Eye on Reporting
Monthly Financial Reporting newsletter
Welcome to our last edition of Eye on Reporting for the 2014 calendar year.
The 2014/2015 edition of our Good Group New Zealand Limited illustrative financial statements for a for-profit entity reporting under NZ IFRS and our New Zealand Financial Reporting Guide are currently being finalised and will be released after the Christmas holiday season.
In addition, we are pleased to announce the first edition of our Good City Council illustrative financial statements, which also will be released in early 2015. This publication illustrates the financial statements of a New Zealand public sector public benefit entity (PBE) applying the new PBE Standards for a 30 June 2015 reporting date.
This month we also highlight:
- The Financial Market Authority issued a report on how to improve financial statements
- Our IFRS Developments publications on important aspects and practical implementation issues of IFRS 15, the new revenue standard, for entities from different industries
We hope you have a happy and relaxing holiday. Merry Christmas!
Our next edition of Eye on Reporting will be in February 2015.
Kimberley Crook and Graeme Bennett
Financial Accounting Advisory Services
Eye on Reporting headlines:
- Hot topics
- Other IFRS news and other updates
- Industry in focus
- On the horizon
- Events and webcasts
New Zealand Illustrative Financial Statements – Coming soon
Our 2014/15 edition of Good Group New Zealand Limited is currently being finalised and will be released in January 2015. This publication contains an illustrative set of consolidated financial statements for Good Group New Zealand Limited and its subsidiaries, prepared in accordance with NZ IFRS as applicable for a Tier 1 and Tier 2 for-profit entity. It should be a useful tool for companies preparing their financial statements in the next annual reporting season.
Also, we are delighted to announce the first edition of our Good City Council illustrative financial statements, which also will be released in early 2015. This publication illustrates the financial statements of a New Zealand public sector public benefit entity (PBE) applying the new PBE Standards, based on International Public Sector Accounting Standards (IPSAS), for a 30 June 2015 reporting date. This publication should be a valuable reference point as public sector PBEs prepare for the transition to the new PBE Standards.
Our New Zealand Financial Reporting Guide also will be released in early 2015. The New Zealand Financial Reporting Guide has been designed to be used in conjunction with our range of illustrative financial reports, to assist you in preparing your annual reports for 31 December 2014 or 30 June 2015 year-ends.
These resources will be provided as a link in our first Eye on Reporting in 2015, and will also be available to download on our website.
- IFRS Developments Issue 95: Joint Transition Resource Group tackles new revenue topics
At the second meeting of the Joint Transition Resource Group (TRG) for Revenue Recognition, members discussed five implementation issues and expressed diverse views about two: licences of intellectual property; and determining whether a good or service is distinct within the context of a contract. Our IFRS Developments summarises the TRG discussions.
Phase two of financial markets law effective from 1 December 2014
The second phase of New Zealand’s new capital markets and financial services law takes effect from 1 December 2014. The new regulations are designed to build confidence in New Zealand financial markets and allow firms to raise capital efficiently so they can grow their business and the economy.
The phase two regulations cover:
- new disclosure requirements
- go-live of the online registers
- the governance of financial products and
- additional detail supporting the remainder of the Financial Markets Conduct (FMC) Act 2013.
More information can be found on the Financial Markets Authority website here.
FMA issued a report on how to improve financial statements
In September 2014, the Financial Markets Authority (FMA) hosted a discussion forum ‘Beyond International Financial Reporting Standards (IFRS): Quality Financial Reporting’. The forum aimed to facilitate a discussion about ways to improve financial statements. Following the forum, the FMA issued a report containing a summary of the main themes raised at the forum.
The FMA’s primary message is that financial statement information should focus on the specific needs of its primary users. The disclosure of clear, concise and effective financial information provides investors with access to information that will help them make informed financial decisions. The FMA encourages entities to be bold and reduce clutter in financial statements by removing boilerplate and immaterial disclosures and focus on the areas covered in the report.
The report can be found on the FMA’s website here.
Other IFRS news and other updates
Reporting is the magazine from EY that addresses the reporting and governance challenges companies face as they tell their performance story.
The current edition covers some of the themes of ethical behaviour in business and the value of corporate sponsorship.
NZASB issued Annual Improvements to NZ IFRSs 2012-2014 Cycle
The New Zealand Accounting Standards Board (NZASB) has issued Annual Improvements to NZ IFRSs 2012-2014 Cycle. The Standard clarifies certain requirements in:
- NZ IFRS 7 Financial Instruments: Disclosures
- NZ IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
- NZ IAS 19 Employee Benefits
- NZ IAS 34 Interim Financial Reporting
The amendments apply to Tier 1 and Tier 2 for-profit entities, and are effective from annual periods commencing on or after 1 January 2016. Earlier application is permitted.
