NBAA Accountant Magazine by Arnold Njuki

Magazine

A S U P P L E M E N T O F T H E A C C O U N TA N T J O U R N A L

JU LY - SE PTE MBE R 2017

ISS UE N O. 0 0 5

HOW TO BECOME An Accountant The DO’s & DON’Ts Ready to Make the Leap from Accountant to

CONSULTANT? Expand Your Vision & Expand Your Business

Neema Kiure

MSSUSA An Impressive profile

I S S N N O 0856 - 2636

BLOCKCHAIN AND THE FUTURE OF

ACCOUNTANCY

Visits to Accountancy

TRAINING INSTITUTIONS INFORMATION TECHNOLOGY IN ACCOUNTING AND AUDITING

APC

Conference and Hotel Bunju-Dar Es Salaam

Inside Cover story

16 03

From Accountant To Consultant

Steering you in the right direction

Examination candidates & Tuition Providers workshop

NBAA promotes Its products and Services through exhibitions

CONTENTS The articles in the magazine do not necessarily reflect the official views of the National Board of Accounts and Auditors, or any other particular institute or organisation

PUBLISHERS National Board of Accountantss and Auditors Mhasibu House, Bibi Titi Mohamed Street P.O. Box 5128, Dar es Salaam, Tanzania Tel: +255 22 22 111890/9 Fax: +255 22 2151746 Email: info@nbaa.go.tz The Editorial Board welcomes contributions in the form of articles, adverts, news etc. for the Accountant Magazine. The Board reserves the right to reject, edit or shorten any article presented for publication. Although every effort will be made to return unused manuscripts and photographs, these are submitted at the ownerâ&#x20AC;&#x2122;s risk. Reproduction of contents in the whole or part without prior written permission of the Editorial Board is prohibited ART DIRECTION Arnold Njuki DESIGN & PRINTING

Imaging Africa Communication Limited Hotline: +255 718 549 518 /+255 784 657 031 E-mail: marketing@imagingafricaltd.com Website: www.imagingafricaltd.com Mikocheni B, Bima Road, Plot 147, Block B, Dar es Salaam, Tanzania

July / September 2017

A True dream

How to become an accountant

NBAA promotes its products and services through Exhibitions

Visits to accountancy training institutions

Blockchain and the future of accountancy

Capital gain tax in Tanzania - An overview

Ready to make the leap from accountant

to consultant?

17 Examination candidates and tuition providers workshop August 2017

Profile 2017: Neema Kiure Mssusa

Accountants registered by NBAA for 2nd and 3rd quarter of 2017.

Information Technology in Accounting and Auditing

Announcements

CAREER FEATURE

A TRUE

DREAM Is it possible to get a bachelor degree and a CPA (T) at the same time? Meet with CPA Omari Abdul Nina whose story tells it all. . About CPA Omari Nina Omari Abdul Nina was born on 8th May 1995 in Songea, Tanzania where his father worked as a civil servant. He is the third born in a family of five children. In 2007, he completed his primary school education at Msimbazi Mivinjeni Primary School where in 2011, he completed his Secondary School Education at Nianjema Secondary School in Bagamoyo and joined Umbwe High School. In Kihunguo. All along, Omari had a passion for, and did, business studies.

Where did the CPA idea come from? At high school, he met a friend who motivated him to start doing professional exams while in high school. The idea seemed enchanting but with it came such questions as who would finance his studies? Where to study (review centers)? And even who to consult?

Was finance real a problem? After finishing high school, Omari and his colleague met again in the same University (University of Dar es Salaam) where they both pursued Bachelor of Commerce in Accounting

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<<CAREER FEATURE

A true Dream degree. That discussion came up again, but this time, none of them secured neither a student loan nor allowance. They had no other choice than to ask for a financial assistance from their families.

How did he start? In January 2015, with just a high school certificates, Omari registered with NBAA and started ATEC 1 (lowest CPA entrance level) which had four subjects. This meant starting ATEC while at the same time studying for a bachelor degree. This brought the number of subjects to ten (four from ATEC and six from degree) per semester. One interesting motivation was that both ATEC 1 and ATEC 2 (November 2015) were promising as the contents of ATEC 1 and 2 were somehow similar to what was covered at high school and partly what was covered in the first year at the University. This was truly a humble beginning and a rewarding experience. Omari and his friend passed these levels with flying colours and graduated as best students in ATEC 1 and 2.

A Saving grace came ATEC stages were affordable. Omari could even afford the cost from his small savings and contribution from his family. The foundation stage had 5 subjects (1 more than

ATEC) and it cost slightly more. But a saving grace came after learning that the review class that he was in - Cornerstone Financial Consultants (CFC) - provided scholarships (Tuition fee) to students who emerged best candidates in NBAA examinations. Through CFCâ&#x20AC;&#x2122;s sponsorship Omari was funded for his studies at ATEC 2 and Foundation levels.

How difficult did he find it, combining University with CPA studies?

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The dream for CPA seemed to be in trialing

times during the intermediate stage because the number of courses and course contents expanded. At that time, he was taking, six University courses plus six CPA subjects. This was the hour in which Omari thought about dropping some subjects. However, his review class Director and Instructors advised him against the idea.

A first-time relief After passing the intermediate stage with a single sitting in all six subjects, he only had four subjects at the professional level to finish what he had started two years back. A

apart from the network that I built during all the years, my commitment to becoming a certified accountant/ auditor was my drive. The professional examinations have helped acquire knowledge, competencies, skills and attitudes, and I will apply the same at places of work, whether it be in accounting standards, taxation, business law and corporate finance”.

A word to undergraduates: What should first year students do?

relief was that all subjects at final level had a deep foundation from intermediate stage. There was no doubt that he would pass this stage.

Final whistle: Three Key Success in One year The year 2017, which many would have probably taken for granted, became a remarkable year in the history and life of Omari Nina. It’s the year that his longawaited dreams and ambitions come true and his life story changed significantly. It was in June 2017, when Omari realized

that his CPA journey had come to a successful end when he learned that he was one among the Certified Public Accountants of Tanzania. A month later, in July 2017, Omari also completed his bachelor degree in Accounting at the University of Dar es Salaam. As if that was not enough, in August 2017, Omari secure his first employment opportunity in one of the “Big 4” global auditing firms. This is truly outstanding. With commitment and dedication, Omari attained three professional milestones in his career.

Here is Omari’s piece of advice to other undergraduates. “If you aspire to become a professional accountant and you have time, do it right then. It is never too early to start. If I were to do it again, I would have even started immediately after finishing my ordinary secondary school education”. Omari continues “apart from the network that I built during all the years, my commitment to becoming a certified accountant/auditor was my drive. The professional examinations have helped acquire knowledge, competencies, skills and attitudes, and I will apply the same at places of work, whether it be in accounting standards, taxation, business law and corporate finance”. Starting the professional examinations early is something many university students debate about but take no action. Omari points out that “there is always an advantage to start the professional examinations at young age, especially during first year at University, or earlier than that. It’s easy, possible, and certain, to do. Looking three years back today, CPA Omari Nina ends his story by saying, “I remain grateful that I started humbly. Always think big but start small. Nothing can stop you, or anyone, provided that you have a dream, and are dedicated and committed”.

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<< FINANCE FEATURE

HOW TO BECOME

AN ACCOUNTANT Stewart Mbegu

School of Business, Mzumbe University, P.O Box 6559, Mbeya, Tanzania

Accounting is an interesting career. Everybody needs to acquire basic knowledge of accounting enough to facilitate his or her daily business dealings even though that won’t make him or her an accountant.

