New Zealand


  • Service: Audit, Advisory, Accounting Advisory Services
  • Type: Business and industry issue
  • Date: 12/02/2013

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Reporting news - 13RN01 

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 December 2012)


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


Illustrative financial statements under the new Reduced Disclosure Regime


For entities wishing to early adopt the Reduced Disclosure Regime, we have now issued illustrative financial statements – Diverse Group Limited Special Edition – Illustrative Financial Statements under NZ IFRS (Reduced Disclosure Regime) (“Diverse RDR”).


In the headlines

Issue 2013/01 – Regulators focus on goodwill impairment disclosures


The European Securities and Markets Authority (ESMA) has issued a report raising concerns about the robustness of goodwill impairment testing and the transparency of disclosure practices among European listed companies. Other enforcers around the world are likely to take note of ESMA’s concerns.


Don’t wait for questions from the regulator. Instead, ask yourself the following questions now.


  • Is your equity/market capitalisation ratio greater than 100 percent?
  • How realistic are your key assumptions?
  • Are your disclosures clear and tailored to the company?
  • Does your sensitivity analysis provide users with relevant information?



Issue 2012/25 – Regulators focus on forbearance


On 20 December 2012, the European Securities and Markets Authority (ESMA) issued a public statement Treatment of Forbearance Practices in IFRS Financial Statements of Financial Institutions. The statement deals with:

    • The definition of forbearance practices;
    • Their impact on the impairment of financial assets; and
    • The specific disclosures relating to forbearance activities that listed EU financial institutions should include in their IFRS financial statements for the year ending 31 December 2012.


    ESMA’s public statement on forbearance comes as an important reminder to financial institutions.



    Issue 2012/24 – Shaping the future of IFRS


    The IASB has issued a feedback statement on its agenda consultation, outlining a new approach to developing new standards, sets out priorities for the IASB’s work programme and reports on input received from constituents.



    Issue 2012/23 – Accounting for rate regulated activities


    The IASB has decided to develop an interim standard for first-time adopters of IFRS while it works on a comprehensive IFRS on rate-regulated activities.



    Issue 2012/22 – Business combination accounting for interests in a joint operation


    The IASB has issued an Exposure Draft Acquisition of an Interest in a Joint Operation (Proposed amendment to IFRS 11). The proposed amendments aim to address current confusion regarding whether the business combinations standard applies when an entity acquires interests in a joint operation that meets the definition of a business under IFRS 3 Business Combinations.


    Comments are due to the IASB by 23 April 2013 or to the NZASB by 28 March 2013.



    Issue 2012/21 – Transfer of a subsidiary to an associate or JV


    The IASB has issued an Exposure Draft Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. The proposed amendments aim to address a long-standing conflict between consolidation and equity accounting when accounting for gains or losses arising when a parent loses control of a subsidiary in a transaction with an associate or joint venture.


    Comments are due to the IASB by 23 April 2013 or to the NZASB by 28 March 2013.



    Issue 2012/19 – Proposal to ban revenue-based amortisation


    The IASB proposes to amend IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets to state explicitly that revenue-based methods of amortisation (and depreciation) cannot be used.


    Comments are due to the IASB by 28 March 2013 or to the NZASB by 28 February 2013.



    Issue 2012/18 – Proposed amendments to IFRS 9 – Classification and measurement


    On 28 November 2012, the IASB issued an exposure draft (ED) that proposes limited amendments to IFRS 9 (2010) Financial Instruments on the classification and measurement of financial assets and financial liabilities. Although the proposed amendments are labelled ‘limited’, they could have far-reaching implications for an entity’s financial reporting.




    • A new fair value through other comprehensive income (FVOCI) measurement category for financial assets.
    • A new business model and new application guidance on applying the business model concept.
    • Early application of own credit requirements for financial liabilities permitted.
    • Changes in profit or loss volatility are likely – especially for financial institutions.
    • Possible unexpected consequences – in particular, regulatory capital requirements.
    • Transition requirements and preparation needed, with potentially wide impact on an entity’s business.


