Minimum Financial Reporting – New IRD Standards for Small and Medium Companies

On December 16th, 2013, posted in: Business, Team Posts, Useful Posts by

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My interpretations of the coming changes:

I have had a couple of discussions with people now about the new financial reporting standards which are, apparently, meant to change the accounting industry away from compliance.

It looks like the reporting has been general purpose and was mostly driven by accountants in the past, now IRD are taking the reins to determine what is required and what is unnecessary.  But don’t get too excited, the minimums look still to require similar to what is already being done and may not change anything for many companies.

Along with IRD, the requirements also look to be lead by stake holders.  So if you are working with a bank, the bank may determine the reporting required, or a factoring company maybe?  Xero reporting is changing significancy in time for the Financial Year End – which also takes this new customised reporting standards into account.  Xero will allow customisation of the reporting required.

I wonder how easy it will be to understand who determines the reporting required for each company – who will have access to this information, will there be a register – who will police it?

These are my interpretations from a few conversations, so please don’t quote me at this early stage.

 

From IRD – December 9th,2013:

Minimum financial reporting requirements under review

We’re calling for submissions on proposed changes to the preparation of financial statements by small and medium companies.

From 1 April 2014 and later, all active small- and medium-size companies would be required to prepare financial statements to a minimum level, instead of the current general purpose requirements.

The suggested minimum requirements include:

  • double-entry, cost-based accrual accounting
  • a balance sheet, profit and loss, with available specified supporting notes and/or schedules
  • tax values used to determine income and expenditure, and the preparation of the balance sheet where reasonably possible
  • a statement of accounting policies and changes
  • if necessary, a financial statement to taxable income reconciliation
  • a schedule of certain related-party transactions (for periods commencing 1 April 2015 and later).

We encourage companies who think they may be affected to submit feedback on the:

  • proposal to exclude non-trading companies, which don’t file tax returns from the preparation requirement
  • level of detail suggested for financial statements.

View the officials’ issues paper Minimum financial reporting requirements for companies.

Submissions should be made by 20 December 2013 to policy.webmaster@ird.govt.nz (subject line “Financial reporting”) or by post to:

Financial reporting
c/o Deputy Commissioner
Policy and Strategy Division
Inland Revenue
PO Box 2198
Wellington 6140

Footnote

Business Tax Update comments generally on topical tax issues relevant to businesses. Every attempt is made to ensure the law is correctly interpreted, but articles are intended as a brief overview only. The examples provided are not intended to cover every possible factual situation.

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