New Zealand

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  • Service: Audit, Advisory, Accounting Advisory Services
  • Type: Business and industry issue
  • Date: 31/10/2012

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Simon Lee

Technical Director, Accounting Advisory Services

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Reporting news - 12RN12 

A summary of publications on reporting matters to keep you informed about financial reporting developments.

Reporting updates

 

IFRSs issued but not yet effective (30 September 2012)


This publication lists newly effective standards and standards issued but not yet effective for interim and annual periods ending 30 September 2012 and will assist you in complying with the disclosure requirements of NZ IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, paragraph 30.

 

 

In the headlines

 

There are no ‘In the Headlines’ publications this issue.  

 

Other KPMG publications

 

IFRS – Leases Newsletter – Issue 12, September 2012

 

In September 2012, the boards concluded their redeliberations on the lease accounting proposals published in August 2010. This In the Headlines summarises what we expect to see in the Ed, and what the key impacts for lessees and lessors.

  

  • Board conclude re-deliberations on leases.
  • On-balance sheet approach for lessees.
  • ‘Dual’ model for income/ expense recognition. 
  • Increase in complexity for lessee and lessor accounting.
  • Revised exposure draft delayed until first quarter 2013.
  •  

  • Leases Newsletter - Issue 12

 

IFRS – Insurance Newsletter – Issue 29, October 2012

 

This edition of IFRS – Insurance Newsletter highlights the results of the IASB and FASB discussions in September 2012 on the joint insurance contracts project and FASB discussions over the summer. In addition, it provides the current status of the project and an expected timeline for completion.
 

  • The IASB announced plans to issue a targeted re-exposure document in the first half of 2013. The IASB staff expect that the earliest date for a completed draft of a final FIRS would be May 2014.
  • The boards revised transition proposals requiring retrospective application with a practical expedient when impracticable.
  • The boards agreed that an insurer should recognise acquisition costs as part of the insurance liability in the pre-coverage period. .
  • The IASB decided that an insurer should accrete interest on the residual margin at a locked-in discount rate.
  • The IASB carried forward most disclosure requirements from the 2010 ED, while adding new disclosures.


 

IFRS – Insurance Newsletter – Issue 30, October 2012

 

This edition of IFRS – Insurance Newsletter highlights the results of the IASB and FASB discussions in October 2012 on the joint insurance contracts project. In addition, it provides the current status of the project and an expected timeline for completion.

 

  • The IASB intends to allow approximately three years between the date of publication and the mandatory effective date of the new insurance standard. Early adoption would be permitted.
  • The IASB is not planning to delay the mandatory effective date of IFRS 9 Financial Instruments for insurers. As a result, insurers will need to apply IFRS 9 for annual periods beginning on or after 1 January 2015.
  • The oards decided on the earned premium presentation for the statement of comprehensive income.
  • The boards decided that insurers would use the discount rate at inception when measuring the liability for remaining coverage and determining claims and interest expense under the premium allocation approach.
  • The boards provided certain adaptations for certain participating contracts and clarified the mirroring approach.
  • The boards made additional decisions relating to transition.

 

 

IFRS – Financial Instruments Newsletter – Issue 5, September 2012

 

This edition of IFRS Newsletter: Financial Instruments highlights the discussions and tentative decisions of the IASB in

September 2012 on the financial instruments (IAS 39 replacement) project.

 

  • Classification and measurement – Entities will be permitted to early apply only the own credit requirements for financial liability measured under the fair value option, without having to early apply IFRS 9 in its entirety.
  • Classification and measurement – The balloting process for the exposure draft on limited amendments to IFRS 9 should begin shortly.
  • Impairment – The IASB solicited feedback on the impairment model it had jointly developed with the FASB, while the FASB developed its own impairment model.
  • Hedge Accounting –The IASB issued a review draft of its forthcoming IFRS on general hedge accounting.
  • Hedge Accounting – The macro hedging model may depart from the principle that a risk should generally be transferred outside of an organisation to achieve hedge accounting. It seems unlikely that the notion of risk limits will be incorporated into the macro hedging model.


 

IFRS – Financial Instruments Newsletter – Issue 6, October 2012

 

This edition of IFRS Newsletter: Financial Instruments highlights the discussions and tentative decisions of the IASB in October 2012 on the financial instruments (IAS 39 replacement) project.

  

  • Classification and measurement – The IASB has not proposed any further changes to the contractual cash flows characteristics assessment for interest rates in a regulated environment such as China.
  • Classification and measurement – The IASB expects to issue an exposure draft on limited amendments to IFRS 9 in the fourth quarter of 2012.
  • Impairment – The IASB considered feedback on the model it had jointly developed with the FASB. The IASB staff asked the board for guidance on how to go forward.
  • Hedge Accounting –The IASB’s draft of its forthcoming IFRS on general hedge accounting remains available for review.
  • Hedge Accounting – Derivative hedging instruments would be measured at FVTPL, including the effects of credit risk and floating legs.
  • Hedge Accounting – Actual loan commitments seem likely to be eligible for inclusion in the net risk position, but pipeline trades do not.


 

IFRS – Revenue Newsletter – Issue 2, September 2012

 

This edition of IFRS Newsletter: Revenue examines the current thinking on the revenue project, and what the proposals could mean for you.

  • Previous proposals on presentation of customer credit risk rejected – alternative approaches to be developed.
  • Revenue constraint confirmed in principle – but more work required on when and how to apply it.
  • Boards confirm proposals on time value of money – adding complexity to accounting for some long-term contracts.
  • No new guidance on sales through distribution networks – this will remain a judgemental implementation issue.

