New Zealand XRB proposed Accounting Standards Framework
19 Mar 2012
The New Zealand External Reporting Board (XRB) has released a communiqué summarising the main matters considered at its meeting held on 13 March 2012, including the Board's decisions about the new Accounting Standards Framework.
The XRB considered responses to its consultation document issued during 2011 (see our earlier story) regarding a new Accounting Standards Framework for for-profit, not-for-profit and public sector entities.
Set out below is a summary of the decisions made in relation to the Accounting Standards Framework at the meeting:
For-profit entities
| Tier | Accounting | Entities |
|---|---|---|
| Tier 1 | Full NZ IFRS, equivalent to IFRS | Entities that are publicly accountable (as defined) and for-profit public sector entities that are large (as defined) |
| Tier 2 | NZ IFRS 'Reduced Disclosure Requirements' (RDR). No recognition and measurement concessions compared to Tier 1, but with reduced disclosure. | Entities that are not publicly accountable (as defined) and for-profit public sector entities that are not large, which elect to be in Tier 2. |
| Tier 3 | NZ IFRS Differential Reporting | Entities that are not publicly accountable (as defined) and either (a) all of its owners are members of the entity's governing body, or (b) are not large (as defined) which elect to be in Tier 3* |
| Tier 4 | Old New Zealand GAAP (SSAPs and FRSs) | Entities that are not publicly accountable, are not required to file financial statements, and are not large (as defined) and which elect to be in Tier 4* |
* The criteria for, and reporting requirements for, Tiers 3 and 4 will reflect the status quo for entities currently using NZ IFRS differential reporting or Old GAAP (SSAPs and FRSs). These will be transitional tiers which will be removed when proposed legislative changes come into force. Those legislative changes will remove the statutory requirement from most small and medium sized companies to prepare financial statements in accordance with GAAP.
These arrangements are expected to be effective as soon as the NZ IFRS RDR standards can be exposed and then finalised (expected to be September/October 2012), with immediate adoption allowed.
Public benefit entities
| Tier | Accounting | Entities |
|---|---|---|
| Tier 1 | Full PBE Accounting Standards (PAS) | Entities that are publicly accountable (as defined) plus entities that are large (as defined) |
| Tier 2 | PBE Accounting Standards Reduced Disclosure Regime (PAS RDR) | Entities that are not publicly accountable (as defined) and entities that are not large (as defined) and which elect to be in Tier 2 |
| Tier 3 | PBE Simple Format Reporting Standard - Accrual (PSFR-A): | Entities that are not publicly accountable (as defined) and which have expenses <$2 million and which elect to be in Tier 3 |
| Tier 4 | PBE Simple Format Reporting Standard - Cash (PSFR-C) | Entities allowed by law to use cash accounting and which elect to be in Tier 4 |
The above framework is expected to apply as follows:
- Public sector entities — periods beginning on or after 1 July 2014, with early adoption not allowed.
- Not-for-profit entities — periods beginning on or after 1 April 2015, with early adoption allowed.
Click for more information (link to XRB website).
