NBAA @50: Professionalism, public interest and sustainability

After independence the acute shortage of skilled labour to meet the demands of a new nation didn’t spare the accounting profession. Despite increasing numbers of Tanzanians taking accounting professional studies abroad the local needs remained unmet, with a consequent need for reliance on qualified accountants from overseas. Furthermore, the absence of an authoritative body responsible for promoting and regulating the accounting profession in the country created a notable gap.

It was against this background, that in November 1972, National Board of Accountants and Auditors (“NBAA”) was established by authority of the Auditors and Accountants (Registration) Act No.33 (subsequently amended in 1995, in 2002 and most recently in 2021). The primary objective then, which broadly remains relevant today, was to regulate activities and conduct of accountants and auditors in the country. Among other things, NBAA was mandated to establish initial and continuing professional development, conduct examinations and grant accounting/auditing qualification, maintain a register of accountants and auditors, operate a quality assurance review and set up accounting and auditing standards.

Over the last 50 years, NBAA has registered tremendous achievement on many fronts - not least that (as per May 2022 records) it now has more than 10,000 active qualified accountants (registered at different levels such as graduate accountants, certified public accountants (“CPAs”) and CPAs in public practice) and has registered and regulates 450 accountancy and audit firms. NBAA continually reviews the local accounting curriculum to ensure alignment with current global trends and developments, and where the need has arisen has issued local standards and guidelines on financial reporting. It has also succeeded in establishing collaboration with similar organisations within the region and globally such as ACCA UK, CA India, CPA US.

As we look forward, what might NBAA’s priorities be in shaping the accounting/audit profession in the next 50 years? Well, I can think of no better a starting point than this year’s celebration theme: “Professionalism, Public Interest and Sustainability”. The theme encapsulates societal expectations of the profession and fundamental thematic areas for the profession to remain relevant in the future.

“Professionalism” conveys being industrious, reliable and organised, and holding yourself accountable for your thoughts, words and actions in line with the profession’s strict ethical standards. The accounting/audit profession has evolved significantly over the last 50 years and these rapid changes are here to stay. The changes have been necessitated by increasing complexities and sophistication of financial reporting, technology advancement and growing stakeholders’ expectations. A key enabler to cope with these ongoing changes/demands will be a deep business understanding, the ability to share insights and digital upskilling.

“Public interest” is a non-negotiable given the diverse group of stakeholders that rely on the work of accountants and auditors. Just to mention a few, Government for tax collection purposes, regulators for compliance monitoring, lenders for creditworthiness assessment, as well as current and potential shareholders seeking insight as to investment performance. Unfortunately, there have been instances where qualified accountants have eroded public trust in the profession by unprofessional conduct and resulting loss (whether asset embezzlement, other financial loss and corporate failures). Increasing public trust of the profession will remain a paramount priority.

“Sustainability” is a standing agenda item in any current strategy discussion and formulation, reflecting today’s volatile and ever uncertain world. We are constantly reminded that the Chief Financial Officer (“CFO”) of the future must worry about the “4 P’s”, namely Profit, People, Planet and Purpose - and out of these, three primarily relate to the sustainability agenda. Environment, Social and Governance (“ESG”) is no longer a buzzword but rather a licence to do business. Accountants must therefore be at forefront in crafting ESG strategy for organisations, setting out measurable key performance indicators (“KPI’s”), monitoring execution progress and finally in reporting.

At an individual level, each accountant and auditor should reflect on these thematic areas and set personal goals around them. Equally, NBAA as a custodian of the profession in the country and regulator must pause to reflect as to how best to continue playing a pivotal role in driving the desired changes and improvement including in relation to professional development, ethics, and quality of reporting.

As regards professional development, the continuous review and update of the CPA curriculum to ensure upcoming accountants/auditors are future ready is critical. An emphasis on data analytics and technology skills, cybersecurity, business acumen, communication and leadership skills is essential - as is a learning approach that embeds practical scenarios during teaching and examination. NBAA can also help steer similar discussions with local higher learning institutions offering accounting courses.

On ethics a top priority should be the reinforced monitoring of compliance with ethics code of conduct and regulations together with improving robustness of Audit Quality Review (“AQR”) program. Malpractice by an individual accountant or auditor can easily tarnish the profession’s image and so there must be a need for proportional sanctions for wrongdoing.

The quality of reporting by “Those Charged with Governance” must continue to improve. For example, the Dar es Salaam Stock Exchange (“DSE”) and Bank of Tanzania (”BoT”) have already issued regulations/guidelines on sustainability reporting. NBAA will certainly be keenly following the discussion on two exposure drafts of sustainability standards issued by the International Sustainability Standard Board (“ISSB”) and will move swiftly to action once the standards become effective. ISSB was mandated to deliver a comprehensive global baseline of sustainability-related disclosure standards that provide investors and other capital market participants with information about companies’ sustainability-related risks and opportunities to help them make informed decisions. Accountants must resist the pressure to participate in so-called “greenwashing”, being misleading corporate disclosure on ESG seeking to convey achievements way beyond the actual performance.

Lastly, there is an ongoing discussion around separation of roles between member services and regulatory responsibilities. Under the current structure, NBAA has the mandate to perform both roles which at times has led to a perception of conflict of interest. Those in support of the initiatives to separate the member services activities from regulatory ones argue that such separation would give the regulatory body the required autonomy and independence to set standards, supervise and enforce compliance. It appears that the majority of the advanced economies opted for this separation route many years back and similar discussions are ongoing in some neighbouring countries. Certainly, there are nuances that the responsible Ministry and Parliament will have to navigate to enable such a gigantic change but I do hope it will not take another 50 years.