Exemption saves small businesses money
The new accounting rules called the International Financial Reporting Standards (IRFS) were due to become compulsory for all New Zealand organisations from 1 April 2008.
However, the Accounting Standards Review Board (ASRB) in New Zealand has decided to delay its decision about small businesses complying with IFRS until after the government-led review of financial reporting requirements for small businesses is completed. This review isn’t due to kick off until mid 2008.
This is totally sensible and good news for small businesses. IFRS is designed to bring all the big companies in the world onto the same set of accounting rules, which makes sense. Most OECD countries have agreed to comply with these rules, although a noted exclusion is the US.
Had an exemption not been applied to New Zealand small businesses, the preparation of annual financial statements would have been much more complex. It would have taken your accountant significantly more time to prepare.
By providing an exemption, small businesses compliance costs should remain roughly the same.
Large companies must still comply with IFRS. A company is considered large if it meets any two of the following: 50 or more employees, total income in excess of $20 million and/or total assets greater than $10 million.
If you run a small business, you might be interested to know your collective power. There are about 330,000 of you in New Zealand, you make up roughly 95% of all businesses by number and you employ roughly 70% of the total New Zealand workforce. You are the backbone of New Zealand’s economy and we at Xero are on your side. We want to drive compliance costs out of New Zealand businesses through smart technology and we want to deliver valuable information to business owners, empowering them to be more successful.