ABSTRACT It is not surprising to ask yourself a common question, how can I become an accountant? It is a common question nowadays to both students and non – student members of the community. It is either because the accounting career provides opportunities to work in any industry with best rewards; or because everybody has own financial resources and wants account for them. If you dream, plan or seek to become an accountant this article not only will motivate you but, will also guide you on how to achieve your plan.

1.0 INTRODUCTION Accounting is an interesting career. Everybody needs to acquire basic knowledge of accounting enough to facilitate his or her daily business dealings even though that won’t make him or her an accountant. Taking you back 500-years BC, accountants not only were mathematicians and economists, but were of sound mind, meaning that they were comfortable with numbers (Keistar, 1965); To exercise sound judgement and professionalism, accountants should be both comfortable with numbers and well equipped with contemporary knowledge in cooperate governance, finance and all relevant updates in the fields of accounting and auditing (ICAEW, 2017). In the year 1494, Luca Pacioli an Italian Mathematician and the father of accounting, expressed his observations on what Italian Merchants were doing, and put together the double entry principle (Heeffer, 2011). This became the foundation of the interesting career that this

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article is about to tell you today. Graduates in accountancy can choose a career in any of the following specialisms; Business Recovery, Audit and Assurance, Insolvency, Finance and Risk Management, Taxation and Forensic Accounting (ICAEW, 2017); but this is not what makes accounting an interesting career. The Accountant’s code of ethics fundamentally underpins all accountants to take care of public as well as individual’s interests in all their business dealings (AICPA, 1970). This is what make the accounting career interesting. The accounting career needs ethical and diligent people. If you are

planning to become an accountant, you have to learn to be ethical and diligent (AICPA, 2016).

2.0 WHO IS AN ACCOUNTANT? An accountant is a practitioner and professional in the field of accounting who undertakes the duties of recording, classifying, summarizing, analyzing and reporting financial affairs of businesses, individuals or organization (Perks, 1993; Drury, 2009). Furthermore, an accountant is

a person who performs audits and keeps the financial records of businesses, individuals or organization and prepares periodic reports on financial and tax matters, and analyses financial reports (Ray, 2015). To perform the duties of measuring, disclosing, analysing, auditing, taxation, and forensic accounting, an accountant must be registered as a certified public accountant by professional accounting bodies (NBAA, 2017). Most countries have local professional accounting bodies that certify public accountants and oversee the professional and ethical conducts, to which members of International Federation of Accountants (IFAC) must adhere. According to Tanzania’s National Board of Accountants and Auditors (NBAA), a Professional Accountant refers to a person who: (a) has expertise in the field of accountancy, achieved through formal education and practical experience; (b) demonstrates and maintains competence; (c) complies with a code of ethics; (d) is held to a high professional standard; and (e) is subject to enforcement by a professional accountancy organization or other regulatory mechanism. A Public Accountant is an accountant who renders accounting or auditing services to the public, and these services are available to the public at large (NBAA, 2017).

3.0 HOW TO BECOME AN ACCOUNTANT? Planning to become an accountant is a good idea. You may be an engineer, a lawyer, a surveyor, or a human resource manager, and you are at the top of your profession, but an accounting profession will give you an edge over global opportunities (ICAEW, 2017). Step by step from any level of your education, you may steadily become an accountant. In Tanzania, the NBAA has the best process and procedures for anyone who wishes and plans to become an accountant. The process begins with filling forms with which to seek registration for the Board’s examinations and paying the required examination fees at a required level. You attempt the examination and upon passing them you may be registered accordingly as a new member at the following categories; (a) Accounting Technicians (for applicants who pass ATEC examinations or equivalent, with experience of at least one year after she or he has passed ATEC examinations); (b) Certified Public

Accountants (for applicants who pass CPA(T) professional examinations or equivalent, with experience of at least three years after she or he has passed such examinations), (c) Certified Public Accountants in Public Practice - CPA-PPs (for applicants who have at least 3 years post-qualifying experience under the supervision of a Certified Public Accountant in Public Practice, or applicants who hold a practicing certificate from recognized professional bodies elsewhere) (NBAA, 2017).

professional examinations, demonstrating mastery of accountancy as a discipline and as a profession, adhering to the code of ethics provided by NBAA - a member of IFAC - and by gaining experience in a public or private organization. Surely, we will meet in a few years to come in professional accountancy events and exchange views as professional accountants.

4.0 BE AN ACCOUNTANT If you are still asking yourself why you should be an accountant, there is more to tell you. Life is full of financial transactions that you are part of and are harder to avoid. Above all the career opportunities the accountancy profession provides, it is divine. See for example, “For which one of you, when he wants to build a tower, does not first sit down and calculate the cost to see if he has enough to complete it?” (Luke 14:28). If you’re an investor, a business man, an entrepreneur or a corperate manager, a basic knowledge of accounting is inevitable. Sound financial decisions requires multi - knowledge and skills. Your success or failure depends on quality of the financial, investment, and entrepreneurial decisions to take today. Accountancy as a discipline, and as a profession, provides the best knowledge and skills you need to deal with the globalized financial world. Indeed, it is at the heart of organization’s decision-making process and governance. Accounting as a career, is globally highly rewarded, has a clear path, potential for growth, and above all, it is highly respected in the society of professionals and nonprofessionals.

6.0 REFERENCES

5.0 CONCLUSION

NBAA, (2017). The Accountants and Auditors (registration) Act, (Cap. 286) by-laws government GN. No. 151

The accounting profession is highly valued in the society, so is the accountant as its member. This value is measured by the extent to which accountants are perceived to be accountable to public interests. In the constant changing environment, we live in today, accountants must constantly update their knowledge, skills and attitudes in order to exhibit professionalism, and exercise sound judgement in organisations and society at large. For young university graduates, you can fulfill your dream of becoming an accountant by registering and taking the

AICPA, (1970). Basic concepts and accounting principles underlying financial statement of business enterprises, Statement No. 4., New York: Accounting Principles Board (APB) AICPA (2016) Drury, C. (2009). Management accounting for business (4th Edition). United Kingdom:. Cengage Learning EMEA. Heeffer, A. (2009). On the curious historical coincidence of algebra and double-entry bookkeeping. In Francois, K., Lowe, B., Muller, T., Van Kerkhove, B., (Eds.) (2011). Foundations of the formal sciences VII: Bringing together philosophy and sociology of science (Vol. 32, pp. 109-130). College Publications. ICAEW, (2016/17). Careers Guide to Chartered Accountancy, available. At ttp: //www.insidecareers. co.uk Keister, O. R. (1965). The mechanics of Mesopotamian record-keeping. Contemporary Studies in the Evolution of Accounting Thought, The National Association of Accountants Bulletin II. 12-20. Luke (14:28). New revised standard version Bible – Catholic edition, NRSVCE.

Perks, R.W. (1993). Accounting and Society. London: Chapman & Hall. (London); ISBN 0-412-47330-5. p.16 Ray, L. (2015). Strategic role of a chief accountant. Retrieved from: http://smallbusiness.chron.com/ strategic -rolechief- accountant-15963.html

July / September 2017

SPECIALREPORT

Promotion of NBAA Services

THROUGH EXHIBITIONS Stakeholders and members of the public are encouraged to visit these exhibitions every year to get services and raise their concerns about Boardâ&#x20AC;&#x2122;s activities. Feedback and concerns are important the Board future improvements.

