New Zealand


  • Service: Audit, Advisory, Accounting Advisory Services
  • Type: Business and industry issue
  • Date: 21/03/2012

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Simon Lee

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Reporting news - 12RN05 

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

IFRSs issued but not yet effective (31 March 2012)

This publication lists newly effective standards and standards issued but not yet effective for interim and annual periods ending 31 March 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

Issue 2012/03 – Government loans: Amendments to IFRS 1

This In the Headlines summarises the recent amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards.


The amendments, dealing with loans received from governments at a below-market rate of interest, give first-time adopters of IFRS relief from full retrospective application of IFRS when they are accounting for these loans on transition. This is the same relief as was given to existing preparers of IFRS financial statements.


The amendments are mandatory for annual periods beginning on or after 1 January 2013. Earlier application is permitted.




Other KPMG Publications

New on the Horizon: Revenue recognition for technology companies

Technology companies said ... that the 2010 revenue recognition proposals would be difficult to apply. This publication looks at the potential impact of the revised proposals, discusses whether previous concerns have been addressed, and highlights new issues relevant to technology companies.




  • The pattern and timing of revenue recognition may change for some arrangements in the technology sector compared to current practice.
  • The key challenge for technology companies in applying the revised proposals would be determining the number of performance obligations and allocating the transaction price to them.
  • A question remains as to whether the proposals are clear enough to be interpreted and applied consistently by technology companies across the range of multiple-element contracts.


IFRS Practice Issues: Applying the consolidation model to fund managers

Highlights the results of the IASB and FASB discussions in February 2012 on the joint insurance contracts project. In addition it provides the current status of the project and anticipated timeline for completion.




  • The new consolidation standard includes an explicit concept of delegated power. This means that fund managers now have a reference when assessing their relationships with funds under their authority. 
  • The new guidance involves many indicators, much judgement, and few bright lines – all of which make it a challenge to operationalise.
  • The key factors that drive an analysis for fund managers are variability of aggregate economic interest and strength of kick-out rights.
  • While the analysis cannot be reduced to a simple quantitative process, we believe that focusing on the key factors can help reduce the population that needs more qualitative analysis.



IFRS – Insurance Newsletter – Issue 23, March 2012

Highlights the results of the IASB and FASB discussions in February 2012 on the joint insurance contracts project. In addition it provides the current status of the project and anticipated timeline for completion.




  • IASB extends timeline for either re-exposing or issuing a staff draft on the insurance project to second half of 2012. FASB also aims for exposure draft in the second half of 2012.
  • IASB and FASB decide on different but similar eligibility criteria for premium-allocation approach. A practical expedient is provided for use of premium-allocation approach for contracts with coverage period of one year or less.
  • IASB permits rather than requires premium-allocation approach. FASB requires it if eligibility criteria are met.
  • Time value of money to be considered in measuring liability for remaining coverage for contracts that have a significant financing component, as defined in new revenue recognition proposals. A practical expedient is provided in certain circumstances to exclude time value of money from this measurement.
  • Measurement of acquisition costs under premium-allocation approach would be consistent with building-block approach. mediate expensing of acquisition costs for contracts with coverage period of one year or less will be permitted.
  • IASB scopes financial instruments with a DPF issued by insurers into insurance standard.
  • Further guidance added on measuring onerous contracts, estimating cash flows for catastrophe events and unbundling criteria for goods and services.




New IASB publication – Improving disclosures about inter-company investments

The IASB has published a new ‘investor perspective’ entitled Improving disclosures about intercompany investments. It discusses the requirements of IFRS 12 Disclosure of Interests in Other Entities.



External Reporting Board Communiqué

The XRB Board met on Tuesday 13 March 2012. The majority of the meeting was dedicated to finalising the Accounting Standards Framework. The board completed its deliberations on the submissions to the 2011 Consultation Papers and the issues arising from those submissions.


NZ Accounting Standards Board Communiqué

On 8 March 2012, the NZASB announced that the following amendments had been issued for application in New Zealand:


  • offsetting Financial Assets and Financial Liabilities (Amendments to NZ IAS 32 Financial Instruments: Presentation)
  • disclosures - Offsetting Financial Assets and Financial Liabilities (Amendments to NZ IFRS 7 Financial Instruments: Disclosures)
  • mandatory Effective Date and Transition Disclosures (Amendments to NZ IFRS 9 Financial Instruments (2009) and (2010) and NZ IFRS 7 Financial Instruments: Disclosures).


NZ Auditing and Assurance Standards Board Communiqué

The International Auditing and Assurance Standards Board (IAASB) has approved a proposal to commence on a priority basis a project on auditor reporting in light of responses received on its May 2011 Consultation Paper, Enhancing the Value of Auditor Reporting: Exploring Options for Change.


The scope of the project is to improve the content and structure of the auditor's report in the overall context of increasing the relevance of auditor communications, while maintaining the current scope of the audit.


This NZAuASB Communiqué provides more information about the IAASB project as it is likely to have significant implications for auditor reporting in New Zealand.


FMA revised draft guidance note: effective disclosure in offer documents

The Financial Markets Authority will publish a revised draft of its guidance note by 2 April 2012 and invites further submissions from the market.


The first round of market consultation, completed 9 March, consisted of 30 stakeholder meetings. FMA also received over 60 written submissions and is now reviewing and carefully considering all feedback. As a compliance tool, the guidance note seeks to assist issuers by signalling FMA’s expectations and what it will look at as part of a review of disclosure documents.


Submissions invited on the revised draft will close Tuesday 1 May 2012.

Submissions called for on the Financial Markets Conduct Bill

Cabinet made policy decisions on the review of securities law in February and May 2011, following public consultation on a discussion document released in June 2010.


An exposure draft of the Financial Markets Conduct Bill was released in August 2011, with a request for submissions on the technical detail prior to the draft Bill being finalised and introduced to Parliament. The Ministry received 73 submissions on the Bill.


The Financial Markets Conduct Bill has now been introduced to Parliament. The select committee process will provide another opportunity to make submissions on the Bill. Submissions are due by 26 April 2012.


For further background material released by the MED on the FMC Bill and its review of New Zealand's securities legislation click here.



Please speak to your usual KPMG contact or call any of our offices should you have any questions on the above or if you would like further information on any of the matters discussed in this publication.


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