Introduction

Rationale

Local government history in Tanzania has been riddled with gross financial
mismanagement to the point that the government has decided to set up periodic
restructuring and reform program. Lack of management steps affecting millions of
Tanzania Shillings where the taxpayer does not get value for money that they expect to
earn for their government’s service. For example, each audit that the Controller Auditor
General periodically presents to the President each year, the audit reports submitted by
the Controller Auditor General show the results of the Local Government Authorities’
performace financial management. Some financial statements submitted lack of
adequate reporting as per the accounting basis accrual standards of IPSASs resulting in
difficulties in assessing the LGAs’ results. Increase of funds transferred to Local
government under the devolution arrangement (D by D) and from Local government to
Lower Level Government (Ndunguru, 2013).

Local government financial management can be strengthened by implementing

an integrated accrual accounting system to allow accrual-based budgets, financial
statements and performance reports to be prepared to meet the needs of the different
stakeholders. Traditionally, government expenditure management has concentrated on
an expenditure control system, which is based on ensuring that the budgetary authority
provide by the legislature is no surpassed. Accounting bases do not quantify the money
spent during the review period, so the true costs of government programs and initiative
are not accurately calculated, tracked or reported. The performance measures of
efficiency and cost-effectiveness can not be calculated readily in the absence of reliable
cost information. Setting up International Public Sector Accounting Standards (IPSAS),
these standards implement the accrual accounting framework and marks an important
step towards transparent and acoountable information (Ndunguru, 2013).

In Tanzania, government expenditure management has historically been based

on a system of control of expenses to ensure that the budgetary authority provided by
the legislature is not surpassed. Currently available financial information can not
sufficiently fulfill the need to determine or monitor the activities and programs under
review. The Public finance Act, No. 6 of 2001 involves the National Treasury to prepare
financial statemens regarding public sector entities in full compliance with Generally
Accepted Accounting Practice (GAAP). This Act also provides for the setting up of an
Accounting Standards Board ( ASB) to determine the statements of generally accepted
accounting principles (Ndunguru, 2013).
References

http://scholar.mzumbe.ac.tz/bitstream/handle/11192/686/MSc%20A%26F.-Dissertation-
Nicholaus%20S.%20Ndunguru-2013.pdf?sequence=1.