TheRoleofDirectorsinthePrepara3onsofFinancial

Statements(Presenta3ontoNBAADirectorsTrainingatAPCBunju–March19,2016)

Coverage(plannedflow)•  WhoisaDirector?•  AFS:SourceofRegula3oninTanzania•  Fiduciaryresponsibili3es-revisi3ed•  FinancialNumeracyResponsibilityandskillsneeded:CPAornoCPA

•  DirectorsDu3es…includingprepara3onofAFS•  KeyareasofaVesta3ons

WhoisaDirector?

•  Adirector,bywhatever3tleisapersonoccupyingtheposi3onofadirectorandmayincludeGovernors,Councilmembers,Trustee,….etc.

•  Execu3veorNonExecu3veDirectors:SitsintheBoardasamemberresponsibleforcontrolanddirec3on.

•  InourdiscussionwefocusonDirectorswhoareboardmembers.

BoVomline

• Directorsareresponsiblefortheprepara3on,approvalandfilingofcompanyaccounts

AFS:SourceofRegula3ons

In Tanzania, external financial reporting is regulated by: � Legislation – Company Act 2006 - compels � Financial Reporting Standards (NBAA IAS

and IFRS); IPSAS – compels � CMSAandDSEforlistedcompanies,BOTforBanksandFinancialIns3tu3ons,

�  Other laws – Like: on Taxation - compels

Directors’FiduciaryResponsibili3es-Revisited

• Toacceptdirectorship…..istoaccept….aresponsibilityofutmosttrust,faithandconfidencetomanageandprotectpropertyormoneywhereinonepersonhasanobliga8ontoactforanother'sbenefit

Specificresponsibili3es…

toactwithinpowers;•  topromotethesuccessofthecompanyforthebenefitofitsmembersasawhole;

•  toexerciseindependentjudgment;•  toexercisereasonablecare,skillanddiligence;

Specificresponsibili3es…

•  toavoidconflictsofinterest•  nottoacceptbenefitsfromthirdpar3es;and

•  todeclareinterestinproposedtransac3onorarrangement

Responsibili3esonfinancialnumeracy

Directorsresponsibili3esisnotlimitedbyapar3cularbackgroundknowledgeandexperience.Onehastobecomefamiliarwiththebusinessofhis/hercompanyandhowitisrun,andensurethatitisbeingproperlyrun(bymanagement).

Youdon’tneedtobeACPAequivalent.But….

•  Youmusthaveanappropriateleveloffinancialknowledgetounderstandyourcompany’sbusinessandhowitisreflectedinthefinancialreport,andapplyyourknowledgeoftransac3onsandeventstothefinancialreport.

•  FinancialknowledgeincludesknowledgeofmaVerssuchas:

•  financialrepor3ng,•  financialproductsorinstruments,

Youdon’tneedtobeCPA..butneedtobeconversantwith

•  financialassessmentsforcapitalandfundingdecisions,

•  financialprocessesandcontrols,and•  howdecisionscanimpactonthefuturefinancialhealthofacompany.

•  Theextentandareasoffinancialknowledgerequiredmayvarydependinguponthecompaniesofwhichyouareadirectorandfactorssuchastheindustryandtheuseofcomplexfinancialproducts

ResponsibilitytokeepwriVenfinancialrecordsthat:

•  correctlyrecord(Reliable)andexplainthecompany’stransac3ons(comparability)anditsfinancialposi3onandperformance(meaning),andenabletrueandfairfinancialstatementstobepreparedandaudited(IFRScompliant).

ResponsibilitytokeepwriVenfinancialrecordsthat:

DirectorsresponsibilityonAFSinclude:•  recordsarecompleteandaccurate•  throughtheadop3onofappropriateaccoun3ngpoliciesand;

•  thedesignandimplementa3onofappropriatecontrolsandprocesses.

•  (Thisobliga8onexistsregardlessofwhopreparesthem:whetherbooksandrecordsaremaintainedin-house,outsourcedtoathirdparty,orwhethertheyareelectronicorhardcopyrecords)

TanzaniaCompaniesAct,2006

(4)Anyperson,beingaDirectorofacompany,failstotakeallreasonablestepstosecurecomplianceasrespectsanyaccountslaidbeforethecompanyingeneralmee3ngwiththeprovisionsofthissec3onandwithotherrequirementsofthisActatothemaVerstobestatedintheaccounts,heshall,inrespectofeachoffence,beliableonconvic3ontoimprisonmentortoafine

Compliance……

ApprovalApprovalandSigningoftheAccounts

158(1)AcompaniesannualaccountsshallbeapprovedbythecompaniesboardofDirectorsandsignedonbehalfoftheboardofDirectorsofthecompany

Failuretocomplyorrecklessness

Directors’report

Directors’financialrepor3ngobliga3ons-1

•  Yourcompanymustlodgefinancialstatements:thereportsmustincludeadirectors’aVesta3on/statementofresponsibili3esthatincludes:– whether,inthedirectors’opinion,therearereasonablegroundstobelievethatthecompanywillbeabletopayitsdebtsasandwhentheybecomedue

Directors’financialrepor3ngobliga3ons-2

•  whetherthefinancialstatementsandnotescomplywithaccoun3ngstandards,andgiveatrueandfairviewofthefinancialposi3onandperformanceofthecompanyandanyconsolidateden3ty,and

•  whetherthedirectorshavebeengiventhedeclara3onsrequiredbythechiefexecu3veofficer(CEO)andchieffinancialofficer(CFO).

The3MainAVesta3on

1.Directors’responsibilitystatement•  TheBoardofDirectorshavepreparedthesestatements.

•  TheBoardconfirmstothebestofitsknowledge:–  theconsolidatedfinancialstatements,preparedinaccordancewithIFRSandgiveatrueandfairviewoftheassets,liabili3es,financialposi3onandprofitorlossoftheGroup;and

MainAVesta3on

– thedirectors’reportincludesafairreviewofthedevelopmentandperformanceofthebusinessandtheposi3onoftheGrouptogetherwithadescrip3onoftheprincipalrisksanduncertain3esthatitfaces.

MainAVesta3on

2.Disclosureofinforma3ontoauditor•  Havingmadetherequisiteenquiries,sofarasthedirectorsareaware,thereisnorelevantauditinforma3onofwhichtheCompany’sauditorisunawareandthedirectorshavetakenallthestepstheyoughttohavetakentomakethemselvesawareofanyrelevantauditinforma3onandtoestablishthattheCompany’sauditorisawareofthatinforma3on.

MainAVesta3on3.Goingconcern•  AjerreviewingtheGroup’sandCompany’sbudgetforthe

nextfinancialyear,andotherlongertermplans,thedirectorsaresa3sfiedthat,atthe3meofapprovingthefinancialstatements,itisappropriatetoadoptthegoingconcernbasisinpreparingthefinancialstatements.[Furtherdetailisincludedwithinliquidityandcapitalresourcesonpages48to51andnotes21and22totheconsolidatedfinancialstatementswhichincludedisclosureinrela3ontotheGroup’sobjec3ves,policiesandprocessesformanagingitscapital;itsfinancialriskmanagementobjec3ves;details]

TheroleoftheAuditCommiVee

•  Letsdiscuss!!

mainroleandresponsibili3esoftheauditcommiVee

Theyinclude:•  tomonitortheintegrityofthefinancialstatementsofthecompanyandanyformalannouncementsrela3ngtothecompany’sfinancialperformance,

•  reviewingsignificantfinancialrepor3ngjudgmentscontainedinthem;internalfinancialcontrolsand,andriskmanagementsystems;

mainroleandresponsibili3esoftheauditcommiVee

•  tomonitorandreviewtheeffec3venessofthecompany’sinternalauditfunc3on;

•  tomakerecommenda3onstotheboard,forittobeputtotheshareholdersattheAGMontheappointmentoftheexternalauditor

mainroleandresponsibili3esoftheauditcommiVee

•  theremunera3onandtermsofengagementoftheexternalauditor;

•  toreviewandmonitortheexternalauditor’sindependenceandobjec3vityandthe

•  effec3venessoftheauditprocess,takingintoconsidera3onrelevantprofessionalandregulatoryrequirements;

•  todevelopandimplementpolicyontheengagementoftheexternalauditortosupplynonauditservices.

mainroleandresponsibili3esoftheauditcommiVee

•  services,takingintoaccountrelevantethicalguidanceregardingtheprovisionofnon-auditservicesbytheexternalauditfirm;

mainroleandresponsibili3esoftheauditcommiVee

•  andtoreporttotheboard,iden3fyinganymaVersinrespectofwhichitconsidersthatac3onorimprovementisneeded,andmakingrecommenda3onsastothestepstobetaken;and

•  toreporttotheboardonhowithasdischargeditsresponsibili3es.

Discussions,Q&A

Thankyou