In that regard, the Government agreed to prepare its financial statements which

comply with these standards namely: “International Financial Reporting Standards

(IFRS)” – For Government Business Enterprises and Profit-making Organization’s
“International Public Sector Accounting Standards (IPSAs)” – for Public Sectors
e.g., Ministries, Departments, Agencies, Local Government Authorities and
Regional Secretariats

These standards are issued by “International Federation of Accountants (IFAC)” of

which Tanzania is a member via NBAA in order to comply with these standards,
the Central Government in 2007 - 2008 started preparing and presenting its
financial statements on IPSAS Cash Basis. Since IPSAS Cash Basis was a stepping
stone towards adoption of Accruals Basis IPSAS, therefore the Central
Government is in the process of migrating to IPSAS Accruals Basis

All accounts submitted by the Accounting Officers, Accountant General and the
Local Government Authorities, under the Public Finance Act 2001 (revised 2004).

BASES OF FINANCIAL REPORTING

International Public Sector Accounting Standards (IPSAS) are a set of accounting
standards issued by the IPSAS Board (IPSAS Board) for use by public sector
entities. IPSAS are broadly based on International Financial Reporting Standards
(IFRS) issued by the International Accounting Standards Board (IASB). In this
regards public sector entities include national governments, regional governments,
local government and related government entities such as agencies boards,
commission and enterprise.

The use of IPSAS also ensures that financial statements are comparable for
organizations that adopt them. The application of the IPSAS gives bodies
incorporated under public law greater significance through comparability
with general and internationally recognized regulations for submitting accounts
.
This facilitates dealing financiers and simplifies communication with the general
public. Though IPSAS Board has no power to compel countries to adopt the
IPSAS standard, the standards play a vital role in the accounting of national public
sector of various countries. Many countries, including Tanzania have already
introduced IPSAS to account for government accounts.

When preparing general purpose financial statements on an international level, the

standards and framework applicable are the IAS / IFRS, in the case of private
sector entities, and the International Public Sector Accounting Standards (IPSAS),
in the case of public sector entities.

While the IPSAS are IAS / IFRS changed to meet the requirements of public sector
entities, the IPSAS state that where there is no currently applicable IPSAS, the IAS
/ IFRS should be looked to for guidance on disclosure on accounting events.

The framework for preparation of financial statements under IPSASs recognizes

two governmental accounting systems which include cash basis of accounting
and accrual basis of accounting. These two bases of accounting are explained in
detailed in the subsequent Learning Outcomes of this Study Guide.

General purpose financial statements are those intended to meet the needs of users
who are not in a position to demand reports tailored to meet their particular
information needs. General purpose financial statements include those that are
presented separately or within another public document, such as an annual report.
Users of general-purpose financial statements include taxpayers and ratepayers,
members of the legislature, creditors, suppliers, the media, and employees

In accordance with Section 25(2) of the Public Finance Act, each accounting
officer shall prepare and transmit to the Controller and Auditor General in respect
of the past financial year and in respect, of the votes, revenues and moneys for
which he is responsible