A Magreth John Kageya Marketing Officer- NBAA

s part of creating awareness of its activities to the public, National Board of Accountants and Auditors (NBAA) participates in a number of exhibitions. The following are the events/ exhibitions in which NBAA participates: Public Service Week Exhibitions, International Trade Fair Exhibitions (Sabasaba Exhibitions), Tanzania Commission for Universities (TCU) Exhibitions and NBAA Exhibitions (Graduation and Annual Conference Exhibitions). Different products and services offered by NBAA are displayed and demonstrated. PUBLIC SERVICES WEEK EXHIBITIONS In June 2017, NBAA participated in the Public Service Week Exhibitions at NBAA offices, Mhasibu House, Bibi Titi Mohamed Street, Dar Es salaam from 16th to 23rd June 2017. During these exhibitions, NBAA staff worked beyond the normal working hours to serve its stakeholders and the public at large. The exhibitions were very successfully. Different stakeholders expressed their views and concerns on different issues. All issues were addressed accordingly.

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INTERNATIONAL TRADE FAIR EXHIBITIONS Again, in June 2017, NBAA participated in the 41st International Trade Fair Exhibitions (Sabasaba Exhibitions) at Mwalimu Nyerere grounds from 28th June to 13th July 2017. The NBAAâ&#x20AC;&#x2122;s pavilion was flocked everyday by different people who visited everyday to get information on the different products and services offered by the Board TANZANIA COMMISSION FOR UNIVERSITIES EXHIBITIONS In addition, from 26th to 29th July 2017, NBAA participated in the Tanzania Commission for Universities (TCU) Exhibitions. These exhibitions are usually held at a time that coincides with high school leavers and other interested persons that are on the move to select colleges/ universities for further studies. NBAA was able to sign in a good number of students for its examinations.

Mr. Joachim Luguzye (left) and Mrs. Hafsa Mkama (right) attending visitors at the NBAA pavilion during TCU Exhibitions at Mnazi Mmoja grounds from 26th to 29th July 2017.

SPECIALREPORT >>

NBAA staff, Mrs. Makyei Ntiro (left) and Mr. Humphery Sympholian (Right), (Both in blue shirts) explaining issues to customers who visited NBAA, pavilion during Sabasaba Exhibitions at Mwalimu. Nyerere grounds from 26th to 13th July 2017.

The former Deputy Permanent Secretary, Treasury Services (DSTS), for the Minisrty of Finance and Planning, Mrs. Dorothy Mwanyika, signing visitors book when she visited NBAA pavilion during Sabasaba Exhibitions in July 2017.

Guest of Honour to the NBAAâ&#x20AC;&#x2122;s 39th Graduation Ceremony, Deputy Minister for Finance and Planning, Hon. Dr. Ashatu Kijaji (center, right) gets briefing from NBAA Executive Director, CPA. Pius Maneno (fourth left) about NBAAâ&#x20AC;&#x2122;s publications, when she visited exhibition booth during the Graduation Ceremony. The Ceremony was held on 30th September 2017 at APC Bunju grounds, Dar es salaam. First Right is the NBAA Governing Board Chairman, CPA Prof. Isaya Jairo.

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<<SPECIALREPORT

PROMOTION OF NBAA SERVICES THROUGH EXHIBITIONS GRADUATION After a successfully completion of NBAA Examinations, Accounting Technicians (ATEC) , CPA (T) , CPA Equivalent and IPSAS Diploma candidates, are awarded certificates at a Graduation Ceremony. At its 39th Graduation Ceremony this year, held on Saturday, 30th September 2017 at the Accountancy

Profession Centre (APC) Bunju grounds, 1071 candidates graduated. Among the notable graduands were a married couple, CPA Lushina and CPA Charisma P. Kway, ( Mr and Mrs) who graduated with CPA (T). Also CPA Omari Nina (featured elsewhere in this issue) graduated with CPA(T) ending his

succeessful journey he started at ATEC level while at the same time pursuing Bachelor of Commerce in Accounting at the University of Dar es Salaam. You can read more on CPA Ninaâ&#x20AC;&#x2122;s story in this issue. Below are different photos taken during the 39th Graduation Ceremony.

Mr and Mrs Lushina, CPA (T) Graduands at the 39th Graduation Ceremony held on 30th September 2017

A cross section of graduands during the 39th Graduation Ceremony held on 30th September 2017 at APC Bunju grounds.

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NBA, staff celebrating during 39th graduation ceremony held at APC building on 30th september 2017

CONCLUSION • We, at NBAA, encourage more people to register with the Board, to sit for its Examinations, become qualified professionals, and participate fully in growth and development of country’s economy putting in mind country’s drive towards industrialisation. • NBAA wishes to invite all its stakeholders, customers and the general public to visit its offices at Bibi Titi Mohamed Street, in Dar es Salaam and at different exhibitions throughout the year to get more information about activities and services it offers. NBAA also wishes to invite stakeholders, customers and the public at large to visit its website www.nbaa.go.tz for more information. • Accountants and Auditors should live up to professional oaths instead of taking it as a fashion, which might lead to massive mismanagement of public resources PLEASE NOTE: For one to call himself or herself an Accountant or Auditor, he or she must be a registered member of NBAA and having an experience of more than 3 years in the profession.

NBAA Staff dancing during the 39th Graduation Ceremony.

NBAA Executive Director, CPA. Pius Maneno, cheering in joy for the happy conclusion of the 39th Graduation Ceremony.

Another section of NBAA Staff dancing during the 39th Graduation Ceremony.

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EVENTS

Visits To Accountancy TRAINING INSTITUTIONS

romotion of accountancy profession is a major function of The National Board of Accountants and Auditors (NBAA). The Board interacts with students while they are at secondary schools, colleges and universities, in order to inform them about the accountancy profession and its development. Making such enlightenments and awareness to students while they are at early stages of their career and professional undertakings is very crucial as it gives them an opportunity to prepare psychologically, mentally and academically to become future accountancy professionals.

More importantly, these students are prospective candidates of Boardâ&#x20AC;&#x2122;s examinations and future valuable human resource for the accountancy profession. Therefore, it is the commitment of NBAA to reach and inform them regularly about the functions of the Board, its examinations, exemptions and procedures for candidacy registration. In the period between May and September 2017, NBAA visited students of Moshi Cooperative University (MOCU) and College of Business Education (CBE)-Dodoma Campus.

Students of accounting subjects at The College of Business Education (CBE)-Dodoma Campus listening to NBAA staff during the college visit to promote the Board and the Profession.

Students of accounting subjects at Moshi Cooperative University listening to NBAA staff during NBAA visit to promote the Board and the Profession.

President of Moshi Cooperative University Accounting Association (standing) addressing collegues during NBAA visit to the university

Mr. Edwin Mtoi of NBAA explaining issues to students of Moshi Cooperative University, in Moshi.

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FEATURE >>

BLOCKCHAIN AND THE FUTURE OF ACCOUNTANCY Details on the potential of blockchain, its implications for auditors, how the accountancy profession can lead and what skills are necessary for the future.

THE POTENTIAL OF BLOCKCHAIN AND THE FUTURE OF ACCOUNTANCY IT Faculty’s report on Blockchain describes the technology and its likely impact on business, in particular on the accounting profession. Blockchain is an accounting technology. It is concerned with the transfer of ownership of assets, and maintaining a ledger of accurate financial information. The accounting profession is broadly concerned with the measurement and communication of financial information, and the analysis of said information. Much of the profession is concerned with ascertaining or measuring rights and obligations over property, or planning how to best allocate financial resources. For accountants, using blockchain provides clarity over ownership of assets and existence of obligations, and could dramatically improve efficiency. Blockchain has the potential to enhance the accounting profession by reducing the costs of maintaining and reconciling ledgers, and providing absolute certainty over the ownership and history of assets. Blockchain could help accountants gain clarity over the available resources and obligations of their organisations, and also free up resources to concentrate on planning and valuation, rather than recordkeeping.

