Eye on Reporting - October 2013

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Welcome to the October edition of Eye on Reporting.

This month, we bring you our quarterly New Accounting Standards and Interpretations publications for entities with a 30 September 2013 balance date. We have two separate publications, one for for-profit entities and another for public benefit entities, to address differences in the accounting standards framework applying to for-profit entities and public benefit entities (PBEs).

For PBEs, we also highlight the recent exposure drafts (EDs) issued by the International Public Sector Accounting Standards Board (IPSASB) relating to accounting for interests in other entities. This includes proposals for new and amended IPSASs on consolidations, joint arrangements and associates.  The EDs aim to align the accounting for interests in other entities in IPSAS with the requirements in IFRS, to the extent appropriate for public sector entities. As explained below, New Zealand constituents should evaluate the proposals in these EDs as being proposals for new PBE Standards. Comments on EDs are due to the New Zealand Accounting Standards Board (NZASB) by 17 January and to the IPSASB by 28 February 2014.

If you would like any further information on any of these topics or the topics below, please get in touch with our Financial Accounting Advisory Services Team.

To find out more about the services we offer in this area please contact EY's Financial Accounting Advisory Services Team

 

Kimberley Crook

Partner, Auckland

+64 9 300 7094

David Pacey

Executive Director, Auckland

+64 212 425 716

Ravi Kumar

Senior Manager, Auckland

+64 212 214 717

David Bassett

Manager, Auckland

+64 274 899 883

Kind regards
Kimberley Crook
Financial Accounting Advisory Services


Hot topics

  • New accounting standards and interpretations
    NZ IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors requires disclosure when an initial application of a standard has an effect on the current period, or any prior period, and disclosure of the possible impact of new and revised standards and interpretations that have been issued but are not yet effective.
    The attached publications indicate standards and interpretations which have become effective, and those on issue which are not yet effective, for 30 September 2013 year ends.
    It is important to note that there are two separate publications, one for for-profit entities and one for public benefit entities (PBEs). Differences in the accounting standards framework applying to for-profit entities and PBEs make it important to select the applicable publication.
  • Accounting for Interests in Other Entities
    The International Public Sector Accounting Standards Board (IPSASB) has recently published a number of exposure drafts (EDs) relating to the accounting for interests in other entities.

    The EDs aim to converge the accounting requirements contained in IPSAS for interests in other entities with the requirements in IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements & IFRS 12 Disclosure of Interests in Other Entities, to the extent appropriate for public sector entities.

    For New Zealand PBEs, it is expected that, once finalised, these new and amended IPSASs will be incorporated into the PBE standards.  This is because the PBE standards are based primarily on IPSASs and the XRB’s policy for the on-going maintenance and enhancement of the PBE standards includes a rebuttable presumption that the NZASB will adopt a new or amended IPSAS.  Therefore, New Zealand constituents should evaluate the proposals in the EDs as being proposals for new PBE Standards. Proposals for Reduced Disclosure concessions under Tier 2 will be considered at a later date.

    EDs 48-52 address accounting for interests in other entities:
    • ED 48, Separate Financial Statements
    • ED 49, Consolidated Financial Statements
    • ED 50, Investments in Associates and Joint Ventures
    • ED 51, Joint Arrangements
    • ED 52, Disclosure of Interests in Other Entities.
    These five EDs will replace current requirements in three IPSASs:
    • IPSAS 6, Consolidated and Separate Financial Statements
    • IPSAS 7, Investments in Associates
    • IPSAS 8, Interests in Joint Ventures. 

    The EDs can be found on the External Reporting Board’s website (www.xrb.govt.nz)

    Comments on EDs are due to the NZASB by 17 January and to the IPSASB by 28 February 2014.

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Other IFRS news and updates

  • RDR Amendment to NZ IAS 36 Impairment of Assets
    The NZASB has issued an amendment to NZ IAS 36 Impairment of Assets applicable for Tier 2 for-profit entities to require the disclosure of the recoverable amount of each asset (cash-generating unit) for which an impairment loss has been recognised or reversed during the year.  This amendment is a consequence of Recoverable Amount Disclosures for Non-Financial Assets (Amendments to NZ IAS 36), which was issued in June 2013.

    The amendment is effective for periods beginning on or after 1 January 2014, with early adoption permitted.
  • IFRS Update of standards and interpretations in issue at 31 August 2013
    Our September edition of IFRS Update provides an overview of IFRS standards and interpretations effective for years ended September 2013 and thereafter. It includes standards and interpretations issued through 31 August 2013.

    Note that this IFRS Update relates to ‘pure’ IFRS and therefore does not include additional New Zealand material.

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Industry in focus

Life Insurance Entities

  • Amendment to Appendix C of NZ IFRS 4 Insurance Contracts arising from NZ IFRS 10 Consolidated Financial Statements
    The NNZASB has issued amendments to Appendix C of NZ IFRS 4 Insurance Contracts applicable for Tier 1 for-profit life insurance entities. The amendments remove the specific consolidation requirements from Appendix C of NZ IFRS 4, leaving NZ IFRS 10 Consolidated Financial Statements as the sole source for consolidation requirements applicable to life insurance entities.

    The amendments are effective for periods beginning on or after 1 January 2014, with early adoption permitted.

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On the horizon

Below are recent Exposure Drafts which are currently open for comment to the New Zealand Accounting Standards Board (NZASB), IASB and/or International Public Sector Accounting Standards Board (IPSASB). Please refer to the current exposure draft section on the XRB website for more details (www.xrb.govt.nz).
  

 

Standard/Exposure Draft
Comments due to NZASB by
Comments due to IASB by
Comments due to IPSASB by
NZASB Request for comments on Statutory Funds (Amendments to Appendix C of NZ IFRS 4)
20 December 2013
 
 
Discussion Paper DP/2013/1 A Review of the Conceptual Framework for Financial Reporting

22 November 2013

14 January 2014  
IPSASB Exposure Drafts 48-52 on Accounting for Interests in Other Entities

17 January 2014

  15 February 2014
IPSASB Exposure Draft 53 First-Time Adoption of Accrual Basis International Public Sector Accounting Standards 17 January 2014   28 February 2014

 

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Events and Webcasts

  • Click here to access a summary of all upcoming webcasts. If you missed any of the recent global webcasts you can now watch them here.

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Contacts

 For more information on any of the points raised in this newsletter, please contact a member of EY’s Financial Accounting Advisory Services Team.

To find out more about the services we offer in this area please contact EY's Financial Accounting Advisory Services Team

Kimberley Crook

Partner, Auckland

+64 9 300 7094

David Pacey

Executive Director, Auckland

+64 212 425 716

Ravi Kumar

Senior Manager, Auckland

+64 212 214 717

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.