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May 20, 2015

Tanzania praised for IPSAS adoption as cure for “Dutch disease”

Pailles, Mauritius/London. On the back of Tanzania’s recent announcement that the country has set forth the adoption of International Public Sector Accounting Standards (IPSAS), delegates of the African Congress of Accountants (ACOA15) unanimously congratulated the country’s effort to adopt accrual accounting for the management of government finances.

Tanzania’s announcement to adopt IPSAS was one of the highlights of ACOA15’s sessions and corridor conversations held by delegates in Mauritius.

One of the main themes of ACOA15 was the need for African governments to become truly accountable and eradicate the scourge of corruption, particularly in the form of shady deals with foreign corporations which exacerbate the so-called ‘resource curse’.

Also known as the ‘Dutch disease’, the resource curse of many African countries is characterised by the paradox of treasuring wealthy commodities, such as oil and minerals, which are amassed by a corrupt ruling elite in association with foreign investors.

As a result the population of the country is prevented from enjoying the benefits of its own wealth, generating a vicious circle in which corrupt business dynamics penetrate all sectors of the economy.

As featured in conversations and exchanges at ACOA15, the role of the accountancy profession is pivotal to hold national governments and agencies to account, being the first step to "get the numbers right" through the accrual-based standards IPSAS.

In the words of the Pan African Federation of Accountants (PAFA) chief executive Vickson Ncube, politicians possess the decision-making, but equally important accountants have the knowledge to bring transparency and accountability.

Speaking at one of the ACOA15 sessions focused on public sector accounting, the Chartered Institute of Public Finance and Accountancy chair Ian Ball described as "inspiring" Tanzania’s efforts to produce IPSAS-based financial statements.

Recalling his experience assisting the New Zealand government’s historic transition to accrual accounting, he remembered how at that time officials from other industrialised countries said: "We would like to do that, but you can do it because New Zealand is a small country".

Conversely, according to Ball’s account, officials from smaller countries than New Zealand would say the opposite: "We like that [IPSAS]. But you can do it because you are a big country".

As Ball put it, the size of the country is just one of many categories of excuses not to adopt accrual accounting. He added, though, that if a government doesn’t know what is in the balance sheet it would not be able to exert good governance.

Tanzania’s National Board of Accountants and Auditors (NBAA) is the professional accountancy body of the country since 1973. NBAA is a full member of the International Federation of Accountants and PAFA.

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