Alongside other automation trends such as machine learning, blockchain will lead to more and more transactional-level accounting being done – but not by accountants. Instead, successful accountants will be those that work on assessing the real economic interpretation

of blockchain records, marrying the record to economic reality and valuation. For example, blockchain might make the existence of a debtor certain, but its recoverable value and economic worth are still debateable. Asset’s ownership might be verifiable by blockchain records, but its condition, location and true worth will still need to be assured.

spent considering higher-level questions.

By eliminating reconciliations and providing certainty over transaction history, blockchain could also allow for increases in the scope of accounting, bringing more areas into consideration that are presently deemed too difficult or unreliable to measure, such as the value of the data that a company holds.

These judgemental elements often require context that is not available to the general public, but instead require knowledge of the business, and with blockchain in place, the auditor will have more time to focus on these questions.

Blockchain is a replacement for bookkeeping and reconciliation work. This could threaten the work of accountants in those areas, while adding strength to those focused on providing value elsewhere. For example, in due diligence in mergers and acquisitions, distributed consensus over key figures allows more time to be spent on judgemental areas and advice, and an overall faster process.

HOW THE PROFESSION CAN LEAD WITH BLOCKCHAIN

IMPLICATIONS OF BLOCKCHAIN FOR AUDITORS Blockchain has applications in external audit. Performing confirmations of a company’s financial status would be less necessary if some or all of the transactions that underlie that status are visible on blockchains. This proposal would mean a profound change in the way that audits work. Ablockchain solution, when combined with appropriate data analytics, could help with the transactional level assertions involved in an audit, and the auditor’s skills would be better

For example, auditing is not just checking the detail of whom a transaction was between and the monetary amount, but also how it is recorded and classified. If a transaction credits cash, is this outflow due to cost of sales or expenses, or is it paying a creditor, or creating an asset?

The move to a financial system with a significant blockchain element offers many opportunities for the accountancy profession. Accountants are seen as experts in record keeping, application of complex rules, business logic and standards setting. They have the opportunity to guide and influence how blockchain is embedded and used in the future, and to develop blockchain-led solutions and services. To become truly an integral part of the financial system, blockchain must be developed, standardised and optimised. This process is likely to take many years – it has already been nine years since bitcoin began operating and there is much work still to be done. There are many blockchain applications and start-ups in this field, but there are very few that are beyond the proof of concept or pilot study stage. Accountants are already participating in the research, but there is more for the profession

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FEATURE

BLOCKCHAIN AND THE FUTURE OF ACCOUNTANCY to do. Crafting regulation and standards to cover blockchain will be no small challenge, and leading accountancy firms and bodies can bring their expertise to that work. Accountants can also work as advisers to companies considering joining blockchains themselves, providing advice on weighing the costs and advantages of the new system. Accountants’ mix of business and financial nous will position them as key advisers to companies approaching these new technologies looking for opportunity.

SKILLS FOR THE FUTURE The parts of accounting concerned with transactional assurance and carrying out transfer of property rights will be transformed by blockchain and smart contract approaches. The reduction in the need for reconciliation and dispute management, combined with the

increased certainty around rights and obligations, will allow greater focus on how to account for and consider the transactions, and enable an expansion in what areas can be accounted for. Many current-day accounting department processes can be optimised through blockchain and other modern technologies, such as data analytics or machine learning; this will increase the efficiency and value of the accounting function. As a result of the above, the spectrum of skills represented in accounting will change. Some work such as reconciliations and provenance assurance will be reduced or eliminated, while other areas such as technology, advisory, and other value-adding activities will expand.To properly audit a company with significant blockchain-based transactions, the focus of the auditor will shift. There is little need to confirm the accuracy or existence of blockchain transactions with external sources, but there is still plenty of attention to pay to

how those transactions are recorded and recognised in the financial statements, and how judgemental elements such as valuations are decided. In the long term, more and more records could move onto blockchains, and auditors and regulators with access would be able to check transactions in real time and with certainty over the provenance of those transactions. Accountants will not need to be engineers with detailed knowledge of how blockchain works. But they will need to know how to advise on blockchain adoption and consider the impact of blockchain on their businesses and clients. They also need to be able to act as the bridge, having informed conversations with both technologists and business stakeholders. Accountants’ skills will need to expand to include an understanding of the principle features and functions of blockchain – for example, blockchain already appears on the syllabus for ICAEW’s ACA qualification.

CAPITAL GAIN TAX IN TANZANIA

- AN OVERVIEW

Rashidi Mganwa (ATEC II (NBAA)/ ACCA (Difrs) /Diploma in IPSAS/ B, COM (Finance-UDSM) /Masters of Tax Laws and Administration,(UDSM) /CPA(T),) He can be reached at rashidi.mganwa@yahoo.com

INTRODUCTION ost countries’ tax laws provide for some form of capital gains taxes on ‘ capital gains, although capital gains tax laws vary from country to country. Capital gains are profit that results from the appreciation of a capital asset. The gain comes from the asset appreciating in value from its purchase price. A capital gains tax is a type of tax levied on capital gains incurred by person. Capital gains are either realized or unrealized. Unrealized assets are known to have appreciated in value, but have not yet been sold. The capital gain is a potential value. A realized capital gain occurs when an asset has appreciated in value and been sold. In Tanzania capital gains taxes are only triggered when an

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asset is realized, not while it is held by a person. A person can own shares that appreciate every year, but the investor does not incur a capital gains tax on the shares until they are sold. Understanding Capital Gains Tax (CGT) under the Income Tax Act, Cap 332, requires the understanding of the realization concept and types of chargeable assets to CGT, considered by Income Tax Act, Cap 332. REALIZATION CONCEPT There are two different types of realisation: direct realisation and deemed realisation. · Direct realisation - This is when the person parts with ownership of the asset, example when the asset is sold or exchanged, trans-

ferred, distributed, cancelled, redeemed, destroyed, lost, expired or surrendered; · Deemed realisation- There are varieties of cases in the Income Tax Act, Cap 332; those are realisation for the purpose of tax but not a real realisation. In such case, asset might be owned by same person, but deemed as realised for tax purpose Examples include when there is a change of form of asset or change in ownership of an entity by more than 50%. Alternatively, assets might be realised in real practice but for the tax purpose, it may not be deemed as realisation, example include when there is a transfer of assets to a spouse or former spouse or a transfer of asset to an associate if specified conditions in the law meet. CHARGEABLE ASSETS The Income Tax Act, Cap 332, is based on the premise that assets are classified into five categories as shown below

SPECIALREPORT

Trading Stock

Depreciable assets

For capital gain tax to apply on the asset, one needs to be check if the asset falls within the definition of investment assets. Investment assets are those assets other than trading stock, business assets or depreciable assets. The Income Tax Act, Cap 332 has given a special definition of investment assets. Investment asset” means shares and securities in a corporation, a beneficial interest in a non-resident trust and an interest in land and buildings but does not include(i) Business assets, depreciable assets or trading stocks. (ii) Private house of an individual in the following conditions: · Under continued ownership for 3 years or more years, and · Lived in for 3 years or more years continuously or at different times by the person. · Disposed of for a gain of Tshs 15,000,000 or less (iii) An interest in land held by an individual that has a market value of less than Tshs 10,000,000 shillings at the time it is realised and that has been used for agricultural purposes for at least two of the three years prior to realisation (iv) Shares and securities listed on the Dar es Salaam Stock Exchange that are owned by

