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

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news