    Comments are due to the IASB by 28 March 2013 or to the NZASB by 8 March 2013.



    Issue 2012/17 – Proposal to amend equity accounting


    This In the Headlines looks at the IASB’s recent ED on equity accounting – it proposes a rule that would bring consistency, but is it the best answer?


    Comments are due to the IASB by 22 March 2013 or to the NZASB by 1 March 2013.



    Issue 2012/16 – Focus areas for regulators. Disclosures: quality matters


    On 12 November 2012, the European Securities and Markets Authority (ESMA) issued a public statement European common enforcement priorities for 2012 financial statements.


    This is the first time ESMA has highlighted the areas of focus for European national regulators when performing their reviews of December 2012 financial statements.


    Given the global economic and market environment, other enforcers around the world are likely to take notice of ESMA’s statement, and to pay particular attention to these same areas of focus.



    Issue 2012/15 – Consolidation relief for investment funds


    In May 2011, the IASB issued IFRS 10 Consolidated Financial Statements, which introduced a new approach to

    determining which investees should be consolidated. IFRS 10, which is discussed in detail in our publication Insights into IFRS, is effective for annual periods beginning on or after 1 January 2013.


    On 31 October 2012, the IASB issued Investment Entities (Amendments to IFRS 10, IFRS 12, IAS 27 and IAS 28).

    The amendments define an investment entity and introduce an exception to consolidating particular subsidiaries for investment entities. These amendments require an investment entity to measure those subsidiaries at fair value through profit or loss in accordance with NZ IFRS 9 Financial Instruments in its consolidated and separate financial statements. The amendments also introduce new disclosure requirements for investment entities in NZ IFRS 12 and NZ IAS 27.


    This amendment is applicable for annual periods beginning on or after 1 January 2014, with early adoption permitted.



    Issue 2012/14 - FSB Enhanced Disclosure Taskforce publishes its recommendations for banks


    On 29 October 2012, the Enhanced Disclosure Task Force (EDTF) issued a report: Enhancing the Risk Disclosures of Banks.


    • The report is the product of a collaboration between users and preparers of financial reports. It aims to help banks improve their communication with stakeholders in the area of risk disclosures with the ultimate aim of improving investor confidence.
    • The report is built around seven fundamental principles and 32 recommendations across seven risk areas, supported by illustrative examples.
    • Although adoption of the recommendations in the report is voluntary, the EDTF envisages that many of these recommendations may be adopted by banks in 2012 or 2013, with some of them being captured by interim reports.
    • Banks will need to decide on their strategic response to this industry initiative.



    Other KPMG publications


    IFRS Practice Issues: Adopting the consolidation suite of standards


    Transition to IFRSs 10, 11 and 12 is now upon us. In this IFRS Practice Issues, we focus on their adoption. Highlights:

    • Amendments simplify adoption of IFRSs 10, 11 and 12, by limiting mandatory restatement of comparatives to one year.
    • Consolidation conclusion now easier to test, with no need to restate for subsidiaries over which control was lost before 1 January 2013.
    • Relief from onerous disclosures for unconsolidated structured entities.
    • No need to maintain parallel set of records for 2013.



    The Application of IFRS: Food, drink and consumer goods companies


    This survey-based publication focuses on the key IFRS accounting issues facing food, drink and consumer goods (FDCG) companies and the approaches taken by companies to address them. It uses real-life examples to illustrate current reporting practices in the FDCG sector.


    Companies already applying IFRS will find valuable information on trends in disclosure and accounting policies within the FDCG sector. Companies that haven’t yet adopted IFRS will find the survey useful in assessing the impact of adopting IFRS.



    IFRS Newsletter: The Balancing Issues – Issue 4


    The IASB has published Exposure Draft ED/2012/2 Annual Improvements to IFRSs – 2011-2013 Cycle as part of its annual improvements process to make non-urgent but necessary amendments to IFRS.


