Samia’s tactical initiative: 2024 finance amendments review

TANZANIA: THE Public Finance (Amendment) Regulations of 2024, signed on 3rd September 2024 by the Minister for Finance, Dr Mwigulu Nchemba and published under Government Notice No 798 on 13th September 2024, mark a major shift in how public sector entities in Tanzania manage internal auditing, risk assessment and governance processes.

These new regulations require organisations to realign their internal controls, risk management practices and auditing protocols to meet the updated standards.

A key aspect of this realignment is updating the Annual Risk-Based Internal Audit Plan (ARBIAP) and the Audit Committee Charter—a necessary step likely anticipated by the President in supporting these reforms.

Amendments’ Significance The 2024 amendments enhance transparency, accountability and efficiency in public sector entities by mandating stronger internal audit services focused on risk management, independent reporting to the Audit Committee and Internal Auditor General and stricter financial reviews.

Audit Committees now also approve risk-based plans, review financial statements and monitor audit implementation.

The amendments focus on improving transparency, accountability and efficiency in public sector entities. A key change mandates that all public institutions establish or strengthen internal audit services to enhance operations through effective risk management and control, as detailed in Regulation 28(1).

These services must report directly to the Audit Committee and the Internal Auditor General to ensure independence and avoid bias, as required by Regulation 29A.

The amendments also require more rigorous review processes for financial records, operational data and internal controls. This includes ensuring conformity with financial and operational procedures and reviewing the reliability of data used in preparing financial statements, as described in Regulation 29(1)(a)-(d).

Furthermore, the role of Audit Committees has been redefined. They are now responsible for approving risk-based internal audit plans, reviewing financial statements and monitoring the implementation of audit recommendations.

They are also tasked with reviewing quarterly and annual reports, ensuring compliance with audit findings and advising the accounting officer, in line with Regulation 32(1).

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As a result of these changes, public sector entities must revise their internal protocols and policies to ensure compliance with the new regulations.

ARBIAP and Audit Committee Charters To comply with the 2024 Public Finance (Amendment) Regulations, public sector entities must first conduct a regulatory compliance audit to identify gaps in internal controls, risk management and governance, followed by updating key governance documents such as the Annual Risk-Based Internal Audit Plan (ARBIAP) and the Audit Committee Charter—both essential for guiding internal audits and audit committee functions thus aligning them with new regulatory requirements for risk management, reporting, value-for-money audits, information security and data protection, while incorporating the specific deadlines for audit reports and risk-based plans introduced by the 2024 amendments to ensure compliance and avoid the risks associated with outdated standards.

Engaging stakeholders such as accounting officers and internal auditors is essential to tailor these updates to each entity’s specific needs. Concurrently, training internal audit teams on the new standards and international best practices is crucial.

Establishing a comprehensive risk management framework, with a risk policy and risk register, will further align operations with the new regulations. Establishing or strengthening an Audit Compliance Committee is crucial for monitoring regulatory adherence and ensuring timely submission of reports.

Creating a clear reporting schedule will help guarantee that all audit reports meet deadlines, while leveraging audit management software can streamline processes and facilitate real-time compliance tracking.

When necessary, entities should seek support from external auditors or compliance experts to ensure alignment with international standards and best practices.

These steps not only foster compliance but also enhance the overall effectiveness of internal audits and governance functions.

Case Studies Many organisations and public entities worldwide have encountered similar challenges and a review of past case studies reveals that prioritising audit independence, implementing risk-based audit plans and aligning governance processes with international standards can significantly enhance transparency, strengthen financial management and build public trust.

For instance, in 2016, Kenya’s Ministry of Health successfully overhauled its audit processes after facing scrutiny for financial mismanagement.

By establishing a new internal audit unit and incorporating regular audits and risk monitoring, the ministry restored confidence and maintained continued support from the World Bank, demonstrating how entities can regain control through improved audit governance.

Similarly, in 2017, Eskom, South Africa’s state-owned electricity supplier established in 1923, restructured its audit procedures and leveraged technology to improve reporting efficiency.

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As Africa’s largest power utility, Eskom’s focus on audit reform and timely reporting highlights the importance of adopting audit management software, a strategy Tanzanian entity could follow to streamline compliance with the 2024 regulations.

The National Health Service (NHS), the publicly funded healthcare system of the United Kingdom founded in 1948, responded to the 2013 Mid Staffordshire Trust scandal—which exposed severe failings in patient care and governance—by introducing a comprehensive risk management framework and training internal auditors on international standards.

This response underscores the importance of training Tanzanian internal audit teams on the 2024 amendments to strengthen governance and risk management practices. Rwanda’s Office of the Auditor General (OAG) in 2018 also offered a clear example of how governance reforms and enhanced audit independence can improve financial oversight and transparency, key aspects of the new Tanzanian regulations.

These case studies show that with the right reforms, public entities can successfully align with global best practices, improve operational efficiency and strengthen governance in line with the 2024 amendments.

It is thus clear that public sector entities can transition to new regulatory frameworks by adopting best practices in auditing, risk management and governance thus concurrently—Tanzania’s public sector must learn from these examples to comply with the 2024 amended regulations and strengthen governance frameworks.

Incorporating international audit standards, as mandated by the Internal Auditor General, is crucial to avoid non-compliance, governance issues and operational inefficiencies. Immediate action is vital to safeguard public assets and ensure regulatory compliance.