Reminder: New Zealand financial reporting and auditing requirements for companies
This Reporting Update serves as a reminder of the current financial reporting and auditing requirements for companies in New Zealand.
The new statutory framework for financial reporting
On 14 September 2011, the Government announced its proposed reforms to the statutory financial reporting framework. At the same time the External Reporting Board (XRB) released its proposed accounting standards framework that will apply to reporting entities under the new statutory reporting framework. This Reporting Update summarises these proposals, discussing the impact of the changes on NZ organisations.
In the Headlines
In the Headlines: Issue 2011/37 – Further EC proposals for reform of the audit market
On 30 November, the European Commission published proposals that would bring major changes to the audit market if adopted. This is the latest stage in a consultation process that started with the publication of the Green Paper Audit Policy – Lessons from the Crisis in October 2010. The proposals aim to reduce concentration in the market for audit and address perceived threats to auditor independence.
Revenue from contracts with customers
On 14 November 2011 the IASB issued a revised exposure draft on revenue recognition. The ED proposes a single model for recognising revenue from all contracts with customers and would replace IAS 11 Construction Contracts, IAS 18 Revenue, and the related interpretations. Companies have one more chance to comment on the proposal. The deadline for comments is 13 March 2012. KPMG has released a suite of publications to help you understand the proposed changes:
In the Headlines: Issue 2011/35 – Revenue from contracts with customers
This article summarises the key issues, business impacts and actions that companies could start taking now.
New on the Horizon: Revenue from contracts with customers
This article contains a detailed analysis of the ED, prefaced with a summary of the key facts and impacts, and enhanced with KPMG’s insight.
New on the Horizon: Revenue recognition for building and construction
This publication addresses issues specific to entities in the Building and Construction sector.
Other KPMG Publications
IFRS – Insurance Newsletter – Issue 21, November 2011
This IFRS Insurance Newsletter highlights key developments relating to the IASB and FASB’s joint insurance contracts project. It also gives the current status of the project and anticipated timeline for completion.
The Application of IFRS: Chemicals and Performance Technologies Companies
This publication is intended to guide you through some of the accounting challenges facing chemicals and performance technologies companies that report under IFRS. This survey, which is based on a review of the consolidated financial statements of 27 companies from 18 countries, will assist you in understanding the accounting issues relevant to the industry and the approaches taken by companies to address them.
IASB – Revenue recognition webcast
Staff and members of the IASB and the FASB will hold a joint webcast on 8 December 2011 at 10am Eastern Standard Time (NZ Time 9 December 2011 at 4am) to introduce the boards’ recently published exposure draft Revenue from Contracts with Customers. The webcast will include a live question and answer (Q&A) session.
IASB – Insurance contracts podcast available
A podcast has been recorded by Patrick Finnegan, IASB member and Joanna Yeoh, Technical Manager, reporting on developments in the Insurance project following the IASB meeting on 15 November 2011 and joint IASB/FASB meeting on 16 November 2011.
External Reporting Board Communiqué
The XRB Board met on Friday 2 December 2011. The main matters considered were the proposals of the Not-For-Profit Simple Format Reporting Working Group, the XRB’s submission on the IASB’s Agenda Consultation, the XRB’s submission to International Integrated Reporting Committee (IIRC) on the report that has been issued for comment and the establishment of an External Reporting Advisory Panel (XRAP).
NZ Auditing and Assurance Standards Board Communiqué
The New Zealand Auditing and Assurance Standards Board (NZAuASB) held its third meeting on 28 November 2011 in Wellington.
The main matters considered were the NZAuASB's strategy for achieving greater convergence with international standards, Trans-Tasman harmonisation outcomes, the NZAuASB's response to the Financial Markets Authority's (FMA) consultation paper on auditor regulation and consideration of the International Ethics Standards Board for Accountants (IESBA) proposed changes to the Code of Ethics. The NZAuASB also had its first joint session with the Australian Auditing and Assurance Standards Board (AUASB) to consider matters of common interest.
Financial Markets Authority updates
Consultation: Implementation of the Auditor Regulation Act 2011
The Financial Markets Authority has begun consulting with the auditing profession and other interested parties on the implementation of the Auditor Regulation Act, which comes into force on 1 July 2012. The Act applies only to audits of issuers of securities and other entities who are required to file publicly financial statements under the Financial Reporting Act 1993.
The FMA has issued two consultation papers for public comment:
- Consultation Paper #1: Licensing of auditors and registration of audit firms
Under the Act, auditors and audit firms who undertake issuer audits will need to be licensed (auditors) and registered (audit firms). This consultation paper outlines the FMA’s proposals surrounding the minimum standards an auditor must meet to be licensed, the kind of conditions to which such licences will be subject, the minimum standards an audit firm must meet to be registered and the criteria that must be met by individuals and firms to be eligible for the transitional provisions of the Act. The deadline for submissions on this paper is Friday 16 December.
- Consultation Paper #2: Proposed requirements for accredited bodies
Under the Act, accredited bodies have responsibility for licensing, monitoring and overseeing domestic auditors and audit firms. This consultation paper outlines the FMA’s proposals surrounding the minimum standards a person must meet to be granted accreditation by the FMA and the conditions attaching to accreditation. The deadline for submissions on this paper is Thursday 22 December.
FMA releases results of stakeholder research findings
The Financial Markets Authority has published on its website a report written by management consultants Oliver Wyman detailing the findings of local stakeholder research. This report details the results of stakeholder research conducted around the time of FMA's establishment in 2011. It outlines stakeholder priorities, articulates key strategic priorities for the organisation and highlights challenges to implementation.