Finance leaders warned over taxation, reporting and AI risks

 

AI in finance

By Guardian Reporter , The Guardian

TANZANIA’S corporate finance leaders are entering a critical period of operational change as implementation of the Finance Act 2026 coincides with major shifts in...

financial reporting, expanding sustainability requirements and the rapid adoption of artificial intelligence across accounting and finance functions.

The convergence of regulatory reforms and emerging technologies requires immediate and coordinated action by finance teams, executive management and corporate boards, according to stakeholders preparing for the inaugural Radiant Finance & Tax Forum 2026, scheduled for Mwanza from November 19 to 21.

The forum will be held under the theme, “Navigating the Future of Finance: IFRS, Tax Reforms, AI and Emerging Professional Issues.”

Miraji Bango, auditor and tax advisor, said although the developments presented different technical requirements, they all depended on reliable data, effective internal controls and sound professional judgment.

He warned that organisations that fail to prepare could face operational disruptions, tax disputes and penalties arising from non-compliance.

The Finance Act 2026, which came into effect on July 1, has placed additional pressure on businesses to review their tax procedures, financial controls and day-to-day operations.

Companies must also continue managing established areas of tax exposure, including value-added tax, withholding tax, transfer pricing and cross-border transactions.

In these areas, inadequate documentation, inconsistent interpretation of tax requirements and weaknesses in internal controls can expose businesses to disputes, penalties and unexpected tax liabilities.

At the same time, companies are being urged to begin preparations for International Financial Reporting Standard 18 (IFRS 18), presentation and disclosure in financial statements.

The standard will apply to annual reporting periods beginning on or after January 1, 2027, and introduces significant changes to how companies present financial performance.

IFRS 18 establishes defined categories for income and expenses and introduces mandatory subtotals in the statement of profit or loss. It also requires additional disclosures concerning performance measures developed and used by management.

Although mandatory implementation is still ahead, the transition requirements mean companies cannot afford to wait until 2027.

Comparative financial information from the preceding reporting period will be required, making 2026 data particularly important. Companies may therefore need to review their charts of accounts, reporting systems, financial software and data collection processes to ensure the necessary information is available.

Bango said treating IFRS 18 as a last-minute financial statement exercise could leave organisations struggling to produce the required comparative information.

The regulatory agenda is also expanding beyond conventional financial reporting, with sustainability disclosures and assurance emerging as another major area of focus.

Following a 2026 technical pronouncement by the National Board of Accountants and Auditors (NBAA), reporting entities and audit firms are expected to strengthen their readiness for sustainability disclosures and assurance.

The requirements bring environmental, social and governance-related risks and opportunities further into the corporate reporting process, including climate-related information where applicable.

Bango cautioned companies against treating sustainability reporting as merely a communications or marketing exercise.

He said sustainability information must be supported by reliable data, effective governance and internal controls capable of withstanding professional scrutiny.

The shift is expected to place additional demands on finance and audit teams, which will need appropriate systems for collecting, validating and reporting non-financial information.

The rapid adoption of artificial intelligence is adding another dimension to the transformation of finance functions.

Businesses are increasingly using AI and automated tools to analyse financial information, identify unusual transactions, support audit procedures, assist tax work and improve forecasting and reporting.

However, the technology also introduces risks involving data privacy, confidentiality, accuracy, algorithmic bias and transparency.

Bango said the growing use of AI should not diminish the responsibility of finance and audit professionals to scrutinise information and exercise independent judgment.

Automated outputs, he stressed, must remain subject to human oversight, with professionals retaining responsibility for decisions and conclusions informed by technology.