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Research report on the information needs of users of New Zealand capital markets entity reports

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10 Mar 2016

The New Zealand External Reporting Board (XRB) has released a research report examining the usefulness of the financial reports produced by for-profit entities operating in New Zealand domestic capital markets. Significantly, this is the first user-needs research of this type since New Zealand’s adoption of International Financial Reporting Standards (NZ IFRS) in 2007.

The findings of the research show that:

Overall, a significant majority of respondents do use financial reports in making various types of decisions, and most users are satisfied with the quality of current financial reports in meeting their information needs.

All components of financial reports are perceived, on balance, to be useful. In general, respondents rank the statement of profit or loss and the statement of financial position as the two most useful components, while the statement of changes in equity is considered to be least useful. Only a quarter of respondents indicate that the financial statements contain information that is not useful.

Most respondents do find notes to the financial statements useful when making their decisions. Consistent with prior studies, a number of respondents suggest improvements in the disclosure of expectations about future performance. Some respondents suggest better disclosure (e.g., segment reporting, and/or reporting on sustainability), and others suggest simplification, standardisation, and transparency to current financial reporting.

The authors note that overall, users appear satisfied with the current state of financial reporting, although their study did identify some useful insights as to where future efforts for improvement could focus. Based on the findings in the survey and interviews the authors propose improvements to financial reporting overall and to some specific items. These improvements include simplification, standardisation, comparison with budget and targets, dashboard reporting, supplementary information, segment and financial instruments disclosures.

Please click for more information on the XRB website:

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