New Financial and Accounting Standards

Thomson Reuters Releases Update on New Financial and Accounting Standards Legislative Framework Impacting New Zealand Businesses

From 31st March 2015 onwards, significant changes to the statutory financial and the accounting standards frameworks in New Zealand are in effect. Pressure is on organisations to adopt responsive, comprehensive financial and accounting management systems to effectively align their practices with the new regulatory landscape.

Established as part of government reforms aimed at promoting confidence in New Zealand’s financial markets, New Zealand’s new financial reporting framework has two key aspects: the statutory financial framework and the accounting standards framework.

The statutory financial framework

The new statutory financial reporting framework—which includes the Financial Reporting Act 2013 and Financial Reporting (Amendments to Other Enactments) Acts 2013 (together “the new acts”)—received royal assent on 3 December 2013 and replaces the Financial Reporting Act 1993. This framework establishes the types of entities that have statutory financial reporting obligations, including the preparation, audit and filing requirements of General Purpose Financial Reports (GPFR).

Impact - The change aims to reduce compliance costs for small and medium-sized entities by removing obligations to prepare general purpose financial reports. Under the new legislation, around 95 percent of companies in New Zealand will no longer have to prepare financial statements that comply with New Zealand accounting standards.

The key changes impacting companies and partnerships are effective for reporting periods beginning on or after 1 April 2014, as in from 31 March 2015 and onwards, and changes for registered charities are effective on or after April 2015.

The accounting standards framework

Following a 2011 decision by the External Reporting Board (XRB) to step away from a single set of accounting standards for all entities, institutions are now facing a new multi-standard framework requiring different standards for “public benefit entities” (PBEs) and “for-profit entities”. While the standard definition of PBEs remains unchanged, it is now more important than ever before, as it determines which set of accounting standards apply.

Impact - The multi-standard approach is set to effectively cater for the needs of users, including investors, creditors, tax and ratepayers, and people funding charities. Through the use of reporting tiers, the framework also aims to find an appropriate balance between the costs of reporting and the benefits of transparency and accountability.

Preparing for change with technology

Once the process of establishing these two new frameworks is close to completion, the next phase will focus on implementing these new requirements and introducing the right technology.

At the same time, the pressure is on financial and accounting advisory specialists to become familiar with the changes and help organisations navigate them, as well as address any potential challenges that could arise.

Adopting responsive, comprehensive software systems helps ensure accurate financial reporting and statutory compliance to align financial and accounting practices with the new regime.

To assist New Zealand businesses in coping with these legislative changes, Thomson Reuters now provides access to powerful new content in via ONESOURCE Accounts Production, making it the only accounting software solution with Big 4 content that can be used to manage compliance by Australian and New Zealand businesses, across both countries with the same tool. The new content sets will simplify the reporting process and contain corporate and fund content for the Australian market and corporate content for New Zealand.

Andrew Hay, global head of ONESOURCE Accounts Production for the Tax & Accounting business of Thomson Reuters says the solution will provide greater opportunity for Trans-Tasman relations by easing the burden of managing disparate reporting requirements: “With a long history of business relations between the two countries, many companies need a solution that will help manage their compliance needs simultaneously and in accordance with constantly changing accounting standards. This has been a major investment for Thomson Reuters and our Big 4 partners and we believe we are offering something very powerful for companies in the region,” said Mr. Hay.

As the accounting standards framework continues to impact organisations, it is more important than ever for companies to determine whether they are for-profit or PBE. The right technological solution can also assist in the assessment and diagnosis of this, as well as ensure financial information and data is aligned with the new statutory requirements.

Ultimately, implementing the latest tax and accounting software solutions can help organisations assess the impact of the revised frameworks and analyse and interpret the new accounting standards, as well as help identify solutions and specific areas for transition and compliance.

Background on Thomson Reuters ONESOURCE Accounts Production

As a leading accounting software solution in Australia and New Zealand, it empowers finance teams to take control of their financial reporting process. Initially released into the market in 2011, over 150 companies across Australia in a variety of industries and sizes now use the solution to increase accuracy, manage risk and improve consistency in their reports. It provides finance teams with a global platform for the preparation of financial statements.

Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial and risk, legal, tax and accounting, intellectual property and science and media markets, powered by the world's most trusted news organisation. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges. For more information, go to www.thomsonreuters.com

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