Government and industry reform of financial reporting in New Zealand – and a refreshed accounting framework to underpin it – has had a long gestation and is by no means a done deal yet. Yesterday, another step forwards was taken with the Commerce Select Committee producing a set of recommendations for amendments to the all-important Financial Reporting Bill.
Financial reporting is a hot topic for the accounting industry. Reporting requirements and thresholds for many entity types will change over time, driven by the desire for simpler compliance for small entities and clearer guidelines for charities and larger entities.
Xero is keeping a close eye on developments and will make sure that any changes are seamlessly integrated (most likely to the Report Pack part of the application) as and when necessary. Good accounting software that is regularly updated not only for new features and functionality, but also for financial reporting reform, is a must.
Most of the recommendations made by the Committee yesterday will have limited application. The exception is the recommendation to increase the threshold at which a not-for-profit entity must prepare financial statements on an accrual rather than cash basis. This will be a relief to the many small charities who will be able to utilise the simpler cash-based reporting method.
The legislative activity is just one moving part in the overall reform. Other key parts involve the IRD and NZICA, each of which will have considerable weight in terms of final outcomes for business owners and their accountants.
So what does this all mean for the business man or woman going about their day-to-day activity? Is the level of change going to be significant?
Well, for the majority of organisations it really is business as usual. Change, if any, will be gradual. In many cases, there will be no discernable change at all and day-to-day accounting is unlikely to be affected.
Of course, your accountant should be able to advise as to any possible impact when the new reporting regime is finalised. If you don’t have an accountant, there’s no better time to make sure you have the experience and up-to-date knowledge of a trusted professional.
So for now, the journey continues and we aim to keep you informed as the milestones pass.