ASSESSMENT OF COMPLIANCE AND IMPLEMENTATION OF IFRS 9 IN

SOCIAL SECURITY FUNDS

A CASE OF PUBLIC SERVICE SOCIAL SECURITY FUND (PSSSF)
ASSESSMENT OF COMPLIANCE AND IMPLEMENTATION OF IFRS 9 IN
SOCIAL SECURITY FUNDS
A CASE OF PUBLIC SERVICE SOCIAL SECURITY FUND (PSSSF)

By

Stanley M Tweve

A Research Report Submitted to Mzumbe University in Partial Fulfilment of the

Requirements for the Award in Bachelor Degree of Accounting and Finance in
public sector of MzumbeUniversity.
2022
 CERTIFICATION
We, the undersigned, certify that we have read and hereby recommending Mzumbe University
for the acceptance of, a research entitled; “Assessment of compliance and implementation of
IFRS 9 in social security funds: A case study at Public Service Social Security Funds in
Dodoma region” in partial fulfillment of the requirements for award of the Bachelor of
Accounting and Finance in Public Sector (BAF-PS) of Mzumbe University.

Major Supervisor
_________________________

Internal Examiner
_________________________

Accepted for the Board of the School of Business (SOB)

Signature
……………………………………………………….
DEAN/ DIRECTOR, FACULTY/ DIRECTORATE/ SCHOOL/ BOARD

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 DECLARATION AND COPYRIGHT
I, Stanley M Tweve, declare that this research report is my original work and that it has not been
presented and will not be presented to any other university for a similar or any other degree
award.

Signature …………………………………

Date ………………………………………

© 2022
This research report is a copyright material protected under the Berne Convention, the Copyright
Act 1999 and other international and national enactments, in that behalf, on intellectual property.
It may not be reproduced by any means in full or in part, except for short extracts in fair

ii
dealings, for research or private study, critical scholarly review or discourse with an
acknowledgement, without the written permission of Mzumbe University, on behalf of the
author.

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 ACKNOWLEDGEMENT
I thank the almighty god for his blessings and love. I would also wish to extend my gratitude to
my supervisor Dr. Komba for his professional guidance, valuable comments and suggestions in
writing this research,
Special thanks to my family. I sincerely thank my father Mr. Mecky Tweve, my mother Tumaini
Nyaluke, my sisters Lilian, Mervis and my brother Pascal for their tolerance and encouragement
during all the ups and downs of my studies, I further like to extend my special gratitude to my
lovely friends Irene, Kareem, Maclean, Nickson and Meckson for their encouragement in
accomplishing this work
Further, I would like to extend my thanks to all my colleagues from Accounting and Finance
2019 – 2022 for their inspiration and encouraging me at the times I was down and about to give
up. They called me and told me “we will win together.” Indeed, their words were so comforting
and helped me to accomplish my research study, may the almighty God bless them accordingly.
Lastly, I would like to express my sincere thanks to PSSSF management for accepting me to
conduct my field attachment in their office and for allowing me to collect data for this study in
their institutions. It is not possible to mention everyone here by name, but I ask the Lord to bless
everyone who contributed to this achievement.

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 DEDICATION
I dedicate this research to my parents Mr. and Mrs. Mecky Tweve, my bother Pascal and to my
sister Lilian. Your motivations and endless support has been this far.

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 LIST OF ABBREVIATION
AC Amortized Cost
EAD Exposure at Default
ECL Expected Credit Loss
EU European Union
FVOCI Fair Value Through Other Comprehensive
Income
FVTPL Fair Value Through Profit and Loss
IFRS International Financial Reporting Standard
IAS International Accounting Standard
IASB International Accounting Standard Board
IASC International Accounting Standard
Committee
IFRIC International Financial Reporting
Interpretations Committee
LGD Loss Given Default
NSSF National Social Security Fund
OCI Other Comprehensive Income
PD Probability of Default Life Time
PSSSF Public Service Social Security Fund
SIC Standard Interpretation Committee
WHO World Health Organization

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 ABSTRACT
This research assessed on compliance and implementation of IFRS 9 in social security funds.
The study adopted case study design in addressing methodology for study.
First objective of study aimed to identify types of financial instruments that are used by social
security funds and second objective of the study was to identify the extent and level that social
security funds have achieved in reporting for financial instruments as per International Financial
Reporting standard number 9 (IFRS 9) requirements, third objective of the study aimed at
benefits that social security funds have been getting in reporting as per IFRS 9 for financial
instruments and lastly study aimed to determine implementation challenges that social security
funds have been facing in complying with IFRS 9 in reporting for financial instruments.
To achieve objective of the study data were collected from primary and secondary sources.
Documentary review saved in collecting relevant data relating to reporting for financial
instruments. Primary data were obtained through interview which was conducted to accountants
and internal auditors of Public Social Security Funds. Content analysis was used to analyze data
obtained through interview conducted. Purposive sampling technique was used to obtain required
sample for this study, where study successfully obtained 6 respondents.
Basing on findings, results show revealed that IFRS 9 has improved reporting for financial
instruments in social security funds, and social security funds have achieved a significant level in
reporting for financial instruments as per requirements of IFRS 9. Furthermore, study identified
tat new amendments of IFRS 9 from those of IAS 39 have been raising challenges in full
compliance with standard, moreover established approach and models have been difficult in
complying with them due to newness of these amendments.
Hence study recommended that social security funds and government should invest more in
capacity building, training and continuous workshops to keep up accountants and auditors with
competitive knowledge that will enable them to tackle these challenges in their field when
complying with IFRS 9, as these challenges should not be underrated. Study further
recommended that other study should be held in other social security funds in the country so as
to draw a well referenced conclusion on IFRS 9 compliance and implementation in social
security funds.

vii
 TABLE OF CONTENTS
CERTIFICATION............................................................................................................................i

DECLARATION AND COPYRIGHT...........................................................................................ii

ACKNOWLEDGEMENT..............................................................................................................iii

DEDICATION................................................................................................................................iv

LIST OF ABBREVIATION............................................................................................................v

ABSTRACT...................................................................................................................................vi

LIST OF FIGURES........................................................................................................................xi

CHAPTER ONE..............................................................................................................................1

PROBLEM SETTING.....................................................................................................................1

1.1 Introduction................................................................................................................................1

1.2 Background of the study............................................................................................................1

1.3 Background of IFRS 9...............................................................................................................2

1.3.1 Background of IFRS 9 in Tanzania and in social security funds...........................................6

1.3.1.1 Background of IFRS and IFRS 9 in Tanzania.....................................................................6

1.3.1.2 Background of IFRS 9 in Public service social security fund (PSSSF)..............................7

1.4 Statement of the problem...........................................................................................................8

1.5 Research objectives...................................................................................................................9

1.6 Research questions.....................................................................................................................9

1.7 Significance of the study...........................................................................................................9

1.8 Organization of the study.........................................................................................................10

CHAPTER TWO...........................................................................................................................11

LITERATURE REVIEW..............................................................................................................11

2.1 Introduction..............................................................................................................................11

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2.2 Public service social security fund..........................................................................................11

2.3 Theoretical review...................................................................................................................12

2.3.1 Cultural theory......................................................................................................................12

2.3.2 Institutional theory................................................................................................................12

2.3.3 Stakeholders theory..............................................................................................................13

2.4 Empirical review......................................................................................................................13

2.5 Research gap............................................................................................................................16

CHAPTER THREE.......................................................................................................................17

RESEARCH METHODOLOGY..................................................................................................17

3.1 Introduction..............................................................................................................................17

3.2 Research design.......................................................................................................................17

3.2.1 Categories of research design...............................................................................................17

3.3 Data and Data collection techniques........................................................................................18

3.4 Data..........................................................................................................................................18

3.4.1 Primary data..........................................................................................................................19

3.4.2 Secondary data......................................................................................................................19

3.5 Data collection strategy...........................................................................................................19

3.5.1 Interview...............................................................................................................................20

3.5.1.1 Personal interview.............................................................................................................20

3.5.1.1.1 Personal (semi structured) interview..............................................................................20

3.5.1.2 selection of interviewees....................................................................................................21

3.5.1.3 The conduct of interviews.................................................................................................22

3.5.2 Documentary review.............................................................................................................23

3.6 Sampling procedures and sample size.....................................................................................23

3.6.1 sampling................................................................................................................................23

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3.6.1.1 Sample...............................................................................................................................23

3.6.2 Population.............................................................................................................................24

3.6.3 Sampling procedures............................................................................................................24

3.6.3.1 Purposive or judgmental sampling....................................................................................25

3.6.4 Sample size...........................................................................................................................25

3.7 Data analysis strategy..............................................................................................................26

3.8 Ethical issues...........................................................................................................................27

CHAPTER FOUR.........................................................................................................................28

PRESENTATION AND DISCUSSION OF THE FINDINGS.....................................................28

4.1 Introduction..............................................................................................................................28

4.2 Demographic information of respondents...............................................................................28

4.2.1 Gender...................................................................................................................................28

4.2.2 Age........................................................................................................................................28

4.2.3 Educational level..................................................................................................................29

4.2.4 Professional qualifications....................................................................................................29

4.2.5 Number of years of service in the social security funds.......................................................29

4.2.6 List of interviewees...............................................................................................................31

4.3 Presentation of findings...........................................................................................................32

4.3.1 Presentation of finding on types of financial instruments used by Public Service Social
Security Fund (PSSSF)..................................................................................................................32

4.3.2 Presentation of findings on the extent that social security funds comply with IFRS 9 in
reporting for financial instruments................................................................................................33

4.3.3 Presentation of finding on benefits that PSSSF has been getting in reporting for financial
instruments as per IFRS 9..............................................................................................................35

4.3.4 Presentation of findings on implementation challenges of IFRS 9 in PSSSF......................37

4.4 Discussion of findings.............................................................................................................39

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4.4.1 Discussion of findings on types of financial instruments that are used by PSSSF...............39

4.4.2 Discussion of findings on extent that PSSSF comply with IFRS 9 in reporting for financial
instruments.....................................................................................................................................40

4.4.3 Discussion of findings on benefits that PSSSF have been getting in reporting for financial
instruments as per IFRS 9 requirements........................................................................................42

4.4.4 Discussion of findings on implementation challenges of IFRS 9.........................................43

CHAPTER FIVE...........................................................................................................................45

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS..........................45

5.1 Introduction..............................................................................................................................45

5.2 Summary of findings...............................................................................................................45

5.3 Conclusion...............................................................................................................................46

5.4 Recommendations....................................................................................................................47

5.5 Limitations...............................................................................................................................47

5.6 Areas for further studies..........................................................................................................48

REFERENCES..............................................................................................................................49

Appendices....................................................................................................................................52

Appendix A: An Interview Guide.................................................................................................................................52

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 LIST OF TABLES

Table 1 Demographic information of respondents........................................................................32

xii
 LIST OF FIGURES
Figure 1 Categories comparison between IAS 39 and IFRS 9........................................................5

xiii
 CHAPTER ONE

PROBLEM SETTING

1.1 Introduction
This study is about how social security funds in Tanzania comply with and implement the
requirements of IFRS 9.
Therefore, this chapter is an introductory chapter, it will present prior and primary information to
the problem of study. The chapter will give the background information to the problem of study,
statement of the problem, it will further state the research objectives, research questions and it
more highlights significance of the study, limitations of the study and lastly the chapter will
present organization of the study.