Business assets

Investment assets

Other assets

a resident person or a non-resident person who either alone or with other associate controls less than 25% of the controlling shares of the issuer company. Therefore Income Tax Act, Cap 332 covers land and building and interest held in an entity excluding certain land and buildings. Further the same definition of investment assets covers the interest held in any entity or securities. It means gain on disposal of shares, bonds, debentures or any kind of interest held in any company or entity is taxed. CALCULATION OF CAPITAL GAINS TAX A person’s gain from the realisation of an asset is the amount by which the sum of the incomings for the asset exceeds the cost of the asset at the time of realisation. Incomings for an asset of a person means amounts derived or to be derived by a person in respect of realising the asset including:(a) Amounts derived by the person in altering or decreasing the value of the asset; and derived while owning the asset including by way of convenant to repair or otherwise. (b) Amounts derived or to be derived by the person in realising the asset. The cost of an asset is the sum of (a) expenditure incurred by the person in ac-

quiring the asset; (b) expenditure incurred by the person in altering, improving, maintaining and repairing the asset; (c) expenditure incurred by the person in realising the asset; (d) incidental expenditure incurred by the person in acquiring and realising the asset; (e) any amount required to be added in calculating income from the investment under the Act. Applicable Capital gain tax rates Where a person derives a gain in conducting an investment from the realisation of an interest in land or buildings situated in the United Republic, shares or securities held in resident entity that the person shall pay income tax by way of single instalment equal to(a) 10% of the gain for a resident person (b) 20% of the gain for a non-resident person Method of paying capital gain tax Capital gain tax is paid by way of single instalment. It is paid before the title to an investment asset is transferred, and the appropriate authorities for registration, transfer or approval shall not register such transfer or change of name without the production of a certificate of the Commissioner certifying that the instalment has been paid or that no instalment is payable.

IDIANA CONSULTANCY

diana consultancy provides training services to individuals, businesses, governments and non-profits organization on accounting, auditing, risk management, preparation of business plans, tax issues, customer care, conflict management, cooperate governance, entrepreneurship, CPA (T) class review, job orientation and internal control system since 2016. We work with governmental entities, corporations, non-profit organizations, for-profit organizations, small business and individuals. We specialize in providing high-quality, value-added training and consulting services. As a small firm, we are able to focus a higher average level of staff on the engagement. We are large enough to serve and small enough to provide caring attention. The Coordinator of idiana consultancy is Stewart K Mbegu (ECA, BAF, CPA.(T), MBA FINANCE), also a lecturer at Mzumbe university Mbeya - Campus. July / September 2017

Ready to Make the Leap from Accountant to Consultant? Expand Your Vision and Expand Your Business BY GALE CROSLEY

dmit it. You’re good at what you do. Your clients trust your proven ability to help improve their businesses. Perhaps it’s time to take the step of enlarging your vision of yourself from accountant to consultant. Most good CPAs intuitively move beyond tax returns and financial statements, offering insight and counsel. Successfully formalizing the process can make the difference in growing your practice, and in the satisfaction you get from your work.

What Is Consulting, Anyway?

It’s a familiar term, but what does it really mean? I view consulting as a value-added service that helps clients improve the nature and quality of their decision-making. Accounting oriented consulting gives clients the ability to respond to issues and opportunities in a strategic way. Consulting is fundamentally a proactive pursuit. As such, it differs from compliance related duties that are based largely on assessing and responding to existing financial conditions. Consulting is about influencing the future.

Think “Value,” not “Time”

One obstacle for many CPAs is how to charge for consultation. They know how to bill hourly for the preparation of financial statements, audits and tax returns. But how do you bill for creating strategies and improving business conditions? How do you charge for an idea that may have come to you in a flash, but would never have come at all without years of experience?

April / June 2017

I urge CPAs to package and price the advice they offer differently from how they charge for other services, for example on a project or retainer basis. One advantage is that this lends the work the significance it deserves, while moving you away from legal-style, minute-by-minute billing that doesn’t reflect the nature of the work.

Think about this: Your physician doesn’t charge less because he or she sees you for 10 minutes rather than 30, right? What matters is that the doctor solved your problem. The same applies here. Consulting is about identifying and communicating opportunity; problem-solving that may not fit easily into hourly billing. I urge CPAs to package and price the advice they offer differently from how they charge for other services, for example on a project or retainer basis. One advantage is that this lends the work the significance it deserves, while moving you away from legal-style, minute-by-minute billing that doesn’t reflect the nature of the work. What’s important is to make sure your clients understand the value of your offering. What may seem a relatively simple suggestion could significantly shortcut the amount of time a client has to spend on a matter. The value of days or even weeks of time? The value of better decision making? Considerable! The fact that you’ve seen many similar situations and can reliably predict the outcome is what your client is buying. Consider a CPA whom I’ve helped make the transition to consultant. He was asked by a client to assist with succession planning. He responded

as a consultant, not as an accountant, clearly identifying the scope and pricing of the project, apart from compliance work. He planned an engagement that included interviewing all affected individuals, developing a set of recommendations and implementing a strategic plan. Pricing was based upon a combination of value to the client and market conditions. The result was a productive effort for which the consultant was well paid and the client was well served. The CPA also enhanced his reputation with his client, who subsequently sought him out for assistance with other kinds of business problems. Move cautiously. Not every CPA can automatically transform into a business consultant, but the skills can be learned. Examine your own experience and the niche you occupy. Read more about consulting and talk with consultants you admire, creating methodologies, client value and related pricing. One of the best books out there to help you is Alan Weiss’ Million Dollar Consulting. You just might be ready to make the transition from an accountant who occasionally dispenses free advice, to a whole new level as a trusted business advisor. Re- printed for benefits of our members

EVENTS IN PICTURES >>

Examination candidates AND TUITION PROVIDERS

WORKSHOPS August 2017

A cross section of examination candidates who attended the 2017 workshop

he National Board of Accountants and Auditors (NBAA) conducts workshop for Examination candidates and registered Tuition Providers each year. The two events are organized by Education and Training Services Department (ETS). It is through these forums NBAA gets opportunity to interact with its stakeholders, get feedback on its services. On the other hand, candidates and tuition providers are able give out their views to the Board. This year’s workshops professionals and academician were invited to share experiences with candidates and Tuition providers through making presentations. Papers presented at examination candidates workshops were: “How to prepare for (B5) Performance Management” by: Dr.Zawadi Ally from Institute

Each of these workshops are conducted once in a year, there is a reason as to why should Examination Candidates and Tuition providers should attend. of Financial Management(IFM) “Tips for Passing Performance Management (B5) Examination” by: Mr. Vendeline Massawe from Eminent Financial Consultants, “Major Weaknesses Raised by Examiners in May 2017 session and Examination Techniques” by: Mr. Ibrahim Magambo from National Board of Accountants and Auditors., “Recent updates and developments in Board Examination scheme” by: Humphrey Sympholian

from National Board of Accountants and Auditors. Paper presented at Tuition Providers workshop are. “Role of Tuition Providers in improving examination performance” by: Mr.Rashid Mganwa, Evin School of Management. “What makes a review a centre stand out from the crowd. A case of Cornerstone Financial Consultants” by: Cornely Kilatu,Cornerstone Financial Consultants, “Board’s comments on practices and services of Tuition Providers” by: Mr.P.J.Lyimo, Manager-

April / June 2017

<<EVENTS IN PICTURES

Examination candidates and Tuition Providers workshop - August 2017 Education and Training Services. Each of these workshops is conducted once in a year. We encourage many Examination Candidates and Tuition providers to attend. Just spending your single day attending this forum can make difference than you would think. NBAA invites experts and professional to present papers and share experiences with stakeholders. The Board wishes to welcome its esteemed candidates and tuition providers to attend the next workshop in large numbers.

Group picture of Chairperson-Education and Publications Committee CPA Anne Mbughuni with Tuition Providers and NBAA staff in Tution Providers workshop.