Industry in focus
Applying IFRS in Life Sciences: The new revenue recognition standard - life sciences
In this publication, we outline key considerations and actions for life sciences entities in determining when and how to apply IFRS 15 Revenue from Contracts with Customers, the new revenue recognition standard. The new revenue standard marks a significant change from current requirements under IFRS. Early preparation will be key to the successful implementation of the new standard.
Mining and metals
IFRS Developments for Mining & Metals: IFRS 15 – the new revenue recognition standard, impact on mining and metals entities
In this publication we provide the high level overview of requirements of the new revenue recognition standard for mining and metals entities.
Oil and Gas
Applying IFRS 11 Joint Arrangements – Oil and Gas
The International Accounting Standards Board’s (IASB) amendments to IFRS 11 clarify that a joint operator that acquires an interest in a joint operation, whose activity constitutes a business, must apply all of the principles for business combinations accounting. In this issue of Applying IFRS, we consider the amendment's potential impact for oil and gas entities
Insurance Accounting Alert: November 2014
This Insurance Accounting Alert covers topics addressed at the October 2014 IASB meeting. The IASB continued re-deliberations on its 2013 Exposure Draft Insurance Contracts (ED). The Board has essentially completed the development of the model for non-participating contracts at previous meetings. During the October meeting, the Board discussed the measurement approaches that should be applied to non-participating contracts on transition to the new insurance contract accounting standard. The staff will ask the Board to decide on the transition model for participating contracts at a future meeting.
Insurance Accounting Alert: December 2014
During its November 2014 meeting, the IASB has essentially completed the development of the model for non-participating contracts during previous meetings, including the measurement on transition to the new insurance contracts standard. The Board held a discussion on an alternative proposal developed by the European CFO Forum for insurance contracts with participating features (participating contracts). This proposal is based on six key areas of principle, notably:
- Full unlocking of the Contractual Service Margin
- Profit recognition pattern
- Presentation of interest expense in profit or loss
- Single measurement basis
- Non-mandatory use of other comprehensive income.
This Insurance Accounting Alert summaries each of the key principles discussed during the meeting.
IPSAS Outlook – November 2014
The International Public Sector Accounting Standards Board (IPSASB) has recently published its Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities (the Conceptual Framework). Our latest issue of IPSAS Outlook focuses on the IPSASB’s work on the Conceptual Framework project, and gives our readers an overview of the framework itself.
On the horizon
Below are recent proposals that are currently open for comment to the NZASB, IASB and/or IPSASB. Please refer to the current exposure draft section on the XRB website for more details (www.xrb.govt.nz).
Comments due to NZASB by
Comments due to IASB by
Comments due to IPSASB by
18 December 2014
IASB ED/2014/4 Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value (Proposed amendments to IFRS 10, IFRS 12, IAS 27, IAS 28 and IAS 36 and Illustrative Examples for IFRS 13)
16 January 2015
15 January 2015
28 February 2015
25 March 2015
Events and webcasts
New revenue recognition standard for health care entities
In this webcast, our panel will discuss the key implications of the new revenue model for health care entities when accounting for patient service revenue.
Please click here to register.
EY Q4 2014 financial reporting update
Each quarter thousands of professionals gain critical knowledge by participating in the EY financial reporting webcasts. During the year-end instalment, we will discuss frequently asked questions and current financial reporting matters.
Please join us for this interactive discussion and learn about fourth-quarter developments in the world of financial accounting and reporting.
Please click here to register.
International Public Sector Accounting - IPSAS Update 2014 (Replay)
In this webcast, our panel provides a progress update on key projects currently on IPSASB’s agenda, and also the developments regarding its governance and oversight.
Please click here to watch.
Archived recordings of all our previous webcasts are available here.
For more information on any of the points raised in this newsletter, please contact a member of EY’s Financial Accounting Advisory Services Team:
|Kimberley Crook – Partner, Auckland||+64 274 899 535|
|Graeme Bennett – Partner, Auckland||+64 274 899 943|
|David Pacey – Executive Director, Auckland||+64 212 425 716|
|Lara Truman – Executive Director, Wellington||+64 274 899 896|
|Alex Knyazev – Senior Manager, Auckland||+64 218 53 152|
|David Bassett – Manager, Auckland||+64 274 899 883|
The information contained in this newsletter does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to action being taken on any of the information.