CHALLENGES IN ADOPTION AND IMPLEMENTATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS(IFRS) IN TANZANIA.5 RECOMMENDATIONS ON HOW NBAA SHOULD SUPPORT REPORTING7
ENTITIES TO COMPLY WITH IFRSs7
Explain in detail the challenges encountered in adoption and implementation of International Financial Reporting Standards (IFRSs) in Tanzania in reporting of financial information.
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International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. The rules to be followed by accountants to maintain books of accounts which is comparable, understandable, reliable and relevant as per the users internal or external. IFRS began as an attempt to harmonize accounting across the European Union but the value of harmonization quickly made the concept attractive around the world. They are sometimes still called by the original name of International Accounting Standards (IAS). IAS was issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On April 1, 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS and Standing Interpretations Committee standards (SICs). The IASB has continued to develop standards calling the new standards (International Financial Reporting Standards (IFRS). Tanzania decided to migrate to the international accounting and auditing standards from July 2004. All private entities and commercial public entities adopted the International Reporting financial Standards (IFRSs) immediately. The non-business enterprises including the Central Government -Ministries, Departments and Agencies (MDAs) and the Local Government Authorities (LGAs) adopted the International Public Sector Accounting Standards (IPSASs) from year 2006 and 2009 respectively. Most of the MDAs used IPSAS- modified cash basis while the LGAs used IPSASs accrual basis, however, efforts were made for the all MDAs to use IPSASs accrual basis from the financial year 2011/2012.
CHALLENGES IN ADOPTION AND IMPLEMENTATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) IN TANZANIA. IFRS are complex and difficult to interpret
Compliance with IFRS is a complex and tedious work as there is enormous information required to be disclosed. They are increasingly becoming longer, more complex and that the structure and complexity of the standards are affecting, largely in an adverse way, both their adoption and implementation.
Frequent changes in IFRSs
Entities cannot fully comply with IFRSs because of the frequent changes in the IFRSs. Preparers and users of financial statements need additional technical expertise to cope with those changes while still learning and implement the already issued standards before changes are made.
Inadequate number of Professional Accountants in the Country Compliance with IFRSs is mostly affected by the inadequate number of professional accountants in the country. In addition, some of reporting entities might not afford to employ fully qualified accountants who are fully...