Objectives
(a)ROSC (April 2005)
(b) Stakeholders’ Workshop (March 2006)
(c) Project Implementation (August 2006)
3
Project Background and
Objectives
•Improve statutory framework
•Strengthen enforcement
mechanisms
•Upgrade professional
education and training
•Enhance capacity of
regulatory and professional
bodies
4
Project Background and
Objectives
• Raises the status of the profession in
Tanzania and internationally
• Increases the flow of well qualified
accountants
• Supports economic and business
development
5
Approach and Methodology
• Extensive consultation with stakeholders
• Safeguard existing strengths e.g.
examinations
• Consider international/regional practice
• Design NBAA and ICPAT structure
(separation of government and private
sector)
• Draft a Financial Reporting Act
• Workshop
6
NBAA and TAA (ICPAT)
NBAA today:
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Regulator
Professional members’ body
Strong examination system
Highly respected
Board dominated by accountants
7
NBAA and TAA (ICPAT)
TAA:
• Members’ association
• Little incentive for qualified accountants to
join
• Limited resources
• No real disciplinary powers
• Participation by senior well respected
professional accountants
8
NBAA and TAA (ICPAT)
What is needed?

Need to separate roles and responsibilities
of a regulator from those of a professional
members’ body

Develop and strengthen NBAA as a
regulator with public interest oversight
functions

Establish a new stronger professional
body using the experience in TAA
9
NBAA
NBAA to be restructured:
• Membership functions passed to the new
professional body
• Technical regulatory departments set up
• Examinations retained
10
NBAA
New NBAA technical regulatory departments:
(i) Standards Setting
(ii)Monitoring
(iii)Audit Review
(iv)Enforcement
(v)Education (already there)
11
NBAA
Reconstituted NBAA Governing Board e.g.
(i)
9-12 members
(ii) Chairman
(iii)Ex-officio members (6)
(iv)Academic member (1)
(v) Representatives of the accountancy profession--expert members (1-2)
(vi)Eminent members (1-2)
12
NBAA
(vi) Maximum of 3 qualified accountants
(apart from ex-officio members)
(vii) CEO and Heads of Technical
Departments to attend meetings
13
NBAA
The NBAA will act in the public interest as a
regulator of accountants and auditors in
Tanzania to ensure integrity, best practice
and compliance with international standards
in the preparation of financial statements and
the audit of those statements.
14
Public Interest Entity
First Schedule of the Act:
(a)Listed companies
(b)Banks and financial institutions
(c)Insurance companies
(d)Any entity with an annual revenue
that exceeds an amount to be
determined by the Board
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Public Interest Entity
(e) Any entity that meets any two of the
following as determined by the Board:
• Revenue less than (d)
• Number of employees
• Total assets
• Total liabilities (excluding shareholders’
equity)
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Public Interest Entity
(f) Per Second Schedule any Public
Corporation or NGO that meets the criteria
set out in (d) or (e)
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NBAA
Regulatory functions include:
• Register PIEs
• Register auditors of PIEs
• Undertake practice review of audit firms
• Standards setting and monitoring
• Accredit professional bodies
18
ICPAT
The draft Financial Reporting Act (FRA)
establishes a strong professional
body for accountants and auditors:
“The Institute of Certified Public
Accountants of Tanzania”
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ICPAT
As a members’ body ICPAT will
represent the interests of its members
and, in particular:
• Register members and students
• Determine practical training
requirements
• Issue certificates for public practice
20
ICPAT
• Establish disciplinary procedures
• CPE/professional development
• Technical guidance
• Ensure high standards of
professional and ethical conduct
• Eventually IFAC membership
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NBAA Funding
NBAA will receive income from
(a)the Ministry of Finance
(b)auditors of PIEs registration fees
(c)PIE registration fees
(d)Examination fees
(e)Publications
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ICPAT Funding
ICPAT will receive income from:
(a)Membership fees
(b)CPE
(c)Set up costs from World
Bank/Ministry of Finance
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FRA
FRA is divided into the following main parts:
• NBAA
• Registration of Auditors
• ICPAT
• Professional Accountancy Bodies
• Setting of Standards and Monitoring
• Miscellaneous provisions
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FRA
Composition of the NBAA Board:
(a) Chairman
(b)Six ex-officio members (Regulatory
Members)
(c) Academic member
(d)Expert member (max.2)
(e) Eminent member (max.2)
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FRA
Objectives, functions and powers of the
NBAA:
• S12 sets out the objectives
• S13 sets out the functions
• S14 sets out the powers
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FRA
The Technical Departments will have several
functions (S20) including:
(a)Standards Setting
• Develop and adopt accounting/auditing
standards after consultation with ICPAT
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Issue guidelines
Ensure consistency with IFRS/IAS and ISA
Standards for SMEs
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FRA
(b) Monitoring
• Review and analyse financial reports
• Identify any failures of compliance
• Monitor compliance with CPA employment
rules
• Report to the Enforcement Department
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FRA
(c) Audit Review
• Register PIEs and auditors of PIEs
• Conduct practice reviews
• Ensure auditor compliance with the Act
• Accredit and oversee professional bodies
• Report non-compliance to the Enforcement
Department
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FRA
(d) Enforcement
• Review findings reported by other
departments or directly to the Board by
other Government Agencies
• Recommend the appropriate course of
action/sanctions
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FRA
(e) Education
• Preparing syllabi
• All aspects of the examination process
• Accrediting/exempting training providers
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FRA
Enforcement Procedures:
(a)Board Hearing Panel to hear objections
from PIEs, auditors etc
(b)The Panel confirms, amends or quashes
the recommendations/findings of the
Enforcement Department
(c)Accounting and Auditing Appellate
Tribunal to hear appeals from the Panel
•
•
High Court Judge and
4 with demonstrated expertise
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FRA
Registration of Auditors:
(a)To audit a PIE an auditor needs to be
registered with NBAA
(b)Need to register the audit firm with NBAA
(c)NBAA will review quality assurance
procedures of audit firms
(d)Sanctions
(e)Material Irregularities
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FRA
ICPAT:
(a)Covered by S42-64
(b)Council S45-47
(c)Establishes a potentially strong
professional body
(d)Extensive objectives and functions set out
in the Act
(e)Registration, practical experience and
disciplinary functions
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FRA
(f) Certification
(g) CPE and training
35
FRA
NBAA Oversight of Professional Bodies:
(a)For accreditation by NBAA a professional
body (including ICPAT) must demonstrate
it is undertaking various activities in a
satisfactory manner (S65)
(b)NBAA has public oversight of professional
bodies
36
FRA
Setting of Standards and Monitoring:
(a)IFRS/IAS for PIEs
(b) SMEs
(c) ISA
(d) Compliance and Monitoring
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FRA
(e) Practice review of auditors
(f) Powers of investigation
(g) Sanctions possible against registered
auditors, PIEs and their officers/directors
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Transitional Provisions
(a)Transfer of professional membership
(b)Continuity in audit of PIEs
(c)Continue audit practice
(d)Standards apply to SMEs
(e)SOEs deferred compliance
(f)IFAC membership
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Effect on other legislation
•
S78 repeal of the Auditors and
Accountants (Registration) Act, 1972
•
Recommendations to amend 25 other
listed Acts
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