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Sources of regulatory framework being of communities. The NGO Act sets
The laws in Tanzania are originated from out the procedures for NGOs to register
the following sources: with the government, obtain permits for
Tanzania, Companies Act No. 12 of their activities, and comply with reporting
2002: This requires that, every company and accountability requirements. It also
FOR ONLINE READING ONLY
registered in Tanzania to prepare a set of delineates the government’s role in
financial statements including, the statement monitoring and regulating the activities
of financial position, income statement of NGOs to ensure they adhere to legal
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(statement of profit or loss) and statement of standards and contribute positively to
cash flows. Thus, companies are expected to Tanzanian society.
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comply well with the requirements specified The above-mentioned acts provide a legal
in the regulations; otherwise, they may framework to promote effective functioning
be penalised or punished. Examples of and regulation of microfinance institutions
punishment include, fine or penalty for the and non-governmental organisations in
late filing and deregistration for serious and Tanzania, ultimately facilitating financial
extended defaults. inclusion, socio-economic development,

Microfinance Act No. 10 of 2018: The and good governance within the country.
operations of microfinance institutions Accounting standards, are set of rules and
(MFIs) in Tanzania are governed by this principles which guide the preparation of
act. Tanzanians who usually do not have financial statements. They provide the basis
access to traditional banking services can for recognition, measurement, presentation
get financial services from microfinance and disclosure of different transactions
firms, such as insurance, savings accounts, and events reported in the financial
and modest loans. In order to make sure statements. For example, companies are
that microfinance institutions act ethically, required to report their performance (profit/
honestly, and in the best interests of their loss) and financial position by using the
consumers, the Microfinance Act specifies same accounting rules (consistency) over
the licensing requirements, operational time. This is considered as important in
principles, and regulatory framework. minimising fraudulent manipulations and

NGO Act No. 24 of 2002: The NGO enhancing uniformity in financial reporting.
Act governs the registration, operation, It also simplifies the evaluation and
and oversight of non-governmental comparison of performance and financial
organisations (NGOs) in Tanzania. NGOs position of business entities operating in
play a crucial role in addressing various the same industry.
social, economic, and environmental A country can opt to have its own
issues by implementing projects and locally established standards or adopt
programmes aimed at improving the well- the International Financial Reporting

Student’s Book Form Five
5

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