1.2 Background of the study

The purpose of accounting is to communicate the financial information of an organization to the
users to enable them to make informed decisions. The users of accounting information include
managers, investors, tax authorities, employees, auditors, and the government. Over the years
several financial reports have come with inconsistency and differences due to the application of
different accounting standards that render such reports incomparable across nations. When
comparing financial statements under two different accounting standards, the information
provided by the statements may be communicated differently and might even be misleading
(Daske, Hail, Leuz, & Verdi, 2008).
International Financial Reporting Standards (IFRSs) are set by the International Accounting
Standards Board (IASB), which was established in 2001 to replace the International Accounting
Standards Committee (IASC). International Financial Reporting Standards (IFRS) have been
known long time ago under the name International Accounting Standard (IAS). IAS was issued
since 1973-2000 by International Accounting Standards Committee (IASC). IAS was issued in
order to fix the global accounting standard thus there would be better financial understanding of
all companies. However, on April 1, 2001 International Accounting Standard Board (IASB)
replaces the IASC and took over responsibility to build international accounting standard and
named it IFRS. IFRS has been a trending topic over world with the forthcoming, since the
European Union (EU) decides to convergence their financial reporting standard to IFRS, leaving
the US Generally Accepted Accounting Principles (US GAAP) (Zakari, 2004).

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The introduction of International Financial Reporting Standards is closely related to the issue of
globalization. According to world health organization (WHO), globalization is defined as the
increased interconnections and interdependence of peoples and countries. Globalization of
capital markets requires a unified global accounting, reporting, and disclosure set of standards, as
a result of the growing number of direct investments, mergers, and acquisitions in the
globalization era.

1.3 Background of IFRS 9

The IFRS 9 which was issues by IASB’s replacement of IAS 39 financial instruments,
recognition and measurement. The IFRS 9 includes requirements for the recognition,
measurements, impairment, recognition and general hedging of financial instruments. The
financial crisis of 2008 which recognized the untimely recognition of loss allowances which give
rise for the debate to issue a new standard IFRS 9 which the forward looking information
incorporated in the calculation of loss allowances. The forward-looking approach is a novelty in
accounting, and it is introduced in all new standards such as IFRS 16 Leases and IFRS 17
Insurance contracts.
Furthermore, the accounting valuation in the scope of IAS 39 was considered as “too little, too
late” and promoting criticality With the Incurred loss models in IAS 39 prevent organizations to
impair financial instruments in advance in economic downturns unless the objective evidence
happened (significant financial difficulties of issuer or obligor, default or delinquency of
payment of interest or principal, the probability that borrower will enter bankruptcy) and loss
expected as a result of future events was not recognized (Taylor, 2017)
As explained by Tawiah & Boolaky, (2019) IAS 39 did not allow reporting entities to
incorporate the effect of future events occurring after the balance sheet date even if they were
expected and that means that the loan losses were only considered when the loss was close to
100 percent. The new IFRS 9 is incorporating a forward-looking approach in the measurement
and valuation of financial instruments with a stochastic approach regarding the calculation of
Expected credit loss (ECL) and the parameters of Probability of default (PD), loss given default
(LGD), and exposure at draft (EAD).
Also the other evident limitation of IAS 39 was the impairment process. According to the
impairment rules of IAS 39, impairments were applicable only under three of the four categories.
Impairment under the classification of financial assets at Fair value through profit or loss (FVPL)

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was restricted (Deloitte, 2019). The recognition of impairment under IAS 39 was applicable only
if the financial asset showed a credit loss, or if a loss was very likely to arise. This led to
impairment built on historical information. IAS 39 further required that there had to be
indications that the acquisition value could not be recovered. An issue arising with the
identification problem under IAS 39 was that a decline in value could be defined differently
among companies, and as companies must be consistent in their financial reporting, this
produced different outcomes (Gornjak 2017).
As a response to the criticism regarding the complexity of IAS 39, IFRS 9 introduced a
simplified classification method for financial assets (Taylor, 2017). IFRS 9 increase the
appearance of fair values rather than historical cost accounting (Deloitte, 2019). According to the
classification and measurement definitions of financial assets under IFRS 9, a financial asset
must fulfill a business criterion concerning the purpose of the asset. This requirement is called
the business model criteria and implicate that an asset is classified based on how it reflects the
company's underlying business and purpose (Deloitte, 2019). In order to fulfill the business
model requirement, the company's financial assets must be kept within a business model with the
aim of holding financial assets to realize contractual cash flows.
Also the impairment process changes with IFRS 9 as it introduces a forward-looking credit loss
model. The rationale behind the ECL model is to accelerate credit loss recognition, which
became a severe problem with IAS 39 in the financial crisis of 2008 (Radstrom & Neil,
2019)The impairment model under IFRS 9 significantly change the recognition of credit losses
and allow for earlier loss allowances compared to the impairment process of IAS 39. And with
adoption of IFRS 9 the key differences between IAS 39 and IFRS 9 have been pointed out to be
in few areas of Subsequent measurement, types of classification, reclassification, equity,
instruments and Impairment.
As explained by Huian (2012) in his study which identified the following categories comparison
between IAS 39 and IFRS 9

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Figure 1 Categories comparison between IAS 39 and IFRS 9

Category IAS 39 IFRS 9

The purpose Applies to all financial assets, The same.

with

of the a few exceptions.

standard

The initial When an organization The same.

becomes a

recognition party to the contractual

provisions.

of assets

Initial The fair value including The same.

Measuremen transactions costs (for financial

t

assets that are not intended for

trading purposes).

Subsequent The fair value. Amortized cost. Fair value through profit or loss

Measuremen Cost (for the share-based (FVTPL). Amortized cost (AC). Fair
t

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 instruments, which do not have value through other comprehensive
a

reliable fair value income (FVOCI).

measurement)

Types of Available for sale (AFS). Fair value through profit or loss
Held to

classification maturity (HTM). Loans and (FVTPL). Amortized cost (AC). Fair

receivables. Fair value through value through other comprehensive

profit or loss (FVTPL). income (FVOCI).

Reclassificat Reclassification is prohibited Change of business model.

ion

through profit or loss after

initial

recognition.

Equity All equity instruments Irrevocable choice to designate as

available for

instruments sale is measured at a fair fair value through other

value

in another comprehensive income, fair value

comprehensive income.

through profit and loss if held for

trading.

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 Gains and Usually through profit or loss. Usually through profit or loss.

Losses

Impairment Several models of impairment, A unified model of impairment for

model of incurred losses. all financial instruments – the

expected loss model.

1.3.1 Background of IFRS 9 in Tanzania and in social security funds

1.3.1.1 Background of IFRS and IFRS 9 in Tanzania

The IFRS was adopted in Tanzania since July 2004, as the part to improve the reporting
practices, disclosures and transparency by different organizations in the country. The adoption of
IFRS in 2004 mark the beginning for the adoption of all other following standards issued by the
IASB and the new standard issued by the board that have to be adopted by the all reporting
entities.
Moreover, the adoption of various standards, different regulators have been issuing different
regulatory guidance in complying with each adopted standards in the country, Bank of Tanzania
issued a regulatory guidance to all financial institutions on how they have to work with the new
issued standard, as well as the other business entity should copy with.
Furthermore, other organization under different ministries through department of accounting
have been issued with the regulatory guidance on the adoption of the new IFRS. The NBAA
adopted IFRS 9 in 2014, registered accountants and auditors are being updated with compact
knowledge on the new IFRS 9.
In Tanzania the new IFRS 9 has been adopted not only to the government owned business entity
as well as private business entity, various institutions and funds, banks and some of micro
finance institutions which hold the financial instruments as stipulated by the standard. The
adoption includes all the institutions and organizations holding the financial instruments.
Organization such as social security funds which are also required to comply with the standard
(IFRS 9).

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Prior the organization and institutions in the country reported on financial instruments while
complying with the requirements of IAS 39, despite of challenges and complexity in the standard
IAS 39, the introduction of IFRS 9 aimed at solving those complexities, but IFRS 9 have failed
in fulfilling its promised benefits at some point.

1.3.1.2 Background of IFRS 9 in Public service social security fund (PSSSF).

The public service social security (PSSSF) was established by the Public Service Social Security
Fund Act, (No. 2), 2018 (PSSSF, “the Act”) is now operational and this law was assented by the
President of Tanzania on 8th February 2018 and published on 9th February, 2018, vide GN No.
6, Vol. 99 of 2018. Social security funds in Tanzania including Public service social security
fund (PSSSF) and national social security fund (NSSF) which were formed after merging of the
other all social securities in the Tanzania leaving these two, one for the employees under public
service and the other for the servants under private sector.

Background of IFRS 9 in social security funds in Tanzania date the history back to 2014, where
with adaptation of the new IFRS 9 (financial instruments) in Tanzania made mandatory for each
institution and organization holding financial instruments to adopt and comply with the standard
in reporting for the financial instruments held. Social security funds in Tanzania including
PSSSF and NSSF which were formed after merging of the other all social securities in the
Tanzania leaving these two, one for the employees under public service and the other for the
servants under private sector.
Financial instruments such as bonds, shares, which are used as part of investment by PSSSF to
generate funds as to be in position to pay its members contributions, paying the other expenses of
the institutions. With these reasons, the financial instruments which constitute among the items
in the balance sheet items of social security institution, this necessitated adoption of IFRS 9 so
that organization have to make a fair and true presentation for financial instruments held while
complying with requirements as per IFRS 9. This marked the beginning in 2014 for social
security funds and public service social security fund to adapt and use IFRS 9 as part of
complying with standard introduced by IASB.
Therefore IFRS 9 introduces accounting within the selected business model and where assets are
managed in order to generated cash flows by collecting contractual cash flows, selling financial
assets or both (Marshall, 2015). With these few benefits made no doubt for other institutions

7
such as social security funds to adapt IRS 9, which they enjoy the contractual cash flows as well
management of assets so as to be able to pay back member contributions.

1.4 Statement of the problem.

Despite of the efforts done by the government of Tanzania in implementing International
financial reporting standard (IFRS) in response to increasing calls for greater transparency and
accountability in the management of public funds in public sector entities, Similarly, to many
other financial management reforms in developing countries, IFRS was initiated in Tanzania
public and private entities to improve budgeting and expenditure management, enhance effective
processes that control corruption, and improve accounting practices. Also, the other core
motivation for implementation of IFRS by the government of Tanzania as part of the financial
management reforms was to overturn the existing weakness hampering accountability and
transparency in the country in financial accounting part.
Most of researches which focus and explain on IFRS, especially IFRS 9 has grown extremely
since the introduction of the standards. On the past years most empirical researches have done in
the developed economies and most of studies on IFRS 9 have based mostly in Banking sector
(see for example, Marshall, 2015, Nadia & Vinciguerra, August 2014, Desalegn, April, 2020,
Odia, 2013, Tawiah & Boolaky, 2019, Serea, 2015, Radstrom & Neil, 2019) these few studies
have tried to explain on the level of compliance, challenges on imlementation and in adoption,
degree of transprency of IFRS mostly in developed countries, therefore the question on the
compliance and implementation challenges of the new IFRS 9 especially in the social security
funds in developing economies like Tanzania remain unanswered.
Accounting for fiancial instruments has been anticipated most to affect the banking industry than
any industry in any country, because these industry hold most of the financial instruments,
despite of, social security funds like PSSSF which also hold the financail instruements the focus
on these funds or institution has been low on how they are affected with the replacement of IAS
39 to IFRS 9, the adoption of IFRS 9 as it has affetced the banking sector its is also direct
anticipated to afect the public sector of social security funds as well; the challenges in
implementation, and compliance may arise in the institutions
Basing on the reviews and various empirical, on the best knowledge and understsnding of
researcher, studies on the compliance and implementation challenges in Tanzania and in social
security funds in particular are almost non existence to whether the implementation and

8
compliance of IFRS 9 contributed to improved reporting, greater transparency, accountability
and quality financial reporting in the management of public finances or it has posed some
challenges and difficulties in complying with the standard, is a question yet to be established
scientifically.
So it is in this gap which provided all the characteristics and motivation to the researcher on the
current study with the main objective of asessing the compliance and implementation challenges
of IFRS 9 in the social security funds in Tanzania.

