835. The populace’s low level of awareness of their rights and relative ignorance of corporate social responsibility for corporations in their communities makes it easy for these companies to fail to be accountable on issues like the environment and its sustainability. Appointment or election processes for board members also reflect the extent of fidelity to stakeholder accountability obligations. The CSAR notes that in state-owned corporations, board appointments are made by the minister in charge. The CEO and Chairman are appointed by the President, on the recommendation of the minister. The CSAR also notes that the practice of having senior government officials and Members of Parliament on the boards of these corporations can undermine board accountability to the wider society. ll. Findings of the CRM 836. Interaction with corporate sector players in Dar es Salaam confirmed that the small number of accountants in Tanzania explains NBA inability to effectively monitor member compliance with financial reporting standards. These consultations also revealed that with regard to financial reporting and disclosure, the perception is that many companies prepare more than one statement of accounts; one for publication; the other(s) for very limited circulation. 837. CRM consultations with BRELA revealed that it receives filing of company statements of accounts and that whatever is filed becomes the authentic official record of the companies’ financial statements. Accordingly, all institutions, including the Tanzania Revenue Authority (TRA) as well as other officials who deal with companies, are expected to carry out due diligence inquiries on the accounts filed with BRELA. The issue thus turns on accountability, transparency, and full and accurate disclosure, which also reflects the adopted standard of financial reporting. 838. The extent to which Tanzania’s corporate accounting system is compliance-based or risk-based is not clear. According to South Africa’s King (3) Code (2009), ‘A compliance-based approach to internal audit adds little value to governance of a company as it merely assesses compliance with procedures without an evaluation of whether or not the procedure or process is an adequate control. A risk-based approach is more effective as it allows internal audit to determine whether controls are effective in managing the risks which arise from the strategic direction that a company, through its board has decided to adopt.’’ The point to emphasise, is that at this early stage of Tanzania’s corporate sector development, the relative merits of the different approaches should determine the choices made. 839. In the NPOA on the adoption of codes of ethics in business (Objective 3), the CSAR stated that to fashion out its own codes, Tanzania will draw on the Cadbury and King Codes. Standards and Codes of Corporate Governance are constantly evolving worldwide. For example, the Hampbel Committee (1998) was set up to review the Cadbury Code (UK) and it took on financial aspects and other corporate governance issues. The King Code (South Africa) has been revised twice since it was released in 2002. King (3) is reputed to be the first in the world to address IT Governance. In this evolutionary process, these codes have, on occasion, culminated in actual legislation. An example is the U.S. Sarbannes Oxley Act (2002) also known as the Corporate Responsibility Act, designed to protect investors by prescribing full, fair, and accurate disclosure by corporations that would similarly ensure better accuracy and reliability of information given pursuant to the Securities Laws of the United States. It was a direct response to the Enron scandal. These precedents will be useful guides as Tanzania draws up its blueprint for corporate accountability and financial reporting. Sanctions for non-compliance 840. The East African Business Week (Kampala) (http.//all Africa.com/ stories/20107181545.html) reported that for failure to submit its Financial Reports for 2009 and 2010, the Dar es Salaam Stock Exchange (DSE) delisted the National Investment Company Ltd (NICOL) in July 2011, after a one-month suspension. During its suspension, the company had been required by the DSE to submit its 2009 and 2010 Financial Results report on the intention to sell 22 million shares: a partial stake in the National Micro Finance Bank (NMB). Failure to comply with 168

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