New Zealand finalises for-profit differential reporting regime
16 Nov 2012
The New Zealand External Reporting Board (XRB) and New Zealand Accounting Standards Board (NZASB) have released a"for-profit package" of standards which represent the first step toward the implementation of New Zealand's new Accounting Standards Framework. The first package implements a multi-tier structure for for-profit entities, encompassing fully IFRS-compliant standards (NZ IFRS), a 'reduced disclosure regime' (NZ RDR), existing differential reporting requirements, and old NZ-GAAP.
The last two tiers are transitional and will ultimately be removed, leaving entities with either 'NZ IFRS' or 'NZ RDR'. The transitional tiers will be removed when New Zealand legislative changes provided for in the Financial Reporting Bill 2012 come into force, removing the statutory requirement from most small and medium sized companies to prepare financial statements in accordance with GAAP.
For-profit entities applying NZ IFRS are required to make an explicit and unreserved statement of compliance with IFRS. Entities applying the NZ RDR will follow the recognition and measurement requirements of IFRS, but will not be required to comply with all presentation and disclosure requirements.
The following table summarises the tiers reflected in the for-profit package:
|Tier||Eligible entities||Accounting Standards applied|
|1||Publicly accountable entities (as defined), or large (as defined) for-profit public sector entities||NZ IFRS|
Non-publicly accountable entities, and non-large for-profit public sector entitles
|NZ IFRS Reduced Disclosure Regime
(NZ IFRS RDR)
|3||Non-publicly accountable entities and either all of its owners are members of the entity's governing body, or not large (as defined)
Which elect to be in Tier 3*
|NZ IFRS Differential Reporting (NZIFRS Diff Rep)*|
|4||Non-publicly accountable entities, not required to file financial statements, and not large (as defined)
Which elect to be in Tier 4.*
Although the for-profit package also restructures accounting standards for 'public benefit entities', the accounting outcomes for those entities under the new standards are not changed pending the finalisation of further phases expected for such entities in the not-for-profit and public sectors.
The new regime is largely consistent with the exposure drafts issued in April 2012 and applies from 1 December 2012.
Click for press release (link to XRB website).