Financial reporting in NZ: Navigating NZ IFRS and PBE Accounting Standards
New Zealand’s new financial reporting framework was established as part of government reforms aimed at promoting confidence in New Zealand’s financial markets. There are two aspects to the framework:
the legislative framework, which established the types of entities that have statutory financial reporting obligations, including preparation, audit and filing requirements; and
the accounting standards framework, which establishes the accounting standards to be applied by entities with statutory financial reporting obligations.
These changes bring significant benefits to many New Zealand entities:
reduced compliance costs for small and medium sized entities by removing their obligation to prepare general purpose financial reports. Under the legislation, about 95% of companies in New Zealand no longer have to prepare financial statements that comply with New Zealand accounting standards.
the accounting standards framework takes a multi-standard approach aimed at ensuring that user-needs across multiple sectors - investors, creditors, tax and ratepayers, people funding charities - are well catered for. Through the use of reporting tiers, the framework also aims to find an appropriate balance between the costs of reporting and the benefits of transparency and accountability.
While the future is bright, there are still challenges in financial reporting. For-profit entities will continue to report under NZ IFRS. Although entities have applied NZ IFRS for a number of years now, the pace of change in NZ IFRS is fast and entities must continually adapt their finance function to meet these requirements and achieve long-term efficiency. Some for-profit entities currently reporting under Diff Rep or Old GAAP will also need to transition to NZ IFRS Reduced Disclosure Regime no later than accounting periods beginning on or after 1 April 2015.
PBEs will report under PBE Accounting Standards or Simple Format Reporting Standards. Public sector PBEs and not-for-profit PBEs will have to convert to these standards for periods beginning on or after 1 July 2014 and 1 April 2015 respectively and keep abreast of changes in those standards in the future.
How our ACS team can help
Our accounting advisory specialists are on hand to help you navigate your way through the financial reporting challenges that your business or organisation faces.
Our PBE specialists have extensive expertise in International Public Sector Accounting Standards, on which the PBE Accounting Standards are based. They are available to assist at both the conversion stage and with any applications issues that may arise in the future.
Our regular publications will keep you up-to-date on the latest financial reporting developments both locally and internationally.
Click here to find out more about these financial reporting changes.