1.5 Research objectives

The general objective of this study is to assess the implementation and compliance of social
security funds with IFRS 9 in reporting for financial instruments, which will be achieved through
three specific objectives; To identify the types of financial instruments used by Public service
social security (PSSSF), to determine the extent that social security comply with IFRS 9 in
reporting for financial instruments, moreover the study will identify the benefits social security
fund have been getting in reporting for financial instruments as per requirements of IFRS 9 since
its fully adoption and lastly to identify the implementation challenges that PSSSF has been
facing in complying with IFRS 9.

1.6 Research questions

The research questions which will guide the researcher in finding so as to achieve the desired
study objectives.
i. what are the types of financial instruments used by PSSSF?
ii. To what extent social security funds comply with IFRS 9 in reporting for financial
instruments?
iii. What are the benefits social security fund have been getting in reporting for financial
instruments as per requirements of IFRS 9 since its fully adoption?
iv. what are the implementation challenges that PSSSF has been facing in complying with
IFRS 9?

1.7 Significance of the study

Since the study asses on IFRS 9 compliance and implantation in social security funds, the study
will arise benefits to the employees and stakeholders of public institutions especially the social
security institutions.

9
Also due to gap identified on few study concerning IFRS 9 in social security funds especially in
developing economies, therefore this study will save as source of literature review for further
studies concerning IFRS 9 compliance and implantation in social security funds and other
government entities.

1.8 Organization of the study

The study is organized in six chapters.
Chapter one, this chapter presents the background of the study, statement of the problem,
research objectives, research questions, scope of the study, the significance of the study,
limitation of the study, and organization of the study.
Chapter two is a literature review chapter. This chapter reviews the theoretical and empirical
issues associated with accounting standards as well as research gap as well as the chapter will
present the framework, the study variables that will guide to research objectives, the conceptual
framework and the hypothesis.
Chapter three presents the research methodology, this chapter shows the research design, area of
study, population of study, data collection methods, and data analysis methods.
Chapter four is concerned with the presentation and discussion of findings.
Chapter five is more about the conclusion and recommendation of findings

10
 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction
This chapter gives insight into various researchers, the theoretical review and their relationship to
the problem under study. Moreover, the chapter will give a resume of the history and present
status of the problem delineated by a concise review of previous studies from numerous authors,
academicians, professionals, journals and newsletter into closely related problems. Lastly the
chapter will identify and discuss the research gap.

2.2 Public service social security fund

The public service social security (PSSSF) fund is one of the two security service fund in
Tanzania. The Public Service Social Security Fund Act, (No. 2), 2018 (PSSSF, “the Act”) is now
operational and this law was assented by the President of Tanzania on 8th February 2018 and
published on 9th February, 2018, vide GN No. 6, Vol. 99 of 2018. The Act applies in Mainland
Tanzania in respect of all employers and employees in the Public Service. Public Service is
defined under the Act by reference to the meaning ascribed to it under the Public Service Act and
which definition includes judicial service, parliamentary service, police force and prisons service
and service in the specified corporations. PSSSF establishes the Public Service Social Security
Scheme (PSSSS), provides for contributions to and payments of social security benefits in
respect of the service of employees in public service and repeals the Public Service Retirement
Benefit Act, the LAPF Pensions Fund Act, the GEPF Retirement Benefits Fund Act and the PPF
Pensions Fund Act. It also provides for other related matters. The Act has centralized the social
security schemes by merging several existing public schemes into one scheme (PSSSF). The
National Social Security Fund (NSSF) remains to cater specifically for employees in the private
sector, self-employed, foreigners employed in Mainland Tanzania, employees in international
organization based in Mainland Tanzania, and any other category of persons that the Minister
responsible for social security matters may specify upon recommendation by the Social Security
Regulatory Authority (the Authority). Members of PSSSF as defined in the act are; Employees in
the public service employed after the commencement of PSSSF Act, employees who are
members of the former schemes at the time of commencement of the PSSSF Act and employees
employed after the commencement of the act in any specified corporation (company or
corporation where the government or its agent owns more than 30% of the share).

11
2.3 Theoretical review
There are several theories that address how private and public organizations respond to changes
in the financial reporting system specifically with the introduction of new standards including the
changes introduced by the adoption and implementation of IFRS. The ensuing sub-parts provide
a wide discussion of the various theories which Explain the compliance and implementing
international financial reporting standard.

2.3.1 Cultural theory

The theory was developed by Thompson et al., (1990). The theory relates to how accounting
theories with diversity in financial reporting and practices are undertaken in various institutions.
The main aim of this theory is to point up the behaviors relating to preparing and furnishing
financial reporting particularly relating to jurisdiction reporting methods that can provide
advantages in implementing the required accounting standards. As explained by (Borker ,
2013)) that cultural theory can explain better the success or failures of implementing accounting
standards by various organization. In supporting this idea, (Borker , 2013)stated that financial
reporting environment with a profession accounting orientation will be more successful in
implementing accounting standards than environment with statutory control.
According to this theory also the choice of a certain accounting standard can be influenced by a
culture of a certain country, organization or institution, this means that the nature that have been
pre adopted in a certain environment on types of accounting standards being used can have a
direct influence on the nature of accounting standard to be used in particular organization. Also
cultural theory is restricted to constructive and normative accounting philosophies that deal with
diversity in their frameworks and procedures of accounting and financial management
contributing the adoption and application of accounting principles.

2.3.2 Institutional theory

this theory explain why organization accept and implement certain accounting standard to bring
about uniformity and authority to the organization also to respond to a certain other institution
pressure, the adopted accounting standard from the other related institution can have a negative
or positive impacts to the organization or institution. According to this theory the adoption and
implementation of some required standards is due to pressure or force from the other developed

12
similar institutions from the same environment of from external border of which the institution
operates (Geels, 2004).
In agreement with institution theory there should be a statutory control of financial information
disclosures in the financial statement implementation of the various items while complying the
required standards. For example, Oulasvirta (2014) argued that choice of the appropriate
practices by an organization is affected by pressure and social influences and this study aims at
exploring the compliance and implementation of IFRS 9 in social security funds.

2.3.3 Stakeholders theory

This theory assumes that “value is necessary and explicitly a part of doing business”, it asks
managers to articulate the shared sense of the value they create and what brings its stakeholders
together so as to deliver on their purpose, the theory further states that accounting information
available should serve the user for their target purpose, the essence of the theory is that a variety
stakeholder have a vested interest in a financially viable government. Their incentive to use
government financial statements as a source of their collective knowledge of the government
comes from their desire to know the amount, timing, and degree of uncertainty of the benefits
they expected to receive from the government.
According to Smallman (2004), the main criticism of stakeholder theory is focusing on
identifying the problem of who constitutes genuine stakeholders. Another argument is that
meeting stakeholders‟ interests also leads to corruption, as it offers agents the opportunity to
divert the wealth away from shareholders to others.

2.4 Empirical review

Empirical review refers to simply the ongoing studies about the topic or area under study.
The introduction of the new IFRS 9 have attracted various researchers in different countries and
environment. This study is an attempt to assess on the compliance and implementation
challenges of IFRS 9 in social security funds. There are many studies on the challenges, impacts,
implications of IFRS 9 to different industries especially the banking industry and this part of the
research intends to appraise empirical evidence in the implications of IFRS 9 and IFRS in
general.
Study by Samaha & Khlif (2016), which studied on the adoption and compliance of IFRS in
government organization in developing countries conclude that corporate size, auditor type and

13
leverage are strongly associated with IFRS compliance, while the great association with
profitability, industry sector, internationality and ownership dispersion. The study which also
assessed on various theories explaining about compliance with IFRS suggested that the agency
theory may be relevant in explaining the compliance level of government organization in
developing economies with IFRS. Moreover, the study discovered that the ownership structure
may play an important role in determining the extent of IFRS compliance, and also the empirical
investigation suggested that IFRS are optimal only if compliance is monitored and enforced by
efficient institutions and the use of regulations as an enforcement mechanism to monitor
compliance and impose punishments in cases of non-compliances, thus would improve the
implementation of IFRS and enhance compliances levels.
Moreover, study by Msuya & Maleko (2015), which concluded that the importance of IFRS, its
implementations have imposed great challenges in both developing and developed economies,
although most countries are switching bto the new issued standards but bthe literatures still
show that many entities do not comply full with IFRS, the study identified that lack of legal
support to enforce IFRS compliance, few trainings to accountants on the new standards,
complexity of IFRS requirements are the challenges hindring the fully compliance with the
IFRS, also the study found that there is a high degree of non complinace of IFRS in saving
organisation (SACCOS) espceially those in rural areas since they save the few, neverheless the
researcher was covinced to search in the other areas in the country where the study bfound the
same level of non compliance. Therefore, the study lastyly suggested that trinings to the auditors
and acountants shoud b at high level this will help in increasing the compliance level in
preparing the financial infromation.
On the other hand, Radstrom and Eriksson (2018) concluded that the main issues addressed are
derived from that more time is needed for equity analysts to grasp the implications of IFRS 9. It
is uncertain if the complexity of IFRS 9 is derived because of its recent implementation and thus
will take time to settle, or if IFRS 9 is a complex accounting standard by nature. The complexity
of IFRS 9 entail difficulties of comparability within and between banks. The standard comes
with new sets of data, which makes comparison over time severe. Furthermore, the complexity
and flexibility of the standard lead to implications in comparing banks. However, study
anticipate that the issues of comparability might be resolved with time. Even though IFRS 9
provides implications for the respondents, the current economic climate, with low impairment

14
levels, could lead to low attention of the accounting standard. The respondents indicate that they
do not spend too much time on the impairment levels in their valuation processes. In order to
fully evaluate the implications, IFRS 9, therefore, needs to be evaluated during an economic
downturn to reveal the real implications of the ECL model.
Furthermore, study by Demir & Bahadir (2016) indicated that despite the challenges and costs
associated with IFRS implementation, there is still a need there appeared to be a positive stance
towards IFRS by Turkish companies. Most respondents believe that IFRS based financial
statements, rather than national general accepted accounting principles based financial
statements, provide an accurate and balanced view and accountability. As a result, the change in
accounting and reporting under IFRS is deemed to improve comparability among companies and
result in better greater transparency. In addition, IFRS are deemed to be more appropriate for
decision-making and more effective in limiting creative accounting.
On top of that, Jermakowicz (2006) explained that despite the benefits promised with the
adaptation of IFRS in most of countries, still suggested that IFRS is complex set of standards
which it is costly and difficult to implement and which has caused failure in complying with the
standard. One of the biggest pointed challenges in implementing IFRS is he sophisticated nature
of its standards. Furthermore, Jermakowicz (2006) suggested there are two major hindrances in
implementing IFRS in developing economies, first being lack of guidance to implement them
and differences in their interpretation, in study performed documented low training, lack of
knowledge on these new standards pose great challenges in its implementation. (Jermakowicz,
2006) suggested that continuous training on the new introduced standards is required to learn
about such standards which will help to push out the problem of lack of training on the standards.
Furthermore, Larson (2004) conducted study examining the impacts of IFRS adoption on the
economic growth of developing countries, back to date in African countries, the results showed
that there is positive relationship between IFRS adoption versus the economic growth of African
countries who primality adopted the standards, though the study focused on sample of few
African countries but the conditionality I which ones was complying with international standard
and the need to adopt IFRS was to bring uniformity and similarity in reporting for various items
of financial statements, (Larson, 2004) further suggest the transition from local accounting
standard will reduce the complexity in using, implementations of various financial statements
from various countries around the country, moreover the study suggest that the local standard

15
should be used when implementation of IFRS pose difficulties to avoid lope holes of unfair
presentation of financial statements.

