New Zealand


  • Service: Audit, Advisory, Accounting Advisory Services
  • Type: Business and industry issue
  • Date: 1/10/2012

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Reporting news - 12RN11 

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 updates in this issue. 


In the headlines


Issue 2012/12 – Hedge accounting moves closer to risk management

This In the Headlines considers the IASB issued draft of the forthcoming IFRS on general hedge accounting, which proposes to align hedge accounting more closely with risk management.


The proposals would not fundamentally change the current types of hedging relationships, or the current requirement to measure and recognise ineffectiveness; however, the proposals would mean that more hedging strategies used for risk management would qualify for hedge accounting.


The proposals would be effective for annual periods beginning on or after 1 January 2015. Early application would be permitted only if all existing IFRS 9 requirements are applied at the same time or have already been applied.


Other KPMG publications


IFRS Practice Issues for Banks: Fair value measurement of derivatives – the basics


The second edition of IFRS Practice Issues for Banks highlights some issues relevant to valuation of derivatives under IFRS, including making adjustments for credit, liquidity and other factors at a portfolio level and how some of the accounting requirements are made operational.



IFRS – Financial Instruments newsletter – Issue 4, July 2012


This edition of IFRS Newsletter: Financial Instruments highlights the IASB’s July 2012 discussions, including substantial completion of redeliberations on classification and measurement and impairment.




  • The boards tentatively agreed on the reclassification mechanics for the FVOCI category
    The assessment of contractual cash flow characteristics is an example of the use of judgement that will be required to be disclosed.
  • A ‘clean slate’ for the fair value option for new accounting mismatches arising from the transition to the limited amendments to IFRS 9 will be available for entities.
  • A different presentation of revenue will be required for deteriorated credit-impaired assets.
  • The presentation of interest revenue of purchased credit-impaired financial assets will be extended to originated credit-impaired assets.
  • The proposed model will apply to loan commitments and financial guarantee contracts.
  • Additional disclosures will be required on estimates of expected losses and credit quality migration.
  • Transition relief will be available if obtaining credit quality information at initial recognition requires undue cost or effort.
  • Entities’ use of an ‘equity model book’ approach to interest rate risk management is a key consideration in developing a new macro hedge accounting model.



IFRS – Revenue newsletter – Issue 1, July 2012

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




  • The test for identifying and measuring onerous performance obligations will not be carried forward from the ED to the final revenue standard. Instead, entities will apply existing IFRS and US GAAP requirements for the recognition and measurement of contract losses and liabilities.
  • The final standard will retain key concepts from the ED on identifying separate performance obligations and performance obligations satisfied over time, but will re-express them more clearly.
  • There was no agreement on the proposed implementation guidance for recognising revenue from licensing and rights to use. More analysis is needed on how the core recognition criteria in the revenue recognition model apply to licence agreements.
  • The boards aim to conclude redeliberations by December and issue a new standard in the first half of 2013.



IFRS – Insurance newsletter – Issue 28, July 2012

This edition of IFRS – Insurance newsletter highlights the IASB discussions in July 2012 on the joint insurance contracts project which focused on feedback from an IWG meeting in late June.




  • The Insurance Working Group participants:
    – welcome the use of other comprehensive income (OCI) for insurance liabilities but express concern with its interaction with the mixed measurement model in IFRS 9
    – agree that a single converged standard between the IASB and the FASB is desirable
    – raise issues related to the earned premium approach, unbundling (including the disaggregation of investment components for the statement of comprehensive income), transition and other matters.


  • IASB expects a due process document (either staff draft or exposure draft) at the end of 2012.
  • No decisions made in July. Boards plan to resume discussions on presentation, transition, and other matters in September 2012.





FMA issues final guidance note on non-GAAP disclosures


The FMA has issued the final guidance note on non-GAAP disclosures for issuers. The guidance note sets out the FMA’s expectations on the use of financial information in financial documents where information is not presented in accordance with GAAP, or as an alternative to the statutory profit.


The guidance note does not replace GAAP or any legal requirements and the FMA have indicated that they will be using it in their reviews from 1 January 2013.


External Reporting Advisory Panel Communiqué 2012/1 – 20 August 2012

The External Reporting Advisory Panel (XRAP) held its first meeting on 9 August in Wellington. The XRAP’s role is to act "as a champion" for stakeholders and to ensure that the views of the constituency are heard in the standard setting process.


At this first meeting XRAP was briefed on the structure and objectives of the XRB, NZASB and NZAuASB.  Members of the XRAP expressed interest in considering the following topics at future meetings.