    This IFRS Newsletter summarises the proposed amendments and the questions you should be considering. Comments are due to the IASB by 18 February 2013.



    IFRS Newsletter: Revenue – Issues 5 and 6


    This newsletter examines the current thinking on the revenue project, and what the proposals could mean for you

    Issue 5 - In their last meeting of 2012, the Boards concluded substantive redeliberations of the core recognition and measurement principles in the proposed revenue recognition model.


    Notably, they reaffirmed the ED’s core proposals in a number of key areas, rejecting exceptions that might have permitted current practice to continue in certain sectors. Remaining topics for discussion include scope, disclosure, effective date and transition.



    Issue 6 - In the January IASB meeting, the Boards confirmed how the revenue recognition model would apply to common scenarios in different industries, including the following:


    • Performance-based incentive fees for asset managers
    • Common financial sector transactions
    • Repurchase agreements
    • Sales of non-current assets



    IFRS Newsletter: Financial Instruments – Issue 9


    This edition highlights the discussions and tentative decisions of the IASB in January 2013 on the financial instruments (IAS 39 replacement) project.




    • The IASB clarified several issues raised by respondents to the general hedging review draft.
    • Issuance of the final general hedging standard will be delayed until the IASB has completed additional outreach.
    • The IASB plans to propose an urgent limited-scope amendment in February. This would permit hedging relationships to continue when both parties are required to novate the hedging instrument to a central counterparty.



    IFRS Newsletter: Insurance – Issue 33


    This edition highlights the results of the IASB and the FASB discussions in January 2013 on the joint insurance contracts project. In addition, it provides the current status of the project and an expected timeline for completion.



    IFRS Newsletter: Banking – Issue 8


    This newsletter provides an update on IFRS developments that directly impact banks and considers the potential accounting implications of regulatory requirements.





    Seminars on Simple Format Reporting for Charities and other Not-for-Profit Organisation


    The XRB, in conjunction with DIA Charities and the Association of NGOs of Aotearoa (ANGOA), is running a series of seminars on the proposed new accounting standards requirements for registered charities and other not-for-profit organisations.  A feature of the proposals is a simple format reporting approach for organisations with expenditure under $2 million.


    External Reporting Board Communiqué 2012/21 – 13 December 2012


    The New Zealand Accounting Standards Board (NZASB) has issued for comment a package of Exposure Drafts designed to operationalise the new Accounting Standards Framework as it applies to Tier 3 and Tier 4 Public Sector Public Benefit Entities (PS PBEs) including the proposed standards for Simple Format Reporting.


    Submissions on the package are due by Thursday 28 March 2013. Refer to the XRB Communiqué for further details:



    External Reporting Board Communiqué 2012/19 – 3 December 2012


    The External Reporting Board (XRB) and the New Zealand Accounting Standards Board (NZASB) have issued for comment a package of Exposure Drafts designed to operationalise the new Accounting Standards Framework as it applies to Not-For-Profit Entities (NFP Entities), including the proposed standards for Simple Format Reporting.


    Submissions on the package are due by Friday 28 June 2013. Refer to the XRB Communiqué for further details:



    IPSASB Conceptual Framework Exposure Drafts


    • The International Public Sector Accounting Standards Board (IPSASB) has released for comment two Exposure Drafts related to its project to develop a Conceptual Framework for the general purpose financial reporting of public sector entities.
    • The NZASB is currently consulting on its proposal that Tier 1 and Tier 2 Public Sector Public Benefit Entities apply PBE Standards, based on IPSASs. The IPSASB's Conceptual Framework will therefore have a significant impact on New Zealand entities.
    • Comments on the Exposure Drafts are due to the NZASB by 15 March 2013 and to the IPSASB by 30 April 2013. View the Exposure Drafts.


    A full discussion of the matters considered can be found on the XRB website.


    In addition, the NZASB is hosting a seminar series in late February on the IPSASB Conceptual Framework proposals.


    For more information, and to register to attend, visit the XRB website.