The minimum requirements, developed by Inland Revenue, will be relevant for those companies that are not subject to the Financial Reporting Act 2013.
We expect that most small and medium sized NZ companies (i.e. companies with total assets of less than $60 million or annual revenue of less than $30 million), some subsidiaries of large companies, and overseas companies and subsidiaries of overseas companies with revenues of less than $10 million and assets of less than $20 million will be affected. They should take note of the minimum requirements.
The minimum requirements include a profit and loss statement and balance sheet, based on double entry accrual accounting principles, with accompanying schedules. The schedules include a statement of accounting policies, fixed asset registers, taxable and accounting income reconciliation, and specified related party disclosures.
Some information requirements originally consulted on, such as the need to track Available Subscribed Capital and realised capital gains, have been omitted. This should reduce some of the compliance costs of the new rules.
Our main concern is the ability for Inland Revenue to prescribe additional data points in its forms (the IR10 or its replacement) and have these form part of the minimum financial reporting requirements. This needs to be restricted to provide certainty to business.