Eye on Reporting - December 2013

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Welcome to our last edition of Eye on Reporting for the 2013 calendar year.

Christmas is around the corner and we're pleased to provide this update to help you meet tight deadlines in the new year.

The establishment of a new financial reporting framework in New Zealand is nearing completion. In our updated publication, Navigating the new terrain, we provide an overview of the new financial reporting framework, updated for the enactment of the Financial Reporting Act 2013 and recent developments to the accounting standards framework. Furthermore, we summarise the key dates when parts of the framework will become effective.

This month, we are also pleased to announce the release of our 2013/2014 illustrative financial statements, Good Group New Zealand Limited, and our New Zealand Financial Reporting Supplement.

Good Group New Zealand Limited is an illustrative set of financial statements of a for-profit entity that has prepared financial statements in accordance Tier 1 for-profit accounting standards (“full” NZ IFRS) or Tier 2 for-profit accounting standards (NZ IFRS with reduced disclosures, i.e. NZ IFRS RDR).

Our New Zealand Financial Reporting Supplement 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 2013 or 30 June 2014 year-ends.

In addition, we bring you our quarterly New Accounting Standards and Interpretations publications for entities with a 31 December 2013 balance date. We now 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.

 

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.

We hope you have a happy and relaxing holiday. Merry Christmas!

    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

    • Navigating the new terrain 
      Earlier this month the Financial Reporting Act 2013 and Financial Reporting (Amendments to Other Enactments) Act 2013 received Royal Assent, moving the new financial reporting framework into the final stages of completion.

      The new Acts replace the Financial Reporting Act 1993 and make consequential amendments to other legislation, to enact changes to the statutory financial reporting requirements concerning which entities are required to prepare General Purpose Financial Reports, along with related audit and filing requirements.

      In our publication, Navigating the new terrain, we provide an up-to-date summary of the new financial reporting framework and highlight the key dates from when parts of the framework will become effective.

    • Good Group New Zealand Limited
      Good Group New Zealand Limited is an illustrative set of consolidated financial statements designed to assist for-profit entities preparing financial statements in accordance with Tier 1 for-profit accounting standards ("full" NZ IFRS) and Tier 2 for-profit accounting standards (NZ IFRS with reduced disclosures, i.e. NZ IFRS RDR), for 31 December 2013 and 30 June 2014 year-ends.

      Disclosures and related commentaries for which NZ IFRS RDR concessions are available have been highlighted in dark grey with white text. Tier 2 for-profit entities are not required to make these disclosures.

      Any additional NZ IFRS RDR disclosures required to be made by Tier 2 for-profit entities are contained in dashed boxes.

      Please note: Good Group New Zealand Limited only presents the financial statements for the Group. Entities will need to consider legislative requirements around whether parent financial statements are required.

      For example, companies with 31 December 2013 and 30 June 2014 year-ends are required to prepare parent financial statements, even when group financial statements have been prepared.  (The requirement for companies to prepare parent financial statements will be removed, once the Financial Reporting Act 2013 becomes effective.)

    • New Zealand Financial Reporting Supplement
      Our New Zealand Financial Reporting Supplement 2013/14 summarises recent changes to the financial reporting framework. This includes an update for for-profit entities preparing financial statements in accordance with Tier 3 for-profit accounting standards (NZ IFRS Diff Rep) and for Public Benefit Entities (PBEs) preparing financial statements in accordance with NZ IFRS PBE standards. The Supplement also provides illustrative disclosures of the disclosure requirements of the Companies Act 1993.

    • 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 31 December 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.

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    Other IFRS news and other updates

    • Hedge accounting
      In November 2013, the International Accounting Standards Board (IASB) issued a new version of IFRS 9 Financial Instruments (2013) that includes; (a) the new hedge accounting requirements; (b) a ‘fast-track’ to applying the requirements of IFRS 9 for the presentation of own credit risk-related fair value gains and losses; and (c) removes the 1 January 2015 mandatory effective date for IFRS 9.
      At its December board meeting, the New Zealand Accounting Standards Board (NZASB) adopted IFRS 9 (2013) into NZ IFRS by issuing:
      • NZ IFRS 9 (2013) Financial Instruments (Hedge Accounting and amendments to NZ IFRS 9, NZ IFRS 7 and NZ IAS 39) – applicable to Tier 1 and Tier 2 for-profit entities; and
      • NZ IFRS 9 (2013) (Diff Rep) Financial Instruments (Hedge Accounting and amendments to NZ IFRS 9 (Diff Rep), NZ IFRS 7(Diff Rep) and NZ IAS 39 (Diff Rep)) – optional for Tier 3 for-profit entities.
      The Standards are effective for periods beginning on or after 1 January 2017, with early adoption permitted.
      To allow reporting entities to immediately early adopt the standards, if they wish to do so, the two standards were issued in accordance with section 28(2) of the Financial Reporting Act 1993. This enables the new standards to be treated as taking effect on the date of notification in the Gazette (being 12 December 2013) instead of 28 days after notification in the Gazette.
      The NZASB will consider an exposure draft of proposed RDR concessions for Tier 2 for-profit entities at its meeting in February 2014.

    • IFRS Developments: Boards conclude re-deliberations on revenue recognition
      The IASB and FASB have now concluded re-deliberations on their joint revenue recognition project. This publication summarises the decisions reached in October 2013 on the assessment of collectability, application of a constraint on variable consideration and accounting for licences.

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    Industry in focus

    Mining

    • Good Mining (International) Limited 2013
      Good Mining (International) Limited is an illustrative set of consolidated financial statements for Good Mining Group, a fictitious group of mining companies, for the year ended 31 December 2013.

      Note that this set of illustrative financial statements relates to ‘pure’ IFRS and therefore does not include additional New Zealand material.

    Oil and gas

    • Good Petroleum (International) Limited 2013
      Good Petroleum (International) Limited is an illustrative set of consolidated financial statements for Good Mining Group, a fictitious group of mining companies, for the year ended 31 December 2013.

      Note that this set of illustrative financial statements relates to ‘pure’ IFRS and therefore does not include additional New Zealand material.
       

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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
    XRB Exposure Draft: Amendments to External Reporting Board Standard A1 Accounting Standards Framework: Omnibus Amendments (Legislative Update)
    20 December 2013
     
     
    XRB Exposure Draft: External Reporting Board Standard A2 Meaning of Specified Statutory Size Thresholds
    20 December 2013
       
    NZASB Exposure Draft: Amendments to Accounting Standards: Omnibus Amendments (Legislative Update)
    20 December 2013
       
    NZASB Request for comments on Statutory Funds (Amendments to Appendix C of NZ IFRS 4)
    20 December 2013
       
    ED NZASB 2013-6 Proposed Disclosure Concessions for Tier 2 For-profit Entities: IASB ED/2013/6 Leases 31 March 2014    
    EDs for Enhancements for PBE Standards for NFP PBEs (Tier 1 and Tier 2)

    2 May 2014

       
    Discussion Paper DP/2013/1 A Review of the Conceptual Framework for Financial Reporting

    CLOSED

    14 January 2014  
    Exposure Draft ED/2013/10 Equity Method in Separate Financial Statements (Proposed amendments to IAS 27) 31 January 2014 3 February  
    Exposure Draft ED/2013/11 Annual Improvements to IFRSs 2012–2014 Cycle 7 March 2014 13 March 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.