Challenges in complying with International Financial, Reporting Standards (IFRS): a case of Insurance Companies in Tanzania.

This study sought to examine and determine the challenges complying with International Financial Reporting Standards among insurance companies in Tanzania. The specific objectives of the study were to identify motivational factors that influence in complying with IFRS, examine and determine internal and technical factors which pose as challenges in complying with IFRS. This qualitative study adopted a design case study. The population of the study include 26 insurance companies chief finance officers and 24 managers/partners who audited insurance companies. A questionnaire was used to collect primary data from 50 respondents that included insurance companies and auditors. All questionnaires from chief finance officers were received giving a response of 100% whereas for the case of manager/partner 23 out 24 questionnaires were received giving a response of 95.8% Data was analysed using both qualitative and quantitative methods. The results show, that compliance with IFRS is influenced by the desire to comply with law, presence of strong internal audit and audit committee, companies' multinational status and status of external auditors. Internal and technical factors, which pose as challenges in complying with IFRS, were found to be lack of sufficient time to be current with IFRS changes, absence of sufficient staff with capacity and competence to understand, interpret and implement IFRS, lack of sufficient training programs and technical guidance in IFRS application among insurance companies in Tanzania. Others were found to be low level of users understanding IFRS and hence not demanding high quality reports, lack or management understanding of complexity:) of IFRS, lack of initiatives to understand IFRS, not keeping up to date with IFRS changes due to heavily reliance on auditors and perception that accountants are not only employed for preparation of published accounts. Further, IFRS reports having no direct linkage with other reports and ability of management success to information without referring to IFRS reports cause lack of attitude of ensuring compliance. Moreover, IFRR being consisting of many standards and interpretations as well as its requirement to disclose more information is also a challenge in complying with IFRS. Despite all these challenges, Chief Finance Officers indicated to face minimum difficulties in treatments of various financial transactions. In case of difficulties, they seek assistance from external auditors, IFRS handbooks and other insurance companies. Area which assistance is sought is mainly on disclosure issues, evaluation of accounting policies, estimates and judgements as well as measurement. The Major reasons for seeking assistance are due to continuous improvement and development of standards, which are also complex. The study recommends that insurance company in Tanzania to keep staff abreast of new IFRS updates. Provision of guidance manuals or notes, comprehensive training programs should be increased and establishing monitoring mechanisms for IFRS Implementations.