  • The balance between simplicity in financial reporting and reporting the complexity of transactions and events
  • Users of financial reporting and their needs - education for users;
  • The role of assurance in quality financial reporting;
  • The accountability of the XRB for achieving the outcomes it has set;
  • Current issues in documents the board are about to release as EDs.
  • XRAP Communiqué 1: 20 August 2012

    External Reporting Board Communiqué 2012/15 – 22 August 2012

    The XRB Board met on 15 August 2012.  Discussion included the following matters:


  • The board met with the Minister of Commerce, Craig Foss and discussed a range of issues relating to the responsibilities and performance of the XRB
  • The board noted the current status of the roll-out of the five reporting packages of exposure drafts including the Public Sector PBE Package, Simple Format Reporting and the use of IFRS by certain PBE’s
  • The board considered the submissions on ED XRB A1 (FP Update). Nine submissions were received with general support for the approach in the ED. The board agreed to finalise XRB A1 (FP Entities Update) subject to the inclusion of guidance on how to interpret the public accountability definition, what comprises “total expenses” and clarifying the use of NZ IFRS 1 in contrast to NZ IAS 8
  • The board approved a revision of XRB Au1 to recognise the International Auditing Practice Notes (IAPNs)




NZ Accounting Standards Board Communiqué 2012/11 – 24 July 2012


The NZASB Board met on 18 July 2012.  Discussion included the following matters:


  • The board approved for issue Consolidated Financial Statements, Joint Arrangement and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to NZ IFRS 10, NZ IFRS 11 and NZ IFRS 12). This provides some relief when applying NZ IFRS 10, 11 and 12


  • The board continued to develop draft Standards to support the XRB Board’s Accounting Standard Framework including Public Sector PBE Standards, PBE Standards – Simple Format Reporting (Not For Profit)


  • The board considered a draft submission to the IPSASB on the IPSASB’s proposal to issue an IPSAS specifying mandatory requirements for financial statement discussion and analysis. The NZASB does not support a mandatory IPSAS on this topic.


  • The board noted the IASB has published an Invitation to Comment on the IASB and IFRS Interpretations Committee Due Process Handbook


  • The NZASB is seeking comments on the IASB’s request for views on its first post implementation review on IFRS 8 Operating Segments. Comments are due to the NZASB by 19 October 2012 and to the IASB by 16 November 2012.



NZ Accounting Standards Board Communiqué 2012/12 – 23 August 2012


The NZASB Board met on 22 August 2012.  Discussion included the following matters:


  • The board noted that the comment period for the For-Profit Accounting Standards Package closed on 3 August 2012. The board will be considering comments during its September meeting.


  • The board considered the draft Exposure Draft 2012-4 Framework: PBE Standards – Mixed Groups and the accompanying Invitation to Comment


  • The board considered a working draft of the PBE Simple Format Reporting Standard – Cash (NFP).  The board noted that the Financial Reporting Bill was released in July 2012 and that a definition of “operating payments” would be required.



NZ Accounting Standards Board Communiqué 2012/13 – 10 September 2012


The IASB has issued a draft of the forthcoming general hedge accounting requirements that will be added to IFRS 9 Financial Instruments.


The draft IFRS consists of additions to IFRS 9, being the draft general hedge accounting requirements, some consequential amendments Classification, Measurement and  Effective Date and Transition. There are also extensive additions to Appendix B Application Guidance and Appendix C Amendments to other IFRSs.


There are two other documents issued to support the draft IFRS. These are the draft Basis for Conclusions and the draft Implementation Guidance, both of which will be integrated into the next version of IFRS 9.


The NZASB is seeking comments on the draft and views as to whether the revised version of IFRS 9 resulting from the issue of the IFRS on general hedge accounting should be introduced into the interim suite of NZ IFRS PBE Standards for Tier 1 and Tier 2 public benefit entities. Submissions are due by 16 November 2012.



NZ Accounting Standards Board Communiqué 2012/14 – 17 September 2012


The NZASB has issued Exposure Draft 2012-4 Framework: PBE Standards – Mixed Groups. The exposure draft is proposing:


  • The release of an Explanatory Guide explaining the board’s policy on considering the implication for PBEs of new or amended standards issued by the IASB
  • The addition of guidance to proposed PBE IPSAS 6 Consolidated and Separate Financial Statements.


The NZASB is seeking comments by 21 December 2012 so that comments on this Exposure Draft can be considered by the NZASB concurrently with the comments on the suite of PBE Standards.


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