Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Businesses largely unaware of accounting changes

Businesses largely unaware of accounting changes

Most small and medium sized businesses are unaware of changes to financial reporting standards, despite the fact they could save time and money.

Under new legislation, most small and medium sized businesses will still have to produce accounts for governance purposes, for the IRD and for the bank, but they won’t have to produce annual accounts that follow External Reporting Board (XRB) accounting standards (also known as Generally Accepted Accounting Practice).

The new accounting requirements will affect 95% of New Zealand businesses, yet research shows that over half (64%) of small to medium sized businesses do not know reporting requirements are changing. An overwhelming majority (83%) do not know what the changes will mean for their business.

“It’s quite natural that many businesses will be unaware of the changes,” says Graeme Mitchell, incoming Chairman of the XRB which has overall responsibility for setting accounting standards. “They typically only focus on reporting when they need to, but it is time for them to get professional advice to understand how the changes will impact them.”

The XRB says shareholders, directors and senior management need to be asking the right questions about their financial reporting.

The Financial Reporting Act was passed in November 2013 introducing the changes, which come into effect on 1 April 2014. Accompanying the legislative changes is a simplification of accounting standards from four to just two suites of standards - Full Standards or Reduced Disclosure Standards.

“The new legislative arrangements and accounting standards give businesses a greater choice to do what’s best for them and for many this will help reduce time and compliance costs. While it is difficult to quantify the extent of the savings, in a competitive business environment, we think this will be welcome news to any company director looking to streamline processes and make efficiencies where they can,” Mr Mitchell says.

Mr Mitchell believes the changes are well supported by the accounting profession. They greatly simplify the reporting requirements for many small to medium sized businesses, and bring New Zealand into line with the approach followed in Australia.

“Our research shows nearly all businesses see the value of reporting (90%), and we believe the new standards will now make the reporting requirements easier and more understandable” says Mr Mitchell. “The new standards recognise that businesses have different needs. Full reporting standards are essential for New Zealand’s larger organisations with high revenues, that issue shares or that borrow, but can be seen as arduous and overly complicated for small to medium sized businesses.”

The XRB stresses that applying the proper accounting standard is a fundamental duty for company directors. Mr Mitchell encourages all directors to ensure that they understand what the changes mean for their business or go towww.xrb.govt.nz for more information.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Interest Rates: Wheeler Hikes OCR To 3% On Inflationary Pressures, Eyes Kiwi

Reserve Bank governor Graeme Wheeler lifted the official cash rate for the second time in as many months, saying non-tradable inflationary pressures were "becoming apparent" in an economy that’s picking up pace and he's watching the impact of a strong kiwi dollar on import prices. More>>

ALSO:

Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>

ALSO:

Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>

ALSO:

Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>

ALSO:

Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>

ALSO:

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news