Financial Reporting in New Zealand
New Zealand has completed its transition to a new financial reporting framework. The framework consists of two parts:
The Statutory Financial Reporting Framework, which sets out the statutory preparation, audit and filing requirements for various types of entities. Key changes to the statutory financial reporting framework impact companies, partnerships and registered charities. For companies, the changes resulted in the removal of the statutory requirement for many small and medium-sized companies to prepare general purpose financial reports (GPFR). Conversely, for partnerships, the changes introduced a statutory requirement for large partnerships to prepare GPFR, to align their reporting requirements with large companies. The changes also introduced a statutory requirement for registered charities to prepare GPFR.
- The Accounting Standards Framework, which establishes the accounting standards to be applied by entities with statutory reporting obligations. The accounting standards framework in New Zealand is a multi-standards framework that requires different sets of accounting standards to be applied by for-profit entities and public benefit entities (PBEs).
The definition of a PBE is as follows:
“PBEs are entities whose primary objective is to provide goods or services for community or social benefit, and where equity has been provided with a view to supporting that primary objective, rather than for a financial return to equity holders”
This definition has not changed, but it is now more important — as it determines which set of accounting standards apply. For entities in a group, each entity within the group with reporting obligations will need to determine whether it is a PBE or for-profit entity.
Please refer to our latest publication Financial reporting guide (January 2016) for more about the financial reporting framework in New Zealand.
How we can help you
EY’s Financial Accounting Advisory Services and Assurance professionals bring together a wealth of accounting knowledge from diverse experiences advising a range of clients across the public, corporate and not-for-profit sectors. We can help your organisation assess how the revised frameworks impact your reporting obligations and assist with the interpretation and implementation of new accounting standards applicable to your organisation.
We can assist with the following steps:
- Entity type assessment – a review of the entity’s assessment as a for-profit entity or public benefit entity
- Initial diagnostic phase – this would include a review of current accounting policies and an initial assessment of the impact of new reporting requirements
- Solution development – identify specific areas of focus for the transition, consideration of the impacts on the financial statements and the processes and systems currently in place
- Implementation – assist to create new accounting policies, update financial information and systems and implement the transitional provisions, to help create an opening balance sheet
- Post implementation – monitor and assess the progress of adoption of new standards and ensure financial information produced is in line with the new requirements