CPA Anne Mbughuni, Chairperson – Education and Publication Commettee officiating the Tuition Providers workshop held at Mhasibu function Hall on 25th August 2017. On her right is Manager-Education and Training Service,Mr.P.J.Lyimo

NBAA Staff Members (Lucy Mwalupanga, Diana Nyamwihura and Magreth Kimaro) registering participants arriving at Mhasibu House –Function Hall to attend the examination candidates’ workshop on 24th August2017.

Resource persons presenting their papers to examination candidates and tuition providers

July / September 2017

Mr.P.J.Lyimo, Manager-Education and Training Services department explaning issues to participants in Examination candidates workshop.

NBAA staff members responding by making clarification different issues raised by participants in examination candidatesâ&#x20AC;&#x2122; workshop

Participants following closely the presentation 1

3 4 PICT 1-4 Participants raising various issues in discussion session after following closely presentations made by resource persons during the examination candidates workshop at Mhasibu HouseFunction Hall on 24th August 2017.

July / September 2017

COVER STORY

IN APRIL 2004 SHE MOVED TO DIAMOND TRUST BANK (T) LIMITED AS FINANCE AND ADMINISTRATION MANAGER, AND IN JUNE 2005 SHE JOINED ERNST & YOUNG (EY) AS AUDIT MANAGER. IN JULY 2009, SHE WAS ADMITTED INTO ERNST & YOUNG PARTNERSHIP, BECOMING THE FIRST FEMALE PARTNER IN BIG FOUR AUDITING FIRMS IN TANZANIA. SHE IS STILL WITH EY AS ASSURANCE/ AUDIT PARTNER.

July / September 2017

COVER STORY >>

Profile 2017 Neema Kiure

MSSUSA In this last quarter of the year 2017, the International Federation of Accountants (IFAC) Nominating Committee recommended and the IFAC Board approved Neema Kiure – Mssusa’s appointment to serve as a member of the International Public Sector Accounting Standards Board (IPSASB). This is a three-year term commencing January 1, 2018. Under the IFAC Bylaws, members are eligible for re-appointment for up to a three-year term for a maximum term of service of six years.

eema Kiure – Mssusa was born on 08th January 1977 at Mount Meru Hospital, Arusha. She is a third born in the family of five. Her father, Mr. Jumaam Selemani Kiure, is a retired accountant and her mother, Mwajuma Omari Kiure, is a retired nurse midwife. Neema attended the Youth League Nursery School in 1981 and 1982, and then joined Naura Primary School from 1983 to 1989. In 1990 she progressed to Arusha Secondary School and completed her ordinary secondary education in 1993. She joined Weruweru Secondary School in 1994 for her advanced secondary education and completed in 1996. In October, the same year, she joined the Institute of Accountancy Arusha (IAA) to pursue her Advanced Diploma in Accountancy (ADA) and graduated on 04th December 1999.

<<COVER STORY

Neema Kiure Mssusa Profile With determination to become an accountant since younger age, and encouragement from her father, she started doing the National Board of Accountants and Auditors (NBAA) professional exams immediately after joining IAA. She started with the Accounting Technician Level II (ATEC II) in May 1997, and completed her Certified Public Accountant (CPA) exams in November 1999. She is now a Fellow CPA (FCPA). Neema joined the University of Dar es Salaam in October 2000 to pursue a part-time Masters of Business Administration (MBA) in Finance, and graduated in November 2002. She is now pursuing her Degree of Philosophy (Phd) in the same university. In February 2000, she joined ULC (Tanzania) Limited as Chief Accountant, the position she held until August 2000 when she decided to move to PriceWaterhouseCoopers (PwC) as an auditor in an attempt to seek more challenging opportunities, where she progressed from Associate to Senior Associate. In April 2004 she moved to Diamond Trust Bank (T) Limited as Finance and Administration Manager, and in June 2005 she joined Ernst & Young (EY) as Audit Manager. In July 2009, she was admitted into Ernst & Young Partnership, becoming the first female partner in big four auditing firms in Tanzania. She is still with EY as Assurance/Audit Partner. Additionally Neema is a Certified Trainer of Corporate Governance and Certified Company Director by Commonwealth Association of Corporate Governance, in Association with the Center of Corporate Governance – 2002; Certified Information Systems Auditor (CISA) by Information System Audit and Control Association (ISACA) - 2006; Certified Basel ii Professional (CBiiPro) by Basel II Compliance Professionals Association (BCPA) – 2012. In 2007

WITH DETERMINATION TO BECOME AN ACCOUNTANT SINCE YOUNGER AGE, AND ENCOURAGEMENT FROM HER FATHER, SHE STARTED DOING THE NATIONAL BOARD OF ACCOUNTANTS AND AUDITORS (NBAA) PROFESSIONAL EXAMS IMMEDIATELY AFTER JOINING IAA.

Ed quamus eum imin nis andicatur mi, illande ndiatiandit eaqui volenimus, temolore nihillantias explaborum re, consequam restrum venis dollent velibus nonserum conemque porerios voluptatem rem harunt. Alia ium aut ipsaepe moluptaecum iur ad quate estibusandae et laboriam quam aspedArit unte min et quae dolupti uriorep erspel ea ducidel iciasperiti odigeni mporem con non cone aborera eprerchit as et omniassim que dolorro que ea se dolorum facea aut hicilita

July / September 2017

she obtained a Diploma in International Financial Reporting from Association of Chartered Certified Accountants (ACCA); and in 2012 she attended a course on Leading Professional Service Firms at Harvard Business School. In November 2014, Neema was appointed by the Minister for Finance to join the NBAA Governing Board as a member, the term which expired in September 2017. Before that she had served in NBAA Technical Committee for six years, from July 2008 to November 2014. In 2016, the Membership Panel of the International Public Sector Accounting Standards Board Consultative Advisory Group (IPSASB CAG), in consultation with the IFAC Public Interest Committee, approved her appointment as member of the IPSASB CAG, the position which will now expire on 31 December 2017 to enable her serve as a Board Member of the IPSASB. From 2000 to 2009, Neema was a part-time trainer to students aspiring to do their professional CPA exams. Particularly she was teaching financial accounting and auditing. She has presented numerous papers in various seminars organized by NBAA, National Audit Office (NAO), Accountant General’s Department, Institute of Internal Auditors (IIA) and other organizations. She is the team leader in the Government project to ensure compliance with International Public Sector Accounting Standards (IPSAS). In 2008 she assisted the Local Government Authorities on IPSAS projects, and since then she had been working closely with the NBAA and Central Government to ensure smooth migration from cash basis IPSAS to IPSAS accrual. Neema is a mother of four, Tariq (16), Tarif (15), Tamarah (7) and Takiyah (4).