 

  • Revenue Newsletter - Issue 2
  •  

    IFRS – Revenue Newsletter – Issue 3, October 2012

       

      This edition of IFRS Newsletter: Revenue examines the current thinking on the revenue project, and what the proposals could mean for you.

       

      • Measuring progress – there will be no practical expedient allowing contract manufacturers to automatically use the units of delivery method to measure progress.
      • Measuring progress – adjustments for uninstalled goods and wastage may change the profile of revenue and profits when applying the input method to measure progress.
      • Contracts claims and variations will be recognised when approved – this will depend on customary business practices.
      •  

      • Revenue Newsletter - Issue 3

       

      IFRS – Banking Newsletter – Issue 7, October 2012

       

      This edition of IFRS – Banking Newsletter provides updates on IFRS developments directly impacting banks, considers accounting issues affecting the sector, and discusses potential accounting implications of regulatory developments.

       

      • FASB decides on an alternative path for its financial asset impairment model, while the IASB indicates that it has taken all the technical decisions for developing an exposure draft for the new impairment model.
      • With the suite of new consolidation standards almost effective, challenges in applying the requirements are coming to the forefront, including how to approach an IFRS 10 implementation project.
      • Both IFRS and regulatory requirements can entail providing information on financial instrument valuation uncertainty. Ensuring consistency when there are overlaps in the information requires is important.
      •  

      • Banking Newsletter - Issue 7

       

       

      Other

       

      External Reporting Board Communiqué 2012/16 – 09 October 2012


      This Communiqué provides an update on the Simple Format Standards being developed for small public benefit entities (PBEs). The new Accounting Standards Framework allows Simple format reporting for Tier 3 (accrual accounting) and Tier 4 (cash accounting) entities.

       

      The key points in the Communiqué were:

       

      • Four different standards are being developed: Accrual accounting for Tier 3 not-for-profit entities, Accrual accounting for Tier 3 public sector entities, Cash accounting for Tier 4 not-for-profit entities, and Cash accounting for Tier 4 public sector entities.
      • Progress has been made on the completion of these standards, accompanying templates and guidance notes however these were not released at the expected September 2012 date as the XRB are performing further ‘pre-consultation’ processes with selected groups within the NFP and public sectors.
      • It is expected that the four exposure drafts will be issued for comment in the middle of December 2012. The comment period for the two NFP exposure drafts will be six months with submissions due by the end of June 2013, while the comment period for the public sector exposure drafts will be three months, with submissions due by the end of March 2013. The XRB are expecting to run seminars on these exposure drafts. 

       

      • XRB Communiqué 16: 09 October 2012
         
      • External Reporting Board Communiqué 2012/17 – 11 October 2012


        The XRB Board met on Wednesday 10 October 2012.  Discussion included the following matters:

         

      • The board approved and authorised for issue Standard XRB A1 (FP Entities Update). This is the first of three revisions to XRB A1 to give effect to the new Accounting Standards Framework. The revision establishes the tier structure and related accounting standards for for-profit entities. It is effective from 1 December 2012.
      • The board considered, and approved for issue as an exposure draft, ED XRB A1 (FP Entities + PS PBEs + NFPs Update). This ED is the third of the revisions to XRB A1 and includes the new accounting standards framework for not-for-profit entities.
      • The board considered a number of significant domestic and international developments and their likely impact on the quality of reporting in New Zealand. These included the International Accounting Standards Board's anticipated standard on Investment Entities, the Financial Market Authority's guidance on non-GAAP reporting, and the International Auditing and Assurance Board's (IAASB) Invitation to Comment on changes to auditor reporting.
      • The board considered the likely impact of two Bills currently before Parliament: the Financial Reporting Bill 2012; and the State Sector and Public Finance Reform Bill 2012. The board noted its general support for the Financial Reporting Bill, and considered the implications of the changes to non-financial reporting requirements proposed in the State Sector and Public Finance Reform Bill.
      •  

      • A full discussion of the matters considered can be found on the XRB’s website
      • XRB Communiqué 17: 11 October 2012
      •  

        NZ Accounting Standards Board Communiqué 2012/15 – 27 September 2012

         

        The New Zealand Accounting Standards Board held its most recent meeting in Wellington on 26 September 2012. The main matters considered at the meeting related to the Accounting Standards Framework.

        Discussion included the following matters:

         

      • The board continued working on the draft standards to support the XRB Board’s Accounting Standards Framework.


      • The board considered comments from the For-Profit Accounting Standards Package and approved minor amendments to the NZ IFRS, NZ IFRS Diff Rep and NZ IFRS PBE suite of standards in response to comments.


      • The board considered the draft suite of NZ IFRS Diff Rep Standards which was proposed in Exposure Draft 2012-2 Framework: Tier 3 For-profit Entities. The board expects to approve these standards before the end of 2012.
      • The board considered the feedback from the limited pre-consultation, and the draft Invitation to Comment and draft Basis for Conclusions for the PBE Simple Format Reporting Standard - Accrual (NFP). The board also considered a working draft of the Tier 3 PBE Simple Format Reporting Standard - Accrual (Public Sector) and made a number of changes to both draft standards. The change with most impact is that the board tentatively decided to propose that significant donated assets should be recognised as revenue on receipt and measured at a readily available current value, such as Rateable Value for a property. Entitles would not be required to recognise other donated assets, including goods donated to charity shops.


      • The board approved a number of very minor editorial corrections to the suites of accounting standards based on NZ IFRSs. These corrections do not change any of the requirements in NZ IFRSs.