New Zealand


  • Service: Audit, Advisory, Accounting Advisory Services
  • Type: Business and industry issue
  • Date: 8/05/2012

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Simon Lee

Simon Lee

Technical Director, Accounting Advisory Services

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Reporting news - 12RN07 

Welcome to this week's Reporting News, a regular summary of publications on reporting matters to keep you informed about financial reporting developments.

Reporting updates


No Reporting update this week.


In the Headlines

Issue 2012/06 – IASB/FASB update status of convergence projects

The IASB and FASB (the “Boards”) recently issued a joint progress report on the Boards’ convergence activities. The progress report:


  • identifies mid-2013 as the new target for completion of major work on convergence
  • explains how the Boards plan to pursue convergence
  • summarises convergence efforts to date.


The Boards remain focussed on their four major convergence projects: Financial instruments, Revenue recognition, Leases and Insurance contracts.



Other KPMG Publications

IFRS – Banking Newsletter – Issue 5, April 2012

‘The Bank Statement’ is KPMG’s IFRS Banking Newsletter produced by the International Standards Group and IFRS banking specialists around the KPMG network. It is a quarterly publication that provides updates on IFRS developments directly impacting banks, considers accounting issues affecting the sector, and discusses potential accounting implications of regulatory developments.


In this issue, we:

  • discuss some of the potential accounting implications of recovery and resolution plans, which compel banks to look at their businesses in new ways
  • consider the latest revenue recognition proposals and analyse some of the application questions that banks are asking
  • review and provide insights on the IASB’s first quarter activities, including the continued development of the macro hedging and financial asset impairment models, along with the limited re-opening of the IFRS 9 classification and measurement mode.

IFRS – Financial Instruments Newsletter – Issue 1, April 2012

Welcome to the first issue of IFRS – Financial instruments newsletter in which we highlight the discussions and tentative decisions of the IASB in April 2012 on the financial instruments (IAS 39 replacement) project.



  •  The IASB and the FASB moved towards converged answers for all issues discussed in April.
  • The IFRS 9 business model classification criterion for amortised cost classification will continue to be based on holding to collect contractual cash flows, but with added implementation guidance.
  • There will be no change to IFRS 9’s embedded derivative requirements (i.e. bifurcation of financial liabilities only).
  • IFRS 9 guidance on presentation of ‘own credit’ gains and losses on financial liabilities will be retained.
  • The measurement objective for expected credit losses under the new impairment model has been clarified.
  • The measurement objective for ‘bucket 1’ has been clarified as being based on expected losses for those financial assets on which a loss event is expected in the next 12 months.
  • The new expected loss impairment model will apply for trade receivables that do not have a significant financing component, including a practical expedient that a provision matrix can be used.


IFRS – Insurance Newsletter – Issue 25, April 2012

This edition of IFRS – Insurance Newsletter highlights the results of recent IASB and FASB discussions on the joint insurance contracts project. In addition it provides the current status of the project and expected timeline for completion.




  • Boards decide the single/residual margin for retroactive reinsurance contracts should be released over the settlement period.
  • Boards decide on the accounting for loss-sensitive features in reinsurance contracts.
  • The FASB decides that the cedant should account for reinsurance contracts using the same approach that it uses to account for the underlying direct insurance contracts.
  • The IASB decides the cedant would be permitted to use the premium allocation approach if it would produce measurements that are a reasonable proxy to the building-block approach.
  • Boards decide the reinsurer should evaluate whether the reinsurance contract should be accounted for under the building-block approach or premium allocation approach in the same manner in which an insurer should evaluate a direct insurance contract.
  • Boards decide that when applying unbundling and disaggregation, policy loans should be considered in determining the amount of the investment component to which they relate.
  • Boards decide on the treatment of contract riders, contract modifications, and reinsurance commutations.
  • Educational sessions held on the accounting for the single margin and the use of other comprehensive income for liability measurement.




External Reporting Board Communiqué 2012/5 – 20 April 2012

The XRB Board met on Wednesday 18 March 2012. The Board noted that the Accounting Standards Framework had been approved by the Minister of Commerce on 2 April 2012. The Board’s focus is now on implementing the Framework in a timely and efficient manner. The Board discussed the five “packages” of exposure drafts that will be issued over the coming months. Those are:


  • Package 1: Accounting standards for for-profit entities
  • Package 2: Accounting standards for Tier 1 and 2 public sector PBEs
  • Package 3: Accounting standards to Tier 3 and 4 not-for profit PBEs
  • Package 4: Accounting standards for Tier 3 and 4 public sector PBEs
  • Package 5: Accounting standards for Tier 1 and 2 not-for profit PBEs.


External Reporting Board Communiqué 2012/7 – 27 April 2012

The XRB and NZASB have issued four Exposure Drafts (EDs) together with accompanying Invitations to Comment relating to the new Accounting Standards Framework for for-profit entities. The four EDs are as follows:


  • ED External Reporting Board Standard A1 Accounting Standards Framework (For-Profit Entities Update) issued by the XRB
  • ED 2012-1 Framework: Tier 1 and Tier 2 For-profit Entities (NZ IFRS) issued by the NZASB
  • ED 2012-2 Framework: Tier 3 For-profit Entities (NZ IFRS Diff Rep) issued by the NZASB
  • ED 2012-3 Public Benefit Entities (NZ IFRS PBE) issued by the NZASB


The XRB is requesting comments on these Exposure Drafts by 3 August 2012.

NZ Accounting Standards Board Communiqué 2012/5 – 23 April 2012

The New Zealand Accounting Standards Board held its most recent meeting in Wellington on 19 April 2012. The main matters considered at the meeting related to the new Accounting Standards Framework. The Board considered Exposure Drafts relating to the for-profit and interim PBE aspects of the Accounting Standards Framework (refer to XRB Communiqué 2012/7 for exposure drafts subsequently issued).

The board also continued the development of the Exposure Draft for Tiers 1 and 2 public sector PBE standards and discussed the application of PBE Standards to not-for profit entities.

NZ Accounting Standards Board Communiqué 2012/6 – 26 April 2012 

The NZASB has issued Government Loans (Amendments to NZ IFRS 1). The amended NZ IFRS 1 applies to for-profit reporting entities and groups applying NZ IFRSs; other than where expressly exempted by its terms, the terms of any other approved accounting standard or by law; and applies to annual periods beginning on or after 1 January 2013. 

eIFRS - Insurance contracts podcast available 

A podcast has been recorded by Andrea Pryde, Technical Principal, and Patrick Finnegan, IASB member, reporting on developments on the insurance contracts project during the IASB and FASB meeting in April 2012.

  • The topics discussed include: 
  • reinsurance
  • issues related to contract modifications, policy loans and riders
  • the single margin approach as tentatively decided by the FASB
  • the use of other comprehensive income (OCI) for some changes in the insurance contracts liability.