On 22nd June 2020, The National Board of Accountants and Auditors (NBAA) revised TFRS 1 – ‘The Directors’ Report’ (initially issued on 1st January 2010) for the purpose of accommodating issues from the current environment, which became operative for financial statements covering accounting periods beginning on or after 1st January 2021. Early adoption allowed.

This Standard is applicable to all entities except those entities which apply Financial Reporting Standard for Micro Entities (FRSME). The standard will assist those charged with governance (TCWG) in setting out their analysis of the entity’s operations and financial review with a forwardlookingtheir’s orientation. This will help primary users and other stakeholders to assess strategies adopted by their respective entities and the potential for those strategies to succeed toward creating value over the short, medium and long-term periods.

The report prepared in accordance to this standard should be balanced, narrative and comprehensive with analytical tool, consistent with the size and complexity of the entity, covering the following areas:

  1. The development and performance of the entity’s operation during the financial year
  2. The financial performance, financial position and cashflows of the entity.
  3. The main trends and factors underlying the development, performance, financial position and cashflows of the entity during the financial year.
  4. Information on how resources whether or not owned by the entity have been used or affected toward creating value over the short, medium and long-term period.
  5. The main trends and factors underlying the business that have affected the results but are not expected in the future; and those that are likely to affect the entity’s future development.
  6. Known events and uncertainties that are expected to have an impact on the operation in the future, primary users and other stakeholders.
  7. Information on budget performance.
  8. In addition to the requirements of this standard, entities are required to comply with relevant statutory requirements applicable in Tanzania.

Operating and Financial Review (OFR)
OFR is defined as a narrative explanation, provided in the report by TCWG, of the main trends and factors underlying the developments, operations, performance, financial position and cash flows of an entity during the financial year covered by the financial statements, and those which are likely to affect the entity’s future developments, operations, performance, financial position and cash flows.

Guiding Principles:
The following principles underpin the preparation and presentation of the OFR in the report of TCWG. The OFR should:

  1. Set out analysis of the business through the eyes of TCWG.
  2. Focus on matters that are relevant to the interests of primary users and other stakeholders.
  3. Have a forward-looking orientation identifying those trends and factors relevant to the primary users and other stakeholders’ assessment of the current and future performance of the entity and the progress towards the achievement of entity’s long-term objectives.
  4. Complement as well as supplement the audited financial statements, to enhance the overall entity disclosure.
  5. Be comprehensive, understandable and consider materiality.
  6. Be balanced and neutral, dealing with both good and bad aspects.
  7. Be comparable over time.

Disclosure Requirements:
Paragraph 15 to 58 of the TRFS publication issued by NBAA, set out the requirements for the disclosures to be provided by those charged with governance in an OFR.
The purpose of disclosure requirements is to set out the key content elements that should be addressed within an OFR. It is for TCWG to consider how best to use the requirements to structure the OFR and the precise content, including the level of detail to be disclosed, relating to the key elements, given the particular circumstances of the entity.
These circumstances may include: The industry in which it operates, The range of products, services or processes it offers, The number of markets it serves, Legal requirements and Extent of accountability.

Below is an outline of the Disclosure Requirements:

1. Details of Particular Matters 14. Stakeholders’ Relationship
2. Nature of the Operation 15 .Capital Structure and Treasury Policies
3. Objectives and Strategies 16. Cash Flows
4. Key Performance Indicators 17. Liquidity
5. Other Performance Indicators 18. Corporate Governance Matters
6. Other Measures and Evidence deemed to be included by the TCWG 19. Appointment of Auditors
7. Public Sector Entities (Separate on its own) 20. Responsibility of the Auditor
8. Entity Operating Model 21. Statement of Responsibility by TCWG.
9. Current and Future Development and Performance 22. Political and Charitable Donations.
10. Analysis of Main Trends and Factors likely to impact future prospects 23. Employee Welfare
11. Budget information and overview 24. Disabled Persons and Gender Balance.
12. Resources 25. Prejudicial Issues
13. Principle Risks, Uncertainties and Opportunities 26. Statement of Compliance


The Report of TCWG must be approved by TCWG and signed by the person(s) authorized by the Board of TCWG, indicating names, designations and date of the approval.