REGISTERED PROFESSIONALS >>

ACCOUNTANTS REGISTERED BY NBAA FOR 2ND AND 3RD QUARTER OF 2017. For the period from April 2017 to September 2017 The National Board of Accountants and Auditors (NBAA) registered 156 Accountants. In its 172nd Meeting held on June 2017, the NBAA Governing Board approved 61 Accountants to be registered in the following categories: Associate Certified Public Accountant (ACPA)

Associate Certified Public Accountant in Public Practice (ACPA - PP)

Temporary Associate Certified Public Accountant (TACPA)

Temporary Associate Certified Public Accountant in Public Practice (ACPA - PP)

Accounting Technician

TOTAL

In its 173rd Meeting held in September 2017 the, NBAA Governing approved 98 Accountants to be registered in the following categories: Associate Certified Public Accountant (ACPA)

Associate Certified Public Accountant in Public Practice (ACPA - PP)

Temporary Associate Certified Public Accountant (TACPA)

Temporary Associate Certified Public Accountant in Public Practice (ACPA - PP)

Accounting Technician

TOTAL

THEME OF SEMINAR AND TOPICS

DATE AND VENUE

CPD HOURS AWARDED

1) ACCOUNTING AND AUDITING SEMINAR: • • • • • • • • •

International Financial Standards – IFRSs, ISAs and IPSAS – Update Detection Measures of Fraud in Audit Plan IT – Auditing and Controls Tax Audit Back Track Security Audit – Hackers Tools Formation of Companies – BRELA’s Perspective Energy Audits for Public Entities IAS 24 – Related Party Disclosure IAS 27 – Separate Financial Statements • IAS 28 – Investments in Associates and Joint Ventures

(9) SEMINAR ON CONTEMPORARY ISSUES IN ACCOUNTING AND A COMPLETE REVIEW OF KEY NEW PRONOUNCEMENTS. • Financial Reporting for Heritage in the Public Sector • IPSAS 39 (New): Employee Benefits • IPSAS 40 (New): Public Sectors Combination • IFRS 9: Financial Instruments • IFRS 15: Revenue From Contract with Customers • IFRS 16: Lease • IFRS 17: Insurance Contracts • ED 62: Financial Instruments – Public Sector • Customs Laws and Control of Goods in Transit EAC/Tanzania • Property Taxes Regime in Tanzania • Integrated Thinking and Integrated Reporting

23rd - 25th August 2017 (three days)

24 HOURS

Dodoma

11th - 13th September 2017

24 HOURS

(three days)

Zanzibar

July / September 2017

FEATURE

INFORMATION TECHNOLOGY

IN ACCOUNTING AND AUDITING

he emergence of information technology in accounting is an innovation. Currently, most business entities in Tanzania, from large companies down to small and medium enterprises (SMEs) are aided by their Accounting Information Systems in managing their operations. This leads to the argument whether information technology can result into replenishment of the accounting profession. This article provides a review on the prominent contribution of information technology on accounting and auditing. This article also discusses the types of accounting process. Accounting is a critical factor for any business. Having the touch of IT enhances the speed and accuracy of computations. It also enhances the ability of businesses to adapt flexibly to changes and improves security of the stored information.

BY AMON ENOCK

University of Dar es salaam

July / September 2017

1.0 INTRODUCTION Accounting is the art of recording, classifying and summarizing, in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof. Accounting can also be referred to as an information system that measures, processes and communicates financial information about an economic entity. Advancements in information technology have dramatically improved accounting and auditing systems and transformed economic life. Computers

and other digital technologies have increased office productivity, facilitating the rapid exchange of documents, research, collaboration with far-flung partners, and the collection and analysis of data. Information technology gave all sorts of individual economic actors, new valuable tools for identifying and pursuing economic and business opportunities.

2.0 INFORMATION TECHNOLOGY Information Technology (IT) deals with the application of computers and telecommunications equipment to store, retrieve, transmit and manipulate data. This may also be described as anything that renders data, information, or perceived knowledge in any visual format through any multimedia distribution mechanism. In the context of business, IT is designed to help management in their stewardship function, support management in their day-to-day operations and decision making. In 1880, machines where invented to help in the accounting system. As year and years passed by, advancements in information technology also transformed accounting systems and its processes. There were many developments in the Accounting Information System (AIS). This was designed to help in the management and control of activities related to the firmsâ&#x20AC;&#x2122; economic and financial affairs. Accounting system is essential for majority of the business entities. The advancements of technology have led to the creation a computerized accounting system which is commonly adopted by business entities today. This has created a competitive market. Thus, entities need to improve their information systems in order to match their information needs for better decision making. Accounting Information System An information system is a set of interrelated subsystems that work together to collect, process, and store, transform, and distribute information for planning, decisions making and control. The use of computer in information systems can improve the efficiency of information collection, processing, storing, transformation and distribution. Accounting information system (AIS) is a tool which was incorporated in the field of Information and Technology systems. It is the one responsible in generating reliable financial information needed for decision making. There are many varying designs of the system. These designs influence the way in which information is gathered and reported. The anticipated uses of the information and the types of decisions they are expected to aid are among the factors for the design of an accounting information system. The design of the system may also depend on the size of the firm, volume of transaction data, nature of operations, organizational structure and business form.

3.1 GENERAL MODEL OF ACCOUNTING INFORMATION SYSTEM Figure 1 shows the general model for Accounting Information System. It is considered a general model because it is applicable to all information systems,

ACCOUNTING INFORMATION SYSTEM (AIS) IS A TOOL WHICH WAS INCORPORATED IN THE FIELD OF INFORMATION AND TECHNOLOGY SYSTEMS. IT IS THE ONE RESPONSIBLE IN GENERATING RELIABLE FINANCIAL INFORMATION NEEDED FOR DECISION MAKING. THERE ARE MANY VARYING DESIGNS OF THE SYSTEM. regardless of the technological architecture. The elements of the model include end users, data sources, data collection, data processing, database management, information generation and feedback.

[Fig. 1] General Model for Accounting Information System

The first operational stage in AIS is the data collection. Its objective is to ensure that the data entering the model are valid, complete and free from material error. This stage promotes relevance and efficiency. The system must only capture relevant data and collects them only once. Data can either be from Internal or external sources. After the data have been collected they will then be stored in the database management and will be processed into information. Tasks which pertain to data processing varies from simple to complex. This includes algorithms, statistical techniques, sales forecasting, and summarizing procedures used in accounting. The information generated will then be forwarded to the external and internal end-users. External end users include creditors, stockholders, investors, regulatory agencies, suppliers and customers. On the other hand, the internal end user is the management at every level of the organization. Feedbacks are then sent back to the entity so that they would know what things to retain and what things to improve.

3.2 TYPES OF ACCOUNTING INFORMATION SYSTEMS In general terms, business entities use three types of information systems namely manual system, computer-based transaction systems and database systems.

MANUAL SYSTEM This is the first type of accounting system. It utilizes paper-based journals and ledgers. Nowadays, computer-based transaction systems replaced some paper records by transforming them into computer records.

Manual system is labor intensive for because its relies on human power to process data. It is for this reason that a manual system may be prone to error. Computer-Based Transaction System Organizations employ multiple forms of information technology in their accounting information system. Because of the advancements in information technology computer-based transaction system were created. In this system, accounting data are kept separately from other operating data. At this point, there is a greater degree of compartmentalization of work in order to preserve the integrity of the accounting information system. Treatment of information is the same as that of the manual system. The only difference is that the user here is simply filing in a computer screen that looks and often times acts as the source document of the transaction. Among the advantages of a computer-based transaction system are: (i) Transactions can be quickly posted to the appropriate accounts, by passing the journalizing process; (ii) detailed listings of transactions can be printed for review at anytime; (iii) internal controls and edit checks can be used to prevent and detect errors and; (iv) a wide variety of reports can be prepared. Accounting packages are available on the market. This consists of modules that deal with the business accounting systems. A simple accounting package might also contain one module or also referred to as stand-alone module. But most of the time, it will consist of several modules. An example of such packages is the QuickBooks.

