Changes to financial reporting requirements

Commerce Minister Craig Foss and Revenue Minister Todd McClay today announced that the Financial Reporting Act, which changes financial reporting obligations for most companies, comes into effect on1 April 2014.

“Now is the time for small and medium-sized companies to make sure they understand how the changes affect their financial reporting obligations,” says Mr Foss.

“Medium-sized companies will no longer be required to produce complex financial statements under the Financial Reporting Act, which will mean a substantial reduction in compliance costs for most companies with annual revenue between $2 million and $30 million,” says Mr Foss.

“As the New Zealand economy grows, the government is focused on removing obstacles for companies. Changing the requirements for financial reporting to Inland Revenue will reduce the compliance burden for most companies, freeing them up to concentrate on building their business and creating jobs,” says Mr McClay.

“Public consultation was very helpful in shaping the new legislation, ensuring that information requirements were balanced against compliance costs.

Implementing these changes is part of the Government’s Business Growth Agenda to cut costs for small and medium sized businesses,” says Mr Foss.

The External Reporting Board (XRB) in association with Inland Revenue and the New Zealand Institute of Chartered Accountants is running a series of free seminars around the country to explain the combined effect of the changes under the Financial Reporting Act and the Tax Administration Act.

The Financial Reporting Act mandates that small and medium sized companies will have no general-purpose reporting obligations from 1 April, instead they will be required to prepare simplified statements. The Order in Council, signed on Monday, sets minimum requirements for these simplified statements. It is anticipated that this will result in significant compliance cost savings for many businesses.

To find out more about the seminar series, visit www.xrb.govt.nz/tools/events/list.aspx?SECT=News
For more information on the tax changes, visit www.taxpolicy.ird.govt.nz

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