Tanzania - Report on the observance of standards and codes (ROSC) : accounting and auditing

35188 REPORT ON THE OBSERVANCE OF STANDARDS AND CODES (ROSC) TANZANIA ACCOUNTING AND AUDITING April 1, 2005 Contents Executive Summary I. Introduction and Background II. Institutional Framework III. Accounting Standards as Designed and Practiced IV. Auditing Standards as Designed and Practiced V. Perception of the Quality of Financial Reporting VI. Policy Recommendations Annex A. Implementation of Policy Recommendations Regarding the Regulation of Auditors and Accountants in Tanzania Annex B. Financial Reporting Legislation Applicable to Parastatals Annex C. Acronyms and Abbreviations PREFACE In the wake of the international financial crisis of the 1990s, initiatives worldwide were set in place to strengthen the international financial architecture in crisis prevention, mitigation, and resolution. The agenda focused on weaknesses in the international financial systems that potentially contribute to the propensity for and magnitude of global financial instability, hence requiring collective action at the international level. In this regard, the international community emphasized the role of minimum standards and codes in strengthening the international financial architecture. There was widespread recognition that global financial stability rests on robust national systems and, hence, requires enhanced measures at the country level. In a world of integrated capital markets, financial crises in individual countries can imperil international financial stability. This provides a basic "public goods" rationale for minimum standards, which benefit international and individual national systems. In this context, the World Bank and the International Monetary Fund initiated the Reports on the Observance of Standards and Codes, which cover twelve internationally recognized core standards and codes relevant to economic stability and private and financial sector development. This Tanzania reports focuses on one of these twelve, accounting and auditing of financial reporting by public interest entities. Based on recommendations of the report, country stakeholders and World Bank staff look forward in working together with the Government of Tanzania to develop a country action plan to strengthen Tanzania's corporate financial reporting regime. The assistance rendered by the Tanzania authorities and country stakeholders during the review is sincerely appreciated. This report, prepared by a team from the World Bank, is based on findings from a diagnostic review carried out in Tanzania during November