DATABASE SYSTEMS This system reduces inefficiencies and information redundancies. Relational database systems such as Enterprise Resource Planning (ERP) depart from the accounting equation method of organizing data. This system captures both financial and non-financial data, and then it stores that information in a data warehouse. The advantages of this system include: (i) recognition of business rather than just accounting events; (ii) support in the reduction in operating inefficiencies; and (iii) the elimination of data redundancy. Objectives Accounting Information System For an accounting system to be considered as effec-

July / September 2017

<<SPECIALREPORT

INFORMATION TECHNOLOGY IN ACCOUNTING AND AUDITING tive it must meet the basic objectives of information systems. The first objective is that they must pass the cost benefit principle or cost benefit relationship. Financial information is not free, other companies even spend millions every year just to gather and organize financial information to assemble into their financial statements. Under this principle, the cost of providing financial information in the financial statements must not outweigh the benefit of that information to the users. If the firm is planning to improve their IT system, they must consider the cost-benefit principle. The second objective is to protect the entityâ&#x20AC;&#x2122;s assets, to ensure that data are reliable and minimize wastes and the possibility of theft or fraud. This is also known as the control principle. The third objective is to be in harmony with the entityâ&#x20AC;&#x2122;s organizational and human factors. This can also be referred to as the compatibility principle. The last is to be able to accommodate growth in the volume of transactions and for the organizational changes. It is also called the flexibility principle. The Accounting Process Figure 2 shows the general flow of the accounting process. The four basic steps involved are: (i) analysis of transactions, (ii) recording of the effects of transactions, (iii) summarizing the effects of transactions; and (iv) preparing records. This procedure is neutral; meaning that the steps involved can be applied to both manual and technology based systems.

The first objective is that they must pass the cost benefit principle or cost benefit relationship. Financial information is not free, other companies even spend millions every year just to gather and organize financial information to assemble into their financial statements. Under this principle, the cost of providing financial information in the financial statements must not outweigh the benefit of that information to the users. If the firm is planning to improve their IT system, they must consider the cost-benefit principle.

July / September 2017

[Fig. 2] The Accounting Process

The first step is the analyzing of transactions, the transaction must be known to be financial in nature. Recordable and non-recordable transactions are separated. In this step the transaction is being analyzed on how it affects the accounting equation. Source documents such as invoices, orders, checks are helpful in this stage. The second step is to record the effect of the transactions. Transactions are recorded using journal entries. These journal entries are the accountantâ&#x20AC;&#x2122;s way of recording the effect of both simple and complex business transactions. Journals provide a chronological record of all transactions of a business. They show the dates of the transactions, the amounts involved, and the particular accounts affected by the transactions. Sometimes a detailed description of the transaction is also included. It is also known as the books of original entries.

Improved Internal and External Reporting Because of the improved speed and accuracy in the processing of information, financial reports can easily be generated and reported to internal and external users. External users can use these reports to assess the condition of the entity. Internal user - the management - benefits from this development because they timely get all the information they need to make sound economic decisions. Most companies have found that computers greatly simplify the task, enabling managers and other employees to get financial reports exactly when they want them.

FLEXIBILITY Flexible technology is severely needed in accounting departments. The accounting system must have the capability to adapt with changes in business practices. Information technology associated with accounting creates flexibility to accommodate changes. Some systems are capable of being upgraded when the entity’s volume of transaction increases.

REDUCTION OF PAPER USAGE The utilization of electronic envelops and documents reduce the usage of papers in accounting processes. Thus, it reduces costs and of course it draws the entity away from the environmental issues regarding trees and paper usage.

CONCLUSION Information technology advancements have greatly helped the accounting and auditing of business entities. Because of today’s computerized accounting information systems, business performances seem to improve. Many transaction processes are simplified thus creating efficient operations. The affordability of computer technology for small business entities creates great opportunities for these entities to improve their businesses. Information technology advancements made effective and efficient information flow which enhances managerial decision-making. This subsequently increases the firm’s ability to achieve corporate and business’s strategic objectives. This increases the prospects of the firm’s survival. Information technology applied in accounting is not perfect. Sometimes we must consider the fact that they are just piece of technology. With regards to the accounting information system of a business, these systems greatly help in the accounting processes. However, we must consider the possibility that the system might be ineffective sometimes; same with some accounting software. Business entities must therefore choose compatible systems and software. It is also important to note that with the rapid advancements in information technologies, com-

puters have improved the accounting processes, but they cannot replace the role of human in the accounting systems.

THE NATIONAL BOARD OF ACCOUNTANTS AND AUDITORS TANZANIA

ANNOUNCEMENT TO EXAMINATION CANDIDATES: MID SESSION EXAMINATIONS We would like to inform our Esteemed Examination Candidates that from February 2018 Mid-session examinations; any candidate who wishes to register and sit for these examinations will be allowed to do so. Midsession examinations involve three subjects (A5 Business Law, B4 Public Finance and Taxation I and C4 Public Finance & Taxation II). Mid-session examinations are held in February and August. Fees for mid-session examinations shall apply. EXECUTIVE DIRECTOR

July / September 2017

NATIONAL BOARD OF ACCOUNTANTS AND AUDITORS (NBAA) PROCESSING OF NBAA CERTIFICATE We would like to to inform our esteemed examination candidates that the exercise of processing NBAA certificates starts immedately after the release of of examination results. Once a canditate has cleared his/her examination papers and become eligible for award of certificate, he/ she will be required to submit a passport photograph within seven (07) working days after the release of the examination results. Certificate issued by the Board after examinations are:• • • •

Diploma in IPSAs ATEC CPA (T) CPA (T) Equivalent

The Candidate will be rquired to do the following: • • • •

Go to the photo point centre Take a passport photo on a white background size 2x3cm Collect passport photo in a soft copy (digital) Send it to the Board via email to lucy.mwalupanga@nbaa. go.tz

When submitting the passport photo a canditate should provide the following details through email: 1. 2. 3. 4.

First Name Initial(s) if any Sur Name Index Number

EXECUTIVE DIRECTOR

MID SESSION EXAMINATIONS: A Fast Solution To Your CPA (T)

Mid-Session Examinations which are held in February and August have been a shortcut for the completion of CPA (T) programme Mid-session examinations involve three subjects A5 Business Law, B4 Public Finance and Taxation I and C Public Finance and Taxation II. You are invited to make use of these examination sessions to reduce the workload in the substantive examination sessions as well as clearing your pending subjects i.e A5, B4 or C4 to complete your CPA (T) programme. The following candidates managed to clear their remained examination papers in August 2017 and therefore and therefore graduated in september 2017. If they had not made this wise decision, they wouldn’t have graduated. 1. 0028731 Mr. Abubakar A. Maketem 2. 0027559 Mr. Alex Meshack

CONGRATULATIONS

July / September 2017

(NBAA) THE NATIONAL BOARD OF ACCOUNTANTS AND AUDITORS TANZANIA

Our Esteemed Stakeholders, With much honour, Management of NBAA, on behalf of the Governing Board would like to make it known that we have just opened a new Office at Dodoma to bring our services close to our stakeholders. We have a very convenient location right now for our central regions stakeholders which offers various solutions to your problems and anything that you would ask for. We take much pride in our new location as it has top of the line technology to bring solutions that you can easily access. We would be very happy to have you as our customer in our new office and we encourage you to come and enjoy our services. We are dedicated to providing you with the best service that you deserve. We are looking forward to you visiting our new office located at: NATIONAL AUDIT OFFICE BUILDING, 8TH FLOOR, UDOM ROAD P.O. BOX 1271, DODOMA. TEL. NO.: +255-26- 2963318-9, E-MAIL: info@nbaa.go.tz WEBSITE: www.nbaa.go.tz All enquiries should be addressed to: EXECUTIVE DIRECTOR, NBAA MHASIBU HOUSE, P.O. BOX 5128, DAR ES SALAAM. TEL.NO.: +255-22- 2211890-9, FAX NO.: +255 -22 - 2151746 E-MAIL: info@nbaa.go.tz WEBSITE: www.nbaa.go.tz

July / September 2017

Facilities available at

APC

BunjuDar Es Salaam