2.5 Research gap

The summary of literature reviewed related to compliance of IFRS 9 to the different institutions,
organizations after reviewing different articles and previous researches it was noted that there is
still a gap in findings and suggestions of compliance and implementation challenges of IFRS 9 in
social security institutions. Also, other researcher identified that most of research on the new
IFRS 9 has been done mostly under banking industry, the equity analysts and creditors analysts.
Most of researches concluded that, despite that IAS 39 was too complex but still there is
complexity in the new IFRS 9, also other researchers concluded that with time aspect the new
IFRS 9 will suit the promised treatment of the new standard.
Thus researcher identified the gap that the study of IFRS 9 in social security organizations are
almost nonexistence. Therefore, this research gets the study characteristics that the study of IFRS
9 in business entity and social security funds in Tanzania is non taken, thus the study aims at
finding the compliance and implementation challenges of IFRS 9 to social security funds in
Tanzania.

16
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction
This chapter presents a detailed examination of the methodological procedures which will be
used to explore the compliance and implementation challenges of IFRS 9 in social security funds
in Tanzania. Specifically, this part presents research design, area of the study, study population,
sampling procedures, sample size, unit of analysis, the techniques employed in the data
collection from the respondents, furthermore, this part shows the measurements of the research
variables and statistical methods and tools for analyzing the data and lastly the chapter will
discuss ethical issues.

3.2 Research design

Kothari (2004), defined research design as the arrangement of conditions for collection and
analysis of data in a manner that aims to combine relevance to the research purpose with
economy in procedure. In fact, the research design is the conceptual structure within which
research is conducted; it constitutes the blueprint for the collection, measurement and analysis of
data.
Also as defined by Malhotra & Dash (2016), A research design is a framework or blueprint for
conducting the marketing research project. It details the procedures necessary for obtaining the
information needed to structure or solve marketing research problems and a research design lays
the foundation for conducting the project. A good research design will ensure that the marketing
research project is conducted effectively and efficiently. As such the design includes an outline
of what the researcher will do from writing the hypothesis and its operational implications to the
final analysis of data.
Therefore, a research design is an arrangement of conditions for collection and analysis of data in
a manner that aims to combine relevance to research purpose with the aim at forming he
foundation of a project to achieve specified research objectives, with concentration in the area
mentioned or an area planned for study.

17
3.2.1 Categories of research design
On top of that a research design can be classified under different categories depending on what is
ought to be conducted and at what depth. Research design can be classified according to purpose
of study where there are exploratory, descriptive and casual research design. Also research
design can be classified according to time dimension in which there are cross sectional and
longitudinal research design. And lastly research design can be classified according to topic
scope breadth and depth of study where there are case study and survey research design.
Basing on having various types of research design a researcher was not be able to concentrate
and use all the types of research designs available, basing on that researcher choose a case study
researcher design to be used in the study.
A case study research design as explained by Kothari (2004) case study method is a form of
qualitative analysis where in careful and complete observation of an individual or a situation or
an institution is done; efforts are made to study each and every aspect of the concerning unit in
minute details and then from case data generalizations and inferences are drawn. Therefore, a
case study places more emphasis on full contextual analysis of a few events or conditions or
situations in a certain area and their interrelations whoever a case studies rely on qualitative data
and emphasize the use of results for insight into problem solving, evaluation, and strategy.
A researcher decided to use a case study research design over other designs available because of
several reasons, the field time which is of three months requiring a researcher to contrite in one
organization for the whole time allocated made it possible to use a case study research design in
which the researcher will concentrate in an institution which will also help in finding detailed
data on the problem under study to achieve research objectives.
Also the researcher decided to use a case study research design case study design as it allows the
interplay of various techniques of data collection and analysis, since the researcher employed
different methods of data collection and analysis of collected data in achieving the desired goals
which suit with case study research design.

3.3 Data and Data collection techniques

As explained by Kothari (2004), the task of data collection begins after a research problem has
been defined and research design or plan chalked out.

18
3.4 Data
Data as defined by Data are the facts and relevant materials that serve as bases for the study.
Data are the basics researcher need so as to make conclusion of the problem under study. There
are two categories of data, primary data and secondary data.

3.4.1 Primary data

The primary data are those which are collected afresh and for the first time, and thus happen to
be original in character (Kothari, 2004). Thus, primary data refer to information obtained
firsthand by the researcher on the variables of interest for the specific purposes of the study. The
primary data are first collected by the researcher in the area of the study.

3.4.2 Secondary data.

The secondary data, on the other hand, are those which have already been collected by someone
else and which have already been passed through the statistical process (Kothari, 2004).
Therefore, secondary data refer to information gathered from sources already existing. Means
data has been collected by someone else apart from the researcher and researcher find useful
information and facts from it to be used in his study. The researcher obtains secondary data
through documentary review of articles, internet sources documents, journals, textbooks,
previous research.
Therefore, under this study the researcher used both types of data. With the existence of
information, a researcher was being able to get the relevant data to the problem under study, for
example the existing financial statements of the organization which provide data on how various
financial instruments are being disclosed, also the researcher will collect the first hand data from
the selected sample size through the different techniques employed. The small number of sample
size make it possible to collect data from the various selected respondents rather than
concentrating on the secondary sources only.

3.5 Data collection strategy

As explained by Kothari (2004), the task of data collection begins after a research problem has
been defined and research design or plan chalked out.
Data collection methods refer to approaches and techniques employed and used by a researcher
to obtain necessary information from different sources within an area of study. Data collection

19
methods are employed depending on the nature of data to be collected, for example there are
different techniques employed in collecting primary and secondary data. Data collection methods
used in collecting primary data are such as Questionnaires, Interviews, Observation. Also the
data collection methods used in collecting secondary data are such as documentary review.
In this study, both primary and secondary data collection methods have been utilized in
collection of data, researcher will use documentary review to collect the secondary data so that to
enhance the saturation of the study and build a reliable theoretical framework, and primary data
have been gathered from personal interview (semi structured personal interview) from the
selected respondents who are staffs of the organization under study.

3.5.1 Interview
The interview method of collecting data involves presentation of oral-verbal stimuli and reply in
terms of oral-verbal responses (Malhotra & Dash, 2016). This method can be used through
personal interviews and if possible, through telephone interviews. An interview is a method
which involve face to face or telephone conversations between interviewee and interviewer,
where interviewee will be responding to interviewer (researcher) questions as asked accordingly.
As mentioned before there are two types of interview, the researcher concentrated on personal
interview in the collection of primary data.

3.5.1.1 Personal interview

As explained by Kothari (2004), Personal interview method requires a person known as the
interviewer asking questions generally in a face-to-face contact to the other person or persons. At
mostly times the interviewee may also ask certain questions and the interviewer responds to the
asked questions accordingly, but usually the interviewer initiates the interview and collects the
information.
Therefore, with person to person interview a researcher must meet the respondents face to face,
taking data direct from them, the direct involvement of researcher can help the researcher to
collect as much accurate data as possible. Moreover, researcher should not employ any other
person to collect the data on behalf so as to comply with the interview principles.
In this method of personal interview, the researcher had a sample size of 6 people who work
under financial reporting departments and internal audit office, whom the researcher will get
accurate data on the problem of study which assess if social security funds comply to the

20
principles of IFRS 9 in reporting for financial instruments and the challenges they face in due
compliance with IFRS 9 in reporting for financial instruments.

3.5.1.1.1 Personal (semi structured) interview

Semi structured interview doesn’t intervene any meaning in personal interview rather it guides
on how interview questions are being delivered and addressed to respondents, semi structured
interview allows a researcher to re arrange the questions during the interview depending on how
respondents respond to the interviewer questions, also due to modal of answering questions by
the interviewee researcher in semi structured interview is allowed to add or remove some
questions where necessary.
Bryman and Bell (2005) argue that semi structured interview keep a clear framework for the
subject to be discussed in the interview, the researcher follows an interview guide, which is a list
need not be followed to the letter, but the order can be changed during the interview and
questions can be removed or added (Bryman & Bell, 2005). Early semi structured interview was
chosen.
The choice was made because semi structured interview because it gave the researcher
moderately flexible and clear framework than unstructured interview, also researcher believed
that it gives a higher quality in empirical findings because it tends to hold a stronger connection
to the theme. Researcher also choose interview and personal interview as method of collecting
primary data due to several reasons; availability of different techniques of collecting data in
comparison with the problem under study which made difficult to concentrate on all techniques,
also the small sample size of six people which will the researcher managed to collect data from
them through interview, moreover the nature of work which keep staffs busy will made
interview more precise for collecting data rather than other method which may result into
untimely collecting of data ( see for example questionnaire) which need staffs to concentrate
much of time in filling questionnaire paper.

3.5.1.2 selection of interviewees

Within the study, empirical data collection has been delimitated in many aspects. First, the
respondents were chosen due to their knowledge relating to reporting of financial instruments.
The primary idea was to conduct interview to all staffs working under account departments In all
social security funds found in Dodoma to see how they comply in reporting for financial

21
instruments and see their perspective on the challenges they face in complying with IFRS 9, but
due to limitation of principle for field researcher study which limit researcher to collect and
study only under organization which the researcher is for study and disregard other similar
institutions found nearby the area. Secondly, with this limitation and aim the decision aimed to
target accountants in reporting office and auditors within the organization under study (PSSSF),
in which the researcher believed that respondents under those two departments would bring
satisfactory findings. Other accountants in other departments such as expenditure, benefits are
not much concern in dealing with financial instruments comparing to those under the selected
departments. This decision better suited the study’ purposes. According to Anderson et al.
(1995), a filed study requires many interviews partially because many interviews are better than
a few but also because it enables the researcher to describe the subject from different
perspectives. But due to limitation of time, the pandemic disease existing but the main focus was
to get as many as reliable information as possible rather than to retrieve insufficient information
from a larger number of respondents. In total six interviews were conducted from six selected
respondents within the accounting professional which was found to be a fair size to retrieve
satisfying answers to the research questions.

3.5.1.3 The conduct of interviews

The researcher will firstly prepare the interview guide questions which concede with the set
research objectives, the prepared guide of questions will help he researcher to collect the mostly
required information as in achieving research objectives, also this will help the researcher to
avoid collecting data which may not fit the study objectives. Conducting an interview in
collecting he required data will follow the following namely procedures, which will guide
interview to be successfully.
As the initial goal was to reach as many respondents as possible but due to some delimitations
personal to personal interview was conducted to six respondents. Trough face to face interviews,
the opportunity to guide the respondents through interview guide was improved. Out of all the
six respondents non was unsuccessfully and non was done through mail or telephone means. The
face to face interview as held in private so that the respondents could feel more comfortable and
confident to answer the questions freely. The interview was held in person and were recorded,
and to further ensure the respondents would present their own view, all the respondents were
given the option and chance to be anonymous. To ensure proper answering of questions and

22
reliable answers are given, the major topics of the interview questions were sent to respondents
two days before the interview date, to give them opportunity to reflect and go over the topics
beforehand. This could result in the respondents in giving their answers that were not their actual
view. Because many respondents had a tight schedule, giving them time to review the researcher
believed that interview resulted in richer answers. To provide the topics beforehand was found to
be an advantage, as the interviews remained focused on the primary subjects of the interview.

3.5.2 Documentary review

Documentary review is the way of collecting data by reviewing existing documents like official
documents or personal documents, organization published documents as a source of information.
The documents reviewed are the physical document available in the organization, the internet
published documents by other researchers relating to the problem under study and through
reviewing the published journals, articles relating to problem under study.
Under this method the researcher went through the published financial statements of the
organization which include the financial statements of the two reporting periods from 2018/2019
from which the fund was formed to 2020/2021, to assess on how they report for financial
instruments, furthermore the researcher will be able to assess on the degree on how they comply
with reporting for financial instruments, the researcher noted documentary review summary and
notes which will guide in analyzing data.
Therefore, researcher choose this method for two important reasons; firstly, researcher went
through documents (Financial statements of the organization) and see how financial instruments
are reported, their measurement and recognition where the researcher found is not adequate to be
satisfied only by primary data of interview, and secondly the researcher decided to use this
method due to availability of already published document which make also possible to extract
information from them to answer the research questions.

3.6 Sampling procedures and sample size

3.6.1 sampling
Sampling as defined by Kothari (2004), refers as the action of choosing a portion from the main
or large population to represent the entire population from which the inference could be drawn.
Means from a large population the researcher aims at collecting data from it, researcher chooses

23
few elements for conducting study in which the results from the elements selected can be used to
make inference to the remaining population where the elements were drawn. The elements
selected or drawn from the population are known as samples.

3.6.1.1 Sample
A sample is that portion of population which has been selected by the researcher to be used in the
study. A Sample consists of some of the elements in a population. From the population a
researcher must choose sample through the sampling frame, which consist of all list of elements
of the population.

3.6.2 Population
A population is the total collection of elements of which we wish to collect data from. From
population a researcher drawn some elements to be used in the study. (The elements to make a
sample). Basing on the two methods of data collection which researcher decided to use and
where the population from which sample will be drawn, which included staffs from departments
of account which constitute a total of 72 staffs, also the financial statements of the organization
from the period of 2018/2019 since the establishment of the fund (PSSSF) to the financial
statements of 2020/2021 making a total of 3 reporting periods, the statements on performance of
various departments, reports of various committee, from various departments and documents
available, researcher was able to choose staffs from informative departments and documents, in
which researcher was able to conduct review to study on the compliance in reporting for
financial instruments.

3.6.3 Sampling procedures

Sampling procedures or sampling technique these are methods employed by the researcher in
selecting elements from the population to be included as sample for the study. Researcher
employ reasonable and efficient technique so that the sample selected will give data to answer
the research questions and achieve research objectives.
The are two categories of sampling technique; probability and nonprobability sampling. Under
probability sampling there are various methods of sampling namely simple random sampling,
Systematic Sampling, Stratified Random Sampling and Cluster Random Sampling, and also
under non probability there are Convenience Sampling, Purposive Sampling, Quota Sampling

24
and Snowball sampling. The choice of these methods of sampling depends on number of factors
one being the main purpose of study and the means population is arranged may affect the method
to be employed to select sample by the researcher.
According to the nature of my study the purposive or judgmental sampling technique will be
applied to select the respondents from the population to constitute the sample.

3.6.3.1 Purposive or judgmental sampling

Purposive or judgmental sampling researcher use judgmental reasons on which element to be
included in the sample. Means the researcher use judgment to select cases that will best enable
researcher to answer research question(s) and to meet research objectives. And this form of
sample is often used when working with very small samples such as in case research and when
you wish to select cases that are particularly informative (Malhotra & Dash, 2016). Researcher
adopted this technique of sampling because the targeted people from which data will be collected
are people under reporting department and internal audit department which are informative
elements on the problem under study that means with personal judgement and reasons of
researcher elements who always work in reporting and auditing; are of much concern in
reporting, measuring of financial instruments which will suit in providing the information to
researcher to meet the research questions in achieving research objectives, also the small number
of sample size needed will influence the use of this technique as it is effective where there is a
small sample which are informative on the problem under study. Also the need to use interview
as method of collecting data which is more efficient when the small number of sample size is to
be utilized.
Moreover, the availability of many documents of the organization, with reasonable judgments
researcher will use only the financial statements of the organization of the three consecutive
reporting periods from 2018/2019 to 2021 which are informative to give enough information on
reporting for financial instruments, because not all the documents of the organization (Reports of
committee, statements of compliance, reports of internal checkers) could be suitable to provide
information relating to reporting for financial instruments but only the financial statements of
selected periods of the organization.

25
3.6.4 Sample size
A sample size is defined as the size of assembly representation of the population of the study
from which conclusion is drawn (Imms, 2015). The sample refers to the total number of elements
drawn from the population that researcher wish to include in the sample for study. Sample size
must be reasonable and informative to provide enough information, also the sample size selected
should be as reasonable as possible so that collection of data from each element of the sample be
possible.
The sample size used in this study is the number of accountants under financial reporting
department and internal auditors present at public service social security fund which make a total
of 6 respondents, who constituted a sample for the study.
Also the sample size of the financial statements of three reporting periods from 2018/2019 to
2020/2021 will be used by the researcher to stud, so that to meet the research objectives. The
selected periods of the financial statements to be studied is from 2018 from which the fund was
formed to the last period of reporting of 2020/202. The sample of six respondents selected from
financial reporting and internal audit office was due to fact that; respondents from these two
departments are more informative on reporting for financial instruments, also the financial
statements were used as source of data for confirmation to researcher on reporting for financial
instruments after collection of data from respondents of financial reporting and internal audit
office.

3.7 Data analysis strategy

Data analysis techniques are the systematic application statistical and techniques to describe the
data and presentation of the data through images, tables and graphs. Methods Data analysis refers
to the process of reviewing and evaluating collected data to obtain a reasonable conclusion. In
order to design and develop research studies there are two main research methods; quantitative
and qualitative (Bryman & Bell, 2005). For the studies most in the subject of accounting, a
quantative research method is always used. Given the study aims which focus on assessing he
compliance and implementation challenges of IFRS 9 which aimed at getting some view of
professionals, in order to achieve successfully and retrieve valuable results and to take advantage
of being in the studied culture a more practical approach was found appropriate.
In order to assess the compliance level and implementation challenges in implementing IFRS 9
in social security funds in Tanzania a qualitative method was chosen. The qualitative method

26
concentrates on words and aims at analyzing the research questions in order to provide an
understanding of organization and social structure on how participants and respondents chosen in
a given sample and social structure understand that particular reality on problem under study. On
top of that the method also focuses on the participants’ perspective on how things are and exist
basing on the problem under study, who will provide a deeper understanding on the research
questions. Semi structured interview, observation and notes of documentary review are the main
tools for collecting data when using a qualitative methods as these tools can contribute to a more
descriptive research (Bryman & Bell, 2005). Since the purpose of the study is to understand the
compliance and the challenges in implementing IFRS 9 in social security funds in Tanzania,
researcher found the qualitative method with personal interview (semi structured) and
documentary review most useful.
Data analysis of qualitative data involves the process of systematically searching and arranging
the interview, observation notes or any other non-textual materials that he researcher
accumulates to increase the understanding of the phenomenon (Wong, 2008).
The process of analyzing qualitative data predominantly involves coding or categorizing the
data, followed by identifying significant patterns and finally drawing meaning from data and
subsequently building a logical chain of evidence (Wong, 2008). The data and information
collected was coded, compiled, summarized, and evaluated using qualitative techniques to create
a consistent relationship between variables. The methods employed in collection of data
(interview and documentary review), which necessitated the use of qualitative techniques in
analyzing data in fact to nature of data that was collected.

3.8 Ethical issues

Ethics are defined as a set of principles that are agreed upon and used when human beings are the
objects of the study and they offer rules of conduct and behavior expectations about the most
appropriate conduct towards participants in a research study. This research study conducted as
per PSSSF code of ethics, participants were free to participate, give their opinion and even to
withdraw from the study if there is any signs of pain or discomfort that was been caused to any
participant. And for the sake of respondent information assurance the research study guaranteed
anonymity and confidentiality. In according to Bryman and Bell (2005), there are several ethics
principles a researcher should keep in mind during a study, as for this study it laid only on two
ethics; informed consent which equals the right for pat takers to receive enough information

27
about the research’s purpose and process before deciding to participate also confidential and
privacy which stress the importance of participants right to be given respect for their need of
privacy.

28
 CHAPTER FOUR

PRESENTATION AND DISCUSSION OF THE FINDINGS

4.1 Introduction
This chapter deals with the presentation, analysis and interpretations of findings obtained from
data collected through interview and documentary review. The main objective of this study was
to assess the compliance and implementation of IFRS 9 in social security funds. Specifically, the
study targeted to address four specific objectives:
i. To determine types of financial instruments used by public service social security fund
ii. To determine the extent that social security funds comply with IFRS 9 in reporting for
financial instruments
iii. To identify the benefits that social security funds have been getting in reporting for
financial instruments as per requirements of IFRS 9
iv. To identify the implementation challenges that public service social security fund
(PSSSF) has been facing in complying with IFRS 9nin reporting for financial instruments
as per standard requirements.

4.2 Demographic information of respondents

Demographic information of respondents consists of five components namely, gender, age,
education level, professional qualifications and number of years of service of respondent in the
industry. The findings of these demographic attributes are stated hereunder:

4.2.1 Gender
As shown in table 1 below, results reveals that the composition of respondents in terms of gender
were 5 males taking 80.3% of the total respondents and 1 respondent making a total of 16.7%
standing for females. Therefore, this implies that majority of respondents in sample size are
males and this is due to nature of respondents in the reporting and internal audit department of
the organization under study.

4.2.2 Age
The age attribute was captured into four groups. As shown in table 1 below that none of
respondents fell in the age group of 18-25 which is equivalent to 0%, 2 respondents’ equivalents

29
to 33.3% fell to age group of 26-35, while 3 respondents representing 50% fell under age
category of 36-45 and 1 respondent equivalent to 16.7% was 46 years and above.

4.2.3 Educational level

The educational level of respondents was categorized into four groups as shown in the table 1
below. This table reveals that, out of six respondents none had certificate, diploma in accounting
and finance representing 0% of the sample size, those having degree in accounting was 1
respondent standing for 16.7% and 5 had master degree represented by 83.3% of the total
respondents.

4.2.4 Professional qualifications

Analysis of the table 1 below indicated that 6 respondent’s equivalents to 100% of the total
respondents had certified public accountant (CPA) qualification, non-had other professional
qualifications such as association of chartered certified accountants (ACCA) and other. Such
results imply that the nature of the organization under study especially working under reporting
and audit department are registered under the recognized body of accountants and auditors
implying that most of them are much committed to undertake for professional certifications.

4.2.5 Number of years of service in the social security funds

Findings from table 1 below indicates 1 respondents making 16.7% of the respondents fell
between 0 to 5 years of service in the social security funds. Also 4 respondents making 66.6%
falling between 6 to 10 years of service in the social security funds, and 1 respondent making
16.7% of the total sample size have been working in social security funds for more than 11 years.

30
Variable Category Frequency Percent
Gender Male 5 83.3
Female 1 16.7
Total 6 100
Age 18-25 0 0
26-35 2 33.3
36-45 3 50
46 and above 1 16.7
Total 6 100
Education Certificate in accounting and/or finance 0 0
level
Diploma in accounting and/or finance 0 0
Bachelor degree in accounting and/or 1 16.7
finance
Master’s degree in accounting and/or 5 83.3
finance
Total 6 100
Professional CPA 6 100
qualification
ACCA 0 0
Others (none of above) 0 0
Total 6 100
Number of 0-5 years 1 16.7
years of
service
6-10 years 4 66.6
11 years ad above 1 16.7
Total 6 100

31
Table 1 Demographic information of respondents
Source: Researcher’s data, (2022)

4.2.6 List of interviewees

i. Baraka Mtoi

Senior accountant
Certified Public Accountant (CPA)
ii. Stanley Mhapa

Senior accountant
Certified Public Accountant (CPA)
iii. Angela Ngohelo

Senior accountant
Certified Public Accountant (CPA)
iv. Johnson Mbuguni

Senior accountant
Certified Public Accountant (CPA)
v. Omary Abdallah

Senior accountant
Certified Public Accountant (CPA)
vi. Shabani Magala

Senior accountant
Certified Public Accountant (CPA)

32
4.3 Presentation of findings

4.3.1 Presentation of finding on types of financial instruments used by Public Service Social
Security Fund (PSSSF)
Mr. Johnson refers to the types of financial instruments mentioned by the standard (IFRS 9) to
describe and explain the types of financial instruments that are used by PSSSF. Among many
types of financial instruments that have been mentioned by the standard, types of financial
instruments used by PSSSF are government securities, equity, cash and cash equivalent, loans
and corporate loans, receivables which include rent, contributions and debtors. As he was quotes
saying
“……. the institutions am working under have almost all the financial instruments which
have been mentioned by the standard, but bond and share are major financial instruments taken
into account by the institutions, for example PSSSF own a large portion of shares with
Corporative rural development bank (CRDB) Plc which it receives its dividends each year…”
Answers from three respondents Mr. shabani, Mr. Baraka and Mr. omary was not so far from
those of Johnson mbuguni, as they all work in the same department providing same answers was
highly possible. But Mr. shabani went a little far to emphasize on the types of financial
instruments used by PSSSF, his explanation was most referring to the definition of financial
instruments given by the standard, as he was quoted saying that
“……as it has been prescribed and explained by the standard for financial necessarily
need one part of the contractual agreement to bear the benefit from it and the other part suffer
the obligations of it, means there should be cash inflow to one part and cash outflow to another
part, for that case the other types which may be seen as not part of financial instruments are to
be. for example, issues of debtors, rents receivables and payables, and other contributions since
they are assuring the future cash flow to the organization and other assure the outflow of it……”
Ms. Angela emphasized on the types of financial instruments used by the organization she
related these types of financial instruments to investment issues of organization, as she
explained, most of financial instruments are part of investments strategy of organization
disregarding the other types held such as receivables, financial instruments such as government
securities, shares and equities are financial instruments but which save the purpose of investment
of organization.

33
And lastly Mr. Stanley views insisted on issues of government securities and equity, as he refer
to be the most important ad efficient part of financial instruments used by the organization as he
insisted that
“……. I can say that government securities and equity are mostly widely used by the most public
institutions like PSSSF, for example the returns from these instruments save cash flows to be
used in paying back various members contributions, despite of interest to be received on rents
and receivables….”

4.3.2 Presentation of findings on the extent that social security funds comply with IFRS 9 in
reporting for financial instruments
Mr. Baraka and Mr. Johnson responses on the level that PSSSF have achieved in reporting for
financial instruments as per IFRS 9 requirements stressed more on how organization have
successfully achieved in complying with the new components of IFRS 9 that were not in IAS 39.
Mr. Baraka gave an example on the new business model of forward looking approach that use
forward information in incorporating forward loses. Furthermore, Mr. Johnson remarked his
explanation on the classifications of financial instruments as provided by IFRS 9. Mr. Johnson
explained that organization have successfully reported for financial instrument and has been able
to incorporate loss basing on the new model moreover organization have significantly succeeded
in classifying financial assets as per IFRS 9 requirements. Mr. Baraka concluded that, the level
that has been achieved by PSSSF in reporting for financial instruments as per IFRS 9
requirements is generally satisfactory, as he was quoted saying that,
“…...we have successfully copied with the few new requirements of IFRS 9 as explained on the
new business model the forward looking approach though it still posse some challenges, also the
new categories of financial assets and liabilities have not posed difficulties in classifying our
financial instruments as per requirements…….”
Responses from two respondents also Mr. omay and Ms. Angela on the level that PSSSF have
achieved in complying with IFRS 9 remarked that the level that have been achieved is generally
satisfactory since as organization and as department have successfully comply with the standard
in recognition, measurement and in derecognition of financial instruments. But Angela provided
some evidence which added some value on the satisfactory level that organization have achieved,
as she was quoted saying that;

34
“on the past reporting period of 2020/2021 our organization under reporting department received
an award from ministry of finance as among the best organization in reporting for financial
statements”
Also responses from other two respondents Mr. Stanley and Mr. shabani wasn’t much far from
explanations of other respondents, his explanation based on how organization have successfully
achieved in recognition, measuring and derecognition for financial instruments with the expected
credit loss model or the forward looking approach as he explained that since forward looking
approach uses and depends on the past and future information in determining the future of
organization specifically when it comes in loss incorporating, Mr. Stanley explained that
organization under reporting office and other depends departments have been carefully in
forecasting these future situations while considering the macroeconomic factor which have been
mentioned to affect much the modal. So considering those factors measurement recognition of
value of financial instruments while considering models of the standard like impairment md of
the forward looking approach which is affected by macro-economic factors. As he was quoted
“…...the issue of macro-economic factors and the issue of forward looking approach has been
explained closely by the standard, macro-economic factors may largely affect business model in
such as organization decision on the model, we have put much efforts in understanding these
macroeconomic factors so as to ensure transparency and efficiency in reporting for financial
instruments specifically in incorporating future losses associated with financial instruments
being hold…………”.
Furthermore, Mr. shabani explanation added something new on the level that PSSSF have
achieved in complying with IFRS 9 I reporting for financial instruments, Mr. shabani
explanations which based on the single impairment model of IFRS 9 which has been easy to
adopted and be applied by organization for all financial instruments which are subjected to
impairment testing. Mr. shabani explanation revealed that single impairment model has been
easy to copy with plus it is less complex compared to impairment models of IAS 39, also singe
impairment model of IFRS 9 which apply to all financial instruments disregard of their
categories of classifications has been more flexible than it was in previous standard. As he was
quoted saying that;
“……...one impairment model of IFRS 9 have made it easy to comply with and test for
impairment to all financial instruments subjected to impairment test, it has been more easy to us

35
to copy with and successfully test for impairment, and I can generally say that our organization
have successfully achieved in that specifically on the modal that I have been explaining……”.

4.3.3 Presentation of finding on benefits that PSSSF has been getting in reporting for
financial instruments as per IFRS 9
Explanation from Mr. shabani who works under reporting department on the importance of IFRS
9 based much on issues of classification of financial instruments which he addressed to be more
flexible comparing to that of IAS 39. As he explained that the classification categories for
financial assets under IAS 39 which are classification under IAS 39 are held to maturity, loans
and receivables, classification under fair value through trading profit and loss and classification
of financial assets available for sale which have been replaced by replaced by few classification
of these financial instruments, as are newly classifies under amortized cost, fair value through
other comprehensive income (FVOCI) and fair value through trading, profit and loss, as he was
quoted saying that
“………the too many classification of financial instruments especially the financial assets under
IAS 39 was too many and sometimes misleading, compliance with the new classification has
softened categories of our organization financial assets to be put under certain classification,
which was very difficult with the previous standard which you may find one or more financial
assets appear in two or more classifications which was a little confusing……….”
Also another respondent Mr. omary, who also stressed his explanations on issue of classification
of financial instrument comparing that of IAS 39 with IFRS 9, Mr. omary explained that the
classification under IFRS 9 base on contractual cash flows characteristics of financial
instruments held by the organization and model of the entity for managing the financial assets,
meanwhile IAS 39 bases the classification of each financial instruments base on definitions for
each category, where he concluded that financial instruments classification requirements are
considered more principle based than in IAS 39 as he also explained that
“……. IFRS 9 has been more flexible where the reclassification of financial assets/ liabilities
can vary in certain organization when that organization have changed the business model,
though it is very rare to happen, this was difficult in IAS 39, reclassification of financial
instruments is required when an entity or organization or institutions have changes the model of
managing business assets, which is very different from that of IAS 39…….”

36
Mr. mbuguni remarked his explanation relating to the forward looking model of IFRS 9, his
explanation showed that model which as under IAS 39 didn’t allow organization to incorporate
future loses in the current financial statements of the organization, despite of some challenges
this model have Mr. mbuguni insisted that the forward looking approach has more benefits than
that on the previous standard business model.
Responses from another respondents Ms. Angela on explaining the importance that PSSSF has
been getting in reporting for financial instruments as per IFRS 9 requirements, Ms. Angela
explanation focused on the impairment modal for all financial instrument which are subjected to
impairment test. Ms. Angela who compared current impairment modal of IFRS 9 to that of IAS
where by Ms. Angela explanation showed that IAS 39 has a lot of impairment modal for
different financial instruments that an organization or institutions possess. As he explained that
“……………The incurred loss model which are under IAS 39 where past events and current
conditions should be taken into consideration when amount of impairment is to be determined,
therefore different impairment model for different financial instrument which are subjected to
impairment testing should applied. For example, case of equity investment…….”
Basing on those explanations Ms. angel added views on impairment modal of IFRS 9 which
shows that, modal of IFRS 9 is different comparing to that of IS 39. As she was quoted
explaining that;
“the expected credit loss, past event and current situation all provide reasonable and support
forward looking information that is needed to be available, in which forward looking information
without undue cost and efforts is much considered in determining impairment, therefore the
modal will be applied to all financial instrument subjected to impairment testing and the modal
applied is the same to all financial instruments disregard their categories or classification.
Also Mr. Baraka who explained that reporting for financial instruments s per IFRS 9
requirements has not affected transparency in reporting for financial instruments. Mr. Baraka on
explain this stressed his explanation on the unchanged scope of IFRS 9 from that of IAS 39,
though Mr. Baraka explained that the only striking difference that in IFRS 9 an organization or
institution can designate certain instruments which I subjected to own use but under one
condition that, financial instrument designated by organization should not be classified at fair
value through profit and loss (FVTPL) for requirements of IFRS 9 to apply to this designated
financial instruments.

37
Also Mr. Baraka added explanations on disclosure of financial instruments, definition of
financial assets and financial liabilities which have not changed from that of IAS 39 where Mr.
Baraka concluded that with these few areas and other key concepts which have not changed,
therefore the scope of IFRS 9 have not affected transparency in reporting for financial
instruments.
Response from lastly respondents Mr. Stanley whose explanation on benefits that PSSSF have
been getting in reporting for financial instruments as per IFRS 9 bed on the development of
hedge accounting requirements for financial instruments. As explained by Mr. Stanley that
entities or funds organization are exposed to different financial risks example changes in
exchange rates and interests’ rates and commodity price changes. Furthermore, Mr. Stanley
explained that the most significantly and important effects with some amendments and
reconsiderations of hedge accounting requirements from that of IAS 39 have enabled hedge
accounting requirements to be applied to other organization comparing to complex and difficulty
requirements for hedge accounting of IAS 39.
Mr. Stanley remarked some of the areas that have been amended from hedge requirements of
IAS 39 to the current hedge requirements of IFRS 9, Mr. Stanley explained that there has been
changes on determination of fair value hedge, issues of cash flow hedge and net investment
hedge. Moreover, Mr. Stanley mentioned that benefits that amendments of hedge accounting
requirements have brought, some significantly effects mentioned by Mr. Stanley that new
requirements for hedge accounting have reduced volatility in the profit and loss statements, also
the new amendments have improved risk management and lastly have increased competition
advantage since the current requirements are flexible to many organizations.

4.3.4 Presentation of findings on implementation challenges of IFRS 9 in PSSSF

Mr. Shabani addresses that despite the introduction of IFRS 9 has been the solution to various
complexities of IAS 39, but its implementation is also a challenging factor in some parts. Mr.
shabani holds the point that the new modal which has been in introduced in IFRS 9; expected
credit loss (ECL) modal which I a forward looking approach in incorporating business loss
compare to that of IAS 39 has been the factor to some subjectivity, Mr. Shabani stresses that the
modal require too many assumptions in its implementation, too many assumption which each
organization complying to the standard and use modal may suffer different results even if the
data provided could be the same, as he was quoted saying that

38
“……………the modal is real good, it help in Incorporating forward institutions losses which
was not possible under IAS 39, but the challenges remain that modal requires too many
assumptions in implementing, for example the modal provide requirements and apply for
treating cash and cash equivalents when they are idle for only one month , then what if there is
cash and cash equivalent idle for more than a month or nit is less than a month may be one
week, is there the modal require more assumptions in incorporating such case……”
also Mr. Shabani added by saying the modal itself it is not independent, it borrows data from
other sources, which sometimes may be misleading, data from other sources or other related
model of the institution may misled the results which are expected from the modal, that factor
also pose many difficulties in implementing the new modal which has been introduced by IIFRS
9.
Two respondents Mr. omary and Miss Angela hold the same view on implementation challenges
of IFRS 9, these two respondents who spoke on different manner but focused on one point
explain that the computation and performance of the requirements as per IFRS 9 especially in the
forward looking impairment calculation will require higher volumes of data comparing to that of
IAS 39 loss incurring model, the base guidelines or stress testing. Mr. omary stressed on factor
that the forward looking impairment model needs a lot of confirmation on what we forecast to
happen, many confirmations requires too large quantity of data of performance of organization
so as to absolutely of what we are incorporation with the view to happen, as he was quoted
“……….to predict the financial events that we expect that they will happen holds us a difficult
critical analysis sometimes, the large quantity of data needed may pose some difficulties even
incorporating of data into wrong way……”
Views from another respondent Mr. mbuguni went different from other respondents, as he
addressed that challenges also are not necessarily from the standards itself but also lack of
specific regulatory from authorities it poses some difficulties in implementing the standard in
various ways. Mr. mbuguni stressed that since adoption of standard there has been no regulatory
issued by specific body to be followed by social security funds in complying with the standard.
Mr. mbuguni explained that in adoption of IFRS 9 in relation to Bank Of Tanzania released a
regulatory which will guide all the financial institutions in complying or dealing with IFRS 9,
which is different in social security funds, so the results are social security funds has found
themselves addresses some issues as per regulatory which was given to be followed by financial

39
institutions by Bank Of Tanzania, which it sometimes can’t solve all the issues of social security
funds as it was not intended for their part, as Mr. mbuguni explained that
“…………...The issue of issuing regulatory to social security funds as it was done to financial
intuitions could be of help, some challenges in standards could have been solved if there would
be a specific regulatory to social security funds as it was done to financial institutions……….”
Mr. Stanley who works under audit department addressed that an expected credit loss modal will
also bring significant challenges for auditors given that the move from a factual credit even as a
driver of provision and toward quantitative credit forecasting loss approaches and staging
classifications, also the issues of hedge accounting which are not much clear with standard may
result into difficulties to auditor’s part. In turn, this may create potential risk due to the effects on
profitability, capital ratios, fair value measurements comparing to the new classifications of
financial assets and liabilities by the standard, and in tax rates. Primarily considering these
reasons auditors are actively monitoring the more development of Expected Credit Loss (ECL)
models and implementation of IFRS 9 solutions.
Mr. Baraka underlines the connection that should be there in implementing IFRS 9, Mr. Baraka
stressed the factor that part of the standard are not much difficulties in complying with, but the
issue of various models which have been addressed by the standard pose difficulties in
implementing. Lack of universal agrees modal to be used in certain institutions can be also a
reasons for some difficulties, also having some common assumptions for such model in all
organization of the same industry have led to some difficulties, despite the unissued regulatory
for some institutions in complying with IFRS 9, lacking of specific modal to the same
organization are problems aligned together. As he was quoted saying that
“……The previous standard had some challenges but when it comes to issue of common modal it
was a hundred helping in complying with the standard, having different model, each
organization applying different model in goal to attain earnings management has led to some
issued which has been dressed by my colleagues for examples too much assumptions in applying
the model by each organization is a result of this factor……….”

40
4.4 Discussion of findings

4.4.1 Discussion of findings on types of financial instruments that are used by PSSSF
Most of responses on types of financial instruments that PSSSF use referred and linked their
explanations with the types of financial instrument that have been mentioned by the standard,
and their explanations revealed that organization have not designated any kind of financial
instrument to fit any arising need of organization. Types of financial instruments mentioned
includes government securities, shares or equities, cash and cash equivalents, loans and corporate
loans, receivables such as contributions, rent receivables and debtors.
Most of financial instrument that were mentioned and explained y respondents refers to financial
asset type of financial instrument, none of respondents went on side of financial liabilities,
therefore study identified that PSSSF balance sheet items are more of financial asset than
financial liabilities and organization uses more of financial asset than financial liabilities. As
explained by standard financial asset is any of cash on equity instruments or a contractual right to
receive cash or another financial asset from another entity or to exchange financial instrument
with another entity under conditions that are potentially favorable (Deloitte, 2019). Furthermore,
some respondents tried to relate types of financial instruments that re used by organization
(PSSSF) in relation to investment issues of organization, Angela who was marked explaining
that financial instrument such as equity shares, government are part of investment plans of
organization to ensure a sensitive cash flows to the organization even in the unforeseeable future.
Therefore, this implies that other types of financial instruments may not be necessary designated
by organization to serve a certain objective rather other available types of financial instrument
mentioned by standard can be serve as many functions.
Moreover, study identified that PSSSF uses mostly of financial asses rather than financial
liabilities, and mostly are on equity shares, government and receivables, such as rent receivables
and members contributions, which also serve a large percent of cash inflows to the organization.
Also study identified that more of types of financial instrument may serve for investment
purpose in which an organization can be assured of contractual future cash flows from
investment, and lastly study identified that mostly and common types of financial instruments
which are used by social security funds are equity, government securities, corporate loans and
largely depend on receivables like rent receivables and members contributions.

41
4.4.2 Discussion of findings on extent that PSSSF comply with IFRS 9 in reporting for
financial instruments.
Responses from different interviewees on to what extent PSSSF have achieved on reporting for
financial instrument as per IFRS 9 requirements based much on the new established components,
items and models in IFRS 9 that were not in IAS 39. Singe impairment model, forward looking
approach with expected credit loss (ECL) model, flexibility to designated and reclassification of
financial asset when a business or an organization change its business model, change in hedging
requirements which have made hedge accounting more flexible to other organization. Mostly of
responses showed that organization (PSSSF) have generally achieved in complying with these
current components of IFRS 9 that were not in IAS 39, and basing on that personal and
organization efforts have been there in ensuring there is full compliance of the standard. Data
from documentary review notes also showed that the level is generally satisfactory, as
explanation from respondents to requirements of the standard have been fully implemented in the
financial statements of organization. In comparison to the three period financial statement of
organization review on how they have been reporting for financial instruments as per IFRS 9
requirements.
Explanation from Ms. Angela on how best organization has been in preparing financial reports,
this verify that level that PSSSF have achieved I reporting for financial instruments is general
satisfactory.
Other respondents’ explanations focused on factors that may affect items of IFRS 9 that were not
in IAS 39 especially business model; forward looking approach. For example, forward looking
approach of IFRS 9 is much affected with macro-economic factors and may literally lead into
misleading and affect full transparency in incorporating full losses of the unforeseeable future of
organization. Therefore, to ensure full compliance with standard also factors which may affect
full compliance are all taken into consideration. Therefore, study identified that complying with
requirements may not be enough for organization to be full complying with standard rather
taking into consideration, taking into consideration these factors directly ensure full compliance
with standard, even for the unforeseeable future.
Therefore, study identified that, most of responses on the level that PSSSF have achieved in
reporting for financial instruments as per IFRS 9 stressed more on components that have been
established with IFRS 9 and were not I IAS 39. Responses focused on how organization have

42
succeeded in complying with those new components; business modal, new impairment model
reclassification and classification of financial instruments, moreover other respondents tried to
compare components of IFRS 9 to those of IAS 39 and explain if IFRS 9 have succeeded in
covering gaps and complexities that were in IAS 39. For instance, responses reveled how
organization have succeeded in complying with forward looking approach in incorporating
future losses, also some amendments on modals such as impairment model I which study find
that most of responses tried to compare many impairment of IAS 39 to single impairment modal
of IFRS 9, new classification of financial asset and other financial instruments. Responses
revealed and concluded that few and flexible models, classification and reclassifications has been
more easy in complying with them, and generally level that have been achieved with PSSSF is
satisfactory but responses suggested more workshops and programs to keep up accountants with
new amendments to ensure there is full compliance.

4.4.3 Discussion of findings on benefits that PSSSF have been getting in reporting for
financial instruments as per IFRS 9 requirements.
Answers from different respondents on benefits that organization (PSSSF) have been getting in
reporting for financial instruments as per IFRS 9 requirements comparing to those of IAS 39
were aligned altogether to the level that they have achieved in reporting for financial instrument
as per IFRS 9. Most of benefits that have been explained by respondents reveled that
amendments from IAS 39 have bring about significant impacts in reporting for financial
instruments, moreover new components of IFRS 9 have positive impacts in complying with the
standard since have help to reduce complexities that existed in IAS 39.
Respondents remarked some of areas which have bring about significantly effects and flexibility
in complying with IFRS 9, responses from interviewee underlined areas such as established
single impairment model for all financial instrument subjected to impairment test of IFRS 9 in
which from responses study identified that different impairment modal of IAS 39 for different
category and classification of financial instruments was too subjective to misleading since
classification of financial instrument was too complex as reported by respondents which lead
also for impairment to be complicated with different impairment modal, therefore single
impairment model of IFRS 9 is conclusively helping and implementing impairment strategies is
more flexible than in previous standard.

43
Also other respondents explained benefits in complying with IFRS 9 with forward looking
approach , from respondents responses study identified that new approach have positive impacts
to organization when it comes in incorporating future losses in the current reporting period of
organization which was not possible under IAS 39,this will help in stabilizing unforeseeable
future of organization, in that part to identified that Current approach which was used by IAS 39
had great chances of causing future downturn of organization as it didn’t allow incorporation of
future losses in the current period financial statements of organization.
Moreover, study identified that some strategies of IAS 39 limited some organization ton use
them even if they have fully adopted the standard in reporting for financial instruments.
Amendments in IFRS 9 in some areas have helped to solve this problem, for example hedging
strategies in IFRS 9 responses reveal that strategies of IFRS 9 re more flexible and less complex
to apply compared to those of IAS 39. As it was noticed from Mr. Stanley where he explained
that new hedging requirements have firstly allowed requirements to applied to other organization
that were limited to IAS 39 hedging requirements, also explanation from Mr. Stanley remarked
that new hedging requirements have bring about significantly impacts in volatility of profit and
loss statements and significantly increase competition advantage.
Generally, study identified that benefits in reporting for financial instruments as per IFRS 9
requirements have mostly based on the new established components, items and models in IFRS 9
that were not in IAS 39 and responses show that have positive helped in reducing complexities
that were reported to be in IAS 39.

4.4.4 Discussion of findings on implementation challenges of IFRS 9

Last question which addressed on the challenges that thy have been facing in complying with
IFRS 9. Each respondent raised different challenges but all challenges pointed on the new
components, models that have been established in IFRS 9 from those of IAS 39. As it was in
benefits of IFRS 9 and compliance level of organization for IFRS 9, challenges align with them.
New models and items were primarily established to solve complexities that were reported to be
in IAS 39, but still new items and models pose challenges in complying with standard.
Responses from different interviewees revealed that IFRS 9 still have few complexities arise
from its new amendments. For example explanation from Mr. shabani revealed that forward
looking approach with expected credit loss model implementation base on to much assumptions,
too much assumption on the model make it too subjectivity and even results can be misleading,

44
as it was explained by Deloitte (2019) hat still there are new developments and amendments
needed to be done with new approach of IFRS 9 so achieve its better promising goals of solving
all reported complexities of IAS 39 business models., models needed to cover all the
shortcomings which have arisen during its implementation y various organization as it was
underlined by Mr. shabani.
Also other responses which related to those provided on too much assumptions of the model
from these responses study revealed that too much assumption is a problem yes, but can be
resolved if there could be same agreed assumptions on the model that are used by all
organization complying with the standard. Agreed assumptions will be on area that model have
failed to cover, this will help in reducing subjectivity and misleading on the model. Also apart
from agreed assumptions results revealed that some business entities/organizations/institutions
with same nature need to have agreed business modal this will help to fix different results from
different organization complying the same standard IFRS 9.
Furthermore, study identified that lack of specific regulatory for social security funds to guide in
complying with the standard, this was explained with respondents while comparing to strategy
that Bank of Tanzania (BOT) issued specific regulatory to guide all financial institution in
complying with IFRS 9. Lack of specific regulatory for social security funds have caused
difficulties in full compliance with the standard, suggestions from respondents went direct that
despite on lack of specific regulatory there should be continuous workshops and development
programs to keep up accountants with the standard and regulatory on IFRS 9 preparations to
ensure there is full compliance with IFRS 9.
Generally, study identified that most of challenges that PSSSF have been facing in complying
with IFRS 9 have arisen from new items, components and models that are in IFRS 9 and were
not in IAS 39, other side amendments such as classifications and reclassifications of financial
instruments have been clear to social security funds in complying with standard.

45
 CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction
This chapter deliberates data obtained in the previous chapter of the study in line with literature
review. It summarizes the findings of the research through the analyzed findings in this study,
consequently the discussion is made based on the international financial reporting standard and
general performance organization as well as compliance of organization with the standard, and
finally recommendations and areas for further research study are suggested.

5.2 Summary of findings

The main aim of the research was to assess compliance and implementation of IFRS 9 in social
security funds using PSSSF as case study. There was response rate of 6 interviewees out of 6
respondents selected. Gender, age was sought as well data showed that number of male
respondents who work in audit and reporting department exceed number of females. Also
number of years of experience of working in the same industry especially in finance
departments, where study find that most of respondents had experience of 6 years and above,
moreover educational level and other academic qualifications were taken into consideration.
Therefore, considering all these factors for respondents who were included in the sample for
study, was enough to provide right and significance information for study and for further
conclusion.
First objective of study was to identify types of financial instruments that are being used by
PSSSF. Results show that PSSSF use all kinds of financial instruments that have been mentioned
by the standard and fit to be used by social security funds, financial instruments such as
government securities, receivables, equity, loans, cash and cash equivalents.
Second objective which aimed to identify extent that PSSSF have archived in complying with
IFRS 9 in reporting for financial instruments. Results show that compliance with IFRS 9 in
PSSSF base mostly on the new amendments that have been made from IAS 39 thus result show
that PSSSF have generally succeeded complying with these new amendments and new
requirements. New amendments such a forward looking approach with expected credit loss

46
model, new classification and reclassification of financial instruments and single impairment
model of IFRS 9.
Third objective was to determine benefits that PSSSF have been getting in reporting for financial
instruments as per IFRS 9. Results show that new amendments which on other side aimed to
solve complexities which were reported to be in IAS 39, these new amendments have brought
about significantly benefits in reporting for financial instruments. New amendments which are
reported to be less complex comparing to AS 39, new approaches have helped in stabilizing
future of organization and also complying become easy due to less complexities of the standard
despite of challenges that organization have been facing.
Fourth objective which identified implementation challenges that PSSSF have been facing in
complying with IFRS 9. Results show that social security funds are not issued with specific
regulatory in complying with the standard and this has been a root for many of the challenges,
many assumptions needed by new business model, lack of universal business model for
organization under on industry are reported to be challenges, generally, despite of new
amendment which aimed to solve complexities of IAS 39 but still they have failed to make IFRS
9 more of advantageous as it was sought to be.

5.3 Conclusion
This study assessed compliance an implementation of IFRS 9 in social security funds. Outcomes
showed that level that social security funds have achieved in complying with IFRS 9 is
significantly relevant as per requirements of the standard, despite of challenges that they have
been facing, this goes in line with results of Radastrom and Eriksson (2018) which concluded
that complexities of IFRS 9 is derived because of its recent implementation and this will take
time to settle, despite results show that new amendments forward looking approach,
classification for financial instruments, impairments model have impacted significance
advantage in complying and implementing IFRS 9 in social security funds.
Also result show that employees who are respondents and other employees in finance department
were provided with training and education to adequately perform their tasks especially in
reporting for financial instruments as per IFRS 9, through training and continuous workshop
prepared by organization and national bard of accountants and auditors have increased
knowledge and substantial impact in adopting and implementing new standard when are issued.

47
These results show that it is necessary o invest much in workshops trainings and capacity
building in order to ensure that implementation of any reform is well succeeded.
Therefore, this study concluded that PSSSF have achieved in complying and implementing IFRS
9 in reporting for financial instruments, but compliance and implementation of IFRS are difficult
when it come to new issued amendments and new standards, difficulties does not arise in either
complying or implementing the standard but they are costful and time needed for capacity
building to keep up accountants with new amendments, cost for trainings, workshops to impact
accounting professions to existing qualified accountants.
In addition to that, despite of challenges, IFRS 9 has led to better reporting of financial
instruments in social security funds and other public sector organization, less complexities with
the standard comparing to those of IAS 39 have made it easy to comply and implement;
furthermore, it has not affected transparency, improve consistency and compatibility of financial
information as well as enhanced decision making.
On other hand, respondents believed that they are many challenges facing IFRS 9
implementation in social security funds and other similar organization and therefore suggestion
show that risk and cost associate with the implementation and adoption of IFRS 9 should not be
underrated and hence study concluded that IFRS 9 compliance and implementation in social
security funds is generally significantly reasonable and satisfactory.

5.4 Recommendations
The study recommends that in order for social security funds to mitigate perceived confusion on
the impact of IFRS 9 implementation in social security funds should increase more trainings of
all stakeholders group of IFRS and ensure their adequate possession of knowledge about them.
Also study suggest that organization should continue making continuous improvements on the
implementation of IFRS because it’s the major fact in the accounting department when preparing
financial reports that are used by third part to measure the performance of organization.

5.5 Limitations
The main drawback or limitation of this study is that the study was conducted at Dodoma region
only as a result the findings may not be the same if the study was carried out in the whole
country.

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Due to time and financial constraints, field report requirements the research work undertakings,
study was focused on only one organization that is PSSSF and also limited to only three elements
to examine the contribution of IFRS on the growth of organization financial performance, as well
as compliance and implementation level of organization with IFRS 9.
Confidentiality was the limitation that affected this study, some information may be confidential
and some questions might be sensitive forcing respondents not to respond appropriately. To
overcome the information constraints, the researcher wrote the declaration that guaranteed the
respondents that their information will be used confidentially and privately

5.6 Areas for further studies.

This study assessed compliance and implementation of IFRS 9 in social security funds. There is
still research opportunities that could be undertaken by other scholars which were not explored
and concentrated by this research such as examining problems faced by social security funds in
complying with IFRS, factors affecting social security funds while complying with IFRS rather
than nation general accepted accounting principle (GAAP), also other studies by other scholar
should focus to any case study rather than concentrating to one case study in order to draw a well
inferenced conclusion.

49
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Appendices

Appendix A: An Interview Guide

1. Please tell me about your professional background
a. for how long have you been working in this institutions/organization/institutions?
b. what is your current and previous position in the
organization/institution/company?
2. Does the adoption of IFRS affect Faithfull representation within financial statements?
Why do you think so?
3. Do you believe that the adoption of IFRS has an impact on the comparability of financial
statements between social security funds in Tanzania? Does it affect the comparability
towards the international market? How?
4. What is your general impression of the IAS 39 now when it is fully adopted to IFRS 9?
How do you interact with the difference?
5. Do you believe the adoption of IFRS 9 has an impacts/benefits on the quality of financial
statements specifically in reporting for financial instruments?
6. Since the adoption from IAS 39 to current standard IFRS 9, has there been a difference
concerning earnings management in social security funds? Has earning smoothing
decreased or increased?
7. Does the enforcement of IFRS 9 affect transparency (full disclosure) of financial
statements in reporting for financial instruments in PSSSF? And to what level do you
think your institution/organization/company have succeeded in reporting for financial
instruments as per IFRS 9?
8. Do you believe that the adoption of IFRS has an impact on the comparability of financial
statements between social security funds in Tanzania? Does it affect the comparability
towards the international market? How?
9. Basing with your experience from the first fully adoption of IAS 39 to IFRS 9 which look
similar but with some slightly differences, what was your expectations with the new
standard comparing to the complexity you have experienced in implementing the
previous standard IAS 39? what the complexity with the previous standard (IAS 39)?

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10. Do you believe that the full adoption of IFRS 9 from IAS 39 have challenges on the level
of reporting for financial instruments to the social security fund? If yes, what are the
challenges? What have been the factors to the challenges?
11. Counting the benefits and challenges which have been faced with fully adoption of IFRS
9 from previous standard IAS 39, has there been any national effort in ensuring there is
fully compliance with IFRS 9 in social security funds with the goal of reducing the
factors to the challenges in fully compliance with the standard? If any, what has been the
efforts?
12. Do you think the enforcement from fully adoption to fully implementation of IFRS 9 in
social security funds, have there been any of your institution/company/organization
efforts in ensuring there is fully compliance with the new standard through its authorized
offices/committees/departments while mitigating the existing factors to the challenges in
fully compliance with IFRS 9? If any what have been the efforts?
13. So far, despite of types of financial instruments that have been mentioned by the
standard, what are the types of financial instruments used by your
organization/institution/company?
14. Is there anything further you would like to add, develop or emphasize of your answers?

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