Why the end of cooked-up financial statements is in sight

By Aurea Simtowe

​​​​​​Dar es Salaam. The falsification of financial statements by institutions and businesspeople may soon come to an end following the introduction of a new verification system by the National Board of Accountants and Auditors (NBAA).

The system, known as the NBAA Verification Number (NBAAVN), will assign a unique number to every audited financial report, enabling institutions such as the Tanzania Revenue Authority (TRA), commercial banks and investors to verify the authenticity of financial statements.

Announcing the initiative on Monday in Dar es Salaam, NBAA said the move is part of efforts to protect the accounting profession from unqualified practitioners, commonly referred to as vishoka, who undermine its integrity.

NBAA Accounting Standards, Research and Technical Services director Angyelile Tende said falsified reports have historically benefited culprits while causing the government to lose revenue and leading banks to suffer losses.

“You’d find someone with one set of reports for the bank showing a high profit, while in reality the business is operating at a loss. The same person might submit another report to TRA showing minimal profit, even when the actual profit is much higher. This results in less tax paid,” she said.

Ms Tende added that banks have often fallen victim to such practices by advancing loans to companies or individuals based on false reports, leading to an increase in non-performing loans.

“This is what has caused the rise of non-performing loans in banks, because once the bank is given a report, it had no way of verifying its authenticity.”

Explaining how the NBAAVN system works, Ms Tende said all audited financial statements will now be submitted through the platform, which will then generate a unique verification number. The reports will be accessible to TRA, banks and other stakeholders, providing a reliable mechanism for verification.

She emphasised that the system will also help eliminate imposters who prepare financial statements without meeting the required professional standards, as only registered auditors will be permitted to submit reports.

“As NBAA, recognising this issue and through amendments to the NBAA Establishment Act, one of the key changes introduced was the requirement for all audited reports to be submitted to NBAA. Through technological advancements, we have now developed this system.”

Ms Tende said the days of falsified reports and unqualified preparers are numbered, stating: “So let me be clear: the days of financial statements prepared by unqualified individuals or falsified reports are coming to an end with this NBAAVN system.”

On the issue of adverse audit opinions, NBAA Corporate Services director Kulwa Malendeja said disciplinary measures are already in place against professionals who breach ethical standards.

“There are various actions taken under the law, including fines, deregistration of audit firms, revocation of auditor certificates, or suspension from practice. We also conduct public awareness campaigns to help people identify unqualified auditors and accountants,” he said.

Mr Malendeja added that NBAA ensures professionals remain compliant by registering annually, paying their fees and attending continuous professional development sessions designed to keep them up to date with global trends in science and technology.

Addressing concerns over high failure rates in the Certified Public Accountant (CPA) examinations, he attributed the challenge to poor preparation by candidates.

“Some candidates register without putting in the effort needed to pass. Many people take the exams just to try their luck, which is why we see a high failure rate. But the exams are not too difficult if someone puts in the effort and is determined.”

Me Malendeja also acknowledged that the mathematics-intensive nature of the exams presents a challenge, but noted that dedication and proper preparation can help candidates overcome the hurdle.