A new multi-standards financial reporting framework was introduced in New Zealand by the External Reporting Board (XRB) in 2012.
This resulted in separate suites of accounting standards for the following three sectors:
- for-profit
- public sector public benefit entities (PBEs), and
- private not-for-profit PBEs (eg, registered charities).
The framework changes meant that from 1 July 2014, Public Sector PBEs report against a new suite of PBE standards.
The suite of PBE standards is made up of mainly International Public Sector Accounting Standards (IPSASs), modified where appropriate for the New Zealand context. The suite also includes five NZ IFRSs and four domestic standards (FRSs). You can read more about the development of this suite of standards in the Overview of the Public Sector Accounting Standards.
On transition the new suite of PBE standards was found to be highly converged with the previous IFRSs as applied by PBEs. Note 33 in the Financial Statements of Government for the year ended 30 June 2015 outlines the impact of adoption of NZ PBE Standards.
For further information on the new framework see Accounting Standards for Public Sector PBEs on the XRB website.
Transition for PBE Entities
As the Government reporting entity is designated as a PBE, the consolidated Financial Statements of the Government (FSG) will need to be prepared using the new PBE standards from the financial year 2014/15. This means that information reported to the Treasury must be based on PBE standards.
On transition we identified very few significant differences. The Treasury will monitor changes to the PBE suite of accounting standards and provide updates via Treasury Circulars and our Guidance for Public Benefit Entities web page.
Transition for For-Profit Entities
The following entities are designated as for-profit entities for financial reporting purposes:
- State-owned enterprises (unless designated as a public benefit entity)
- Mixed ownership model companies (Schedule 5 companies)
- Air New Zealand Limited
- New Zealand Superannuation Fund
- Television New Zealand Limited
- New Zealand Lotteries Commission, and
- any Crown entities designated as for-profit.
Under the new reporting framework, those entities in the Government reporting group designated as for-profit entities will continue to prepare their individual financial statements under NZ IFRS. However, the CFISnet schedules they submit for group reporting purposes, must be based on Crown accounting policies and PBE standards.
As a result, where these two suites of standards differ, for-profits may need to make adjustments to their CFISnet schedules to ensure they are consistent with Crown accounting policies and PBE standards.
To help with this process, Treasury will monitor changes to both the for-profit and PBE suites of accounting standards and provide updates via circulars and our web page Guidance for For-Profit Entities.
Transition Project
We have now completed a project to transition the FSG to the new framework. This project had four phases. The first three phases focused on recognition and measurement, and the four phase focused mainly on disclosure impacts for the first interim and first annual financial statements for the year ended 30 June 2015.
Resources
The following resources may assist you with reporting under the new PBE accounting framework. We will continue to provide updates about changes to PBE standards and for-profit standards each year.
Treasury Resources
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Other material on the Treasury website:
- Accounting Policies for the Financial Statements of the Government of New Zealand for the Year Ended 30 June 2015 [Crown Accounting Policies] (21 Dec 2015)
- Project Timetable (10 Dec 2013) - This is a high level timetable for the PBE transition project.
- Public Sector PBE Standards - Comparison to NZ IFRS (PBE) - Outlines the significant recognition and measurement differences between the new suite of PBE standards, applicable from 1 July 2014, and the NZ IFRS (PBE) standards applicable for the 2013/14 reporting year.
Treasury Circulars
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External Resources
- Model Financial Statements under the new PBE accounting standards (Audit NZ website)
- XRB Website - The XRB issues all accounting standards. Their website also has helpful information on the accounting standards framework.
- Accounting Standards for Public Sector PBEs after 1 July 2014
Guidance on Recognising Liabilities and Expenses
The document Guidance on Recognising Liabilities and Expenses was prepared to provide a “first point of call” when making accounting judgements over when to recognise a provision for a liability of uncertain amount or timing for financial reporting purposes, particularly when that is for an obligation which is not “exchanged”.
Those persons updating accounting policies or preparing financial statements under the new PBE standards may find this a helpful reference for clarifying some of the questions that arise when considering liabilities. However, this document does not directly cover the recognition of liabilities arising from conditions attached to revenue from a non-exchange transaction.