NZASB Update 16/2020

Recent NZASB Meeting

13 August 2020

The NZASB meeting was a full day virtual meeting.

The Board approved the following standards:

• Going Concern Disclosures (Amendments to FRS-44);
• Going Concern Disclosures (Amendments to PBE IPSAS 1);
• 2020 Amendments to PBE FRS 48;
• Amendments to NZ IFRS 17;
• Extension of the Temporary Exemption from Applying NZ IFRS 9;
• Amendments to PBE IFRS 17; and
• Classification of Liabilities as Current or Non-current – Deferral of Effective Date.

The Board also discussed:

• Its draft comment letter on the three IPSASB Exposure Drafts (EDs) on Revenue and Transfer Expenses; and
• The feedback statement on the Targeted Review of the Accounting Standards Framework.

You can now access the public agenda, public meeting papers and highlights for the 13 August meeting on our website.

Have a look

COVID-19 Response: Going Concern

The economic impact of the COVID-19 pandemic is expected to increase the level of uncertainty over the ability of many entities to continue as a going concern for financial reporting purposes.

As part of the COVID-19 response, the NZASB decided that the introduction of specific going concern disclosure requirements would help preparers of financial statements provide improved and consistent disclosures, when applying the existing going concern disclosure requirements in NZ IFRS and PBE Standards.

The two amending standards introduce specific going concern disclosures requirements where an entity’s going concern assessment has involved the application of significant judgement and/or the consideration of material uncertainties about the outcomes of future events or conditions.

The standards amended are:

• FRS-44 New Zealand Additional Disclosures for for-profit entities; and
• PBE IPSAS 1 Presentation of Financial Reports for PBE Entities.

The more specific disclosures will be helpful to:

• users – by ensuring they receive relevant and transparent information;
• preparers – the disclosure requirements require more specificity which assists preparers in deