New Zealand Designs its Final Reporting Rules for for-profit Organizations
The XRB of New Zealand and the NZASB have together issued a ‘for-profit package’ that basically contains standards that represent the initial steps towards implementing of New Zealand’s all new accounting standard related structure. The package will help in implementation of a multi-level framework for the for profit organizations and will encompass standards that are complaint with the International Financial Reporting Standards as well as NZ RDR (reduced disclosure regime), old New Zealand Generally Accepted Accounting Principles and current differential requirements pertaining to reporting.
The final two levels are essentially transitional and would be removed ultimately, leaving organizations with New Zealand IFRS’ or New Zealand RDR. The transition related tiers would be removed only at a time when the New Zealand legislation related changes included in the Finance Reporting bill for 2012 comes into effect, thereby getting rid of the statutory related requirement for a number of small as well as medium companies for preparing finance related statements as per the Generally Accepted Accounting Principles.
For-profit organizations applying New Zealand International Financial Reporting Standards are expected to prepare an unreserved and explicit statement that complies with the IFRS. Organizations applying the New Zealand Reduced Disclosure Regime on the other hand, will have to follow the measurement and recognition related demands of the IFRS. However, they wouldn’t have to comply with the requirements pertaining to disclosure and presentation.
While companies that are accountable to public or large for-profit public organizations will have to implement New Zealand IFRS to their statements, non-public accountable organizations as well as non-large for-profit public organizations that opt to be included in the second tier, will have to apply New Zealand IFRS RDR.
On the other hand, organizations which are not accountable to public as well as either members of the organization’s governing body, its owners or organizations that are not large and elect to be in the third tier will have to apply New Zealand IFRS differential reporting.
Organizations that are not accountable to public, not large and not expected to file finance related statements and which elect to be included in the fourth tier will have to follow old Generally Accepted Accounting Principles.
The new structure will come into effect from 1st of December 2012.