Tanzania Financial Reporting Standard (TFRS) 1

Directors report

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 Coverage
Introduction

Directors report

Objectives of TFRS 1

Features and contents of TFRS 1

Scope of TFRS 1
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 Introduction

Accounting standards are authoritative statements of

how particular types of transactions and events should
be reflected in the entity financial statements.

Compliance with accounting standards is necessary for

the fair presentation of financial statements.

Entities in Tanzania are required to comply with both

local and international financial reporting standards.

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 Introduction
International Accounting Standards
Year Developments
1973 The International Accounting Standards Committee (IASC) was
formed in 1973.
to It was the first international standards-setting body.
It was composed of professional accounting bodies of Australia,
2000 Canada, France, Germany, Japan, Mexico, Netherlands, UK and
the US.
IASC issued International Accounting Standards (IAS).
2001 IASC was reorganized.
It became the International Accounting Standards Board (IASB).
IASB adopted IAS.
2003 IASB issued the first International Financial Reporting Standard
(IFRS), IFRS 1 “First time adoption of International Financial
to date Reporting Standards” in 2003.
Currently a series of 17 IFRS and 41 IAS have been issued.
However...

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 Introduction
International Accounting Standards
 Although the series of IAS is from IAS 1 to IAS 41, there are currently 24 IAS.
Some of the IAS were replaced by other IAS, some were replaced by IFRS and
some were withdrawn. For example:
IAS Replacement
Standard Description Standard Description

IAS 4 Depreciation accounting IAS 36 Impairment of assets

IAS 25 Accounting for investments IAS 39 & 40 39: Financial instruments

40: Investment property
IAS 39 Financial instruments IFRS 9 Financial instruments

IAS 15 Information reflecting the effects N/A withdrawn

of changing prices

 There are currently 16 IFRS in a series of IFRS 1 to IFRS 17. IFRS 17 “insurance
contracts” was issued in 2017, amended in 2020 and is effective from annual
reporting periods beginning on or after 1 January 2023. IFRS 17 replace IFRS 4
“insurance contracts”.
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 Introduction
The National Board of Accountants and Auditors (NBAA) and
Accounting Standards
Year Developments
Prior No any accounting standards.
1972 No NBAA
No any Act of parliament for Auditors and Accountants.
Accountants and auditors relied on their training backgrounds.
1972 NBAA was established under the Auditors and Accountants
(Registration) Act No.33 of 1972 as amended by Act No.2 of 1995
to and CAP 286 (R.E. 2002).
Its operations began on 15th January 1973.
1982 It formed an Accounting Standards Steering Committee to formulate
the accounting and auditing standards in 1981.
No any accounting standards were issued.
1983 NBAA issued the first three sets of accounting standards, known as
Tanzania Statements of Standards Accounting Practice (TSSAP) no.
1, 2 & 3.
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 Introduction
The National Board of Accountants and Auditors (NBAA) and
Local Accounting Standards in Tanzania
Year Developments
1984 TSSAP 2 had an inclusive focus.
Therefore, there was a project of issuing accounting guidelines for
to each of the topics identified under TSSAP 2.
Accounting guidelines were consolidated into accounting standards
2003 - known as the Tanzania Financial Accounting Standards (TFAS) and
TSSAP 2 was withdrawn on 1st July 2001.
 30 TFAS were issued by 30th July 2002 – they were similar to
International Accounting standards (IAS) in all respects.
2004 Due to the global pressure for adoption of international accounting
standards, On 1st July 2004, the NBAA adopted IAS.
TFAS, which had no equivalence to international standards (e.g.
TFRS 1) continued to be used.
References:
Mbelwa, L. H. & Mahangila, D. N. (2019). Critical External Institutional Pressures towards Effective Implementation
of IFRS in the Tanzanian Private Hospital Sector, ORSEA Journal Vol. 9.
Killagane, Y. (2006). Financial Accounting for Professional Students, Volume 2, National Board of Accountants
and Auditors, Dar es Salaam, Tanzania. 7
 Directors Report
It is an important document of Annual Report in which those charged
with governance gives a complete review of the entity‟s operations,
financial performance, financial position, budget implementation and cash
flows of the entity during the year.

Operating and Financial Review (OFR) is a narrative explanation of the

main trends and factors underlying the developments, operations,
performance, financial position and cash flows of an entity of the current
and future financial statements of the entity.

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 Directors Report
Annual report is composed of documents, including financial statements,
auditors report and directors report.

It is not a requirement of International financial reporting standards.

Therefore, there is no any IFRS which guides the directors report.

Directors report is a requirement of national laws.

• Companies Act – for companies (Section 115 of the Companies Act
2002)

• Establishment Act – for public sector entities e.g. Section 20 of the

Institute of Finance Management Act 1972).

Therefore, directors report is guided by national standards -Tanzania

financial reporting standards (TFRS1)

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 Overview of TFRS 1
NBAA originally issued „TFAS 12 – Directors Report‟ in January 1999,
which was revised to continue to give entities guidance in preparing
directors report.

For example, TFRS 1 “The Directors Report” issued on 2009, replaced

TFAS 12 on Directors report which was issued by NBAA on 1st July 2001.

TFRS 1 “The Directors Report” which was approved and issued by the
NBAA on 15th October, 2009 replaced TFRS 1 which was issued on 2009
and was effective from 1st January 2010.

NBAA Governing Board approved the issuance of the revised and the
current TFRS 1 “The Report by those charged with Governance” on 22nd
June, 2020. The standard was effective from 1st January 2021.

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 Objective of TFRS 1
To build a framework for discussion of the main factors underlying an
entity‟s operations, financial performance, financial position, budget
implementation and cash flows of the entity.

To enable primary users and other stakeholders to understand how their
interests have been or are accommodated in the entity‟s current and
future plans.

It only identifies information to be included in the report. It does not set
benchmarks for quality of the items to be disclosed.

It requires compliance with any additional requirements of the relevant

statutory legislations.

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 Scope of TFRS 1
According to TFRS 1, the report should cover the following areas:
Development and performance of the entity‟s operation, including
underlying factors and main trends.

Entity‟s financial performance, financial position and cash flows,

including underlying factors and main trends.

How resources whether or not owned by the entity have been used
toward creating value over the short, medium and long term period.

Main trends of the entity‟s business and factors that have affected
and those which are likely to affect the business.

Events and uncertainties

Information on budget performance

Comply with relevant statutory requirements applicable in Tanzania.

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 Features and Contents of TFRS 1
Nature of operations

Objectives and strategies, including key performance indicators both

financial and non-financial.

Entity operating model

Current and future development and performance

Resources

Principal risks, uncertainties and opportunities

Stakeholders‟ relationships, including employees, customers,

creditors, contractors, lenders, suppliers, budiness partners, local
communities, legislators, regulators, policy makers and civil societies.

Cash flows

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 Features and Contents of TFRS 1
Liquidity

Key performance indicators

Corporate governance matters, including members, meetings,

committees, culture, ethics and values, appointment of auditors and
responsibility statement by those charged with governance.

Political and charitable donations

Employee welfare

Disabled persons and gender balance

Prejudicial issues – outside the control of the entity

Publication of the report on the website alongside audited financial

statements

Approval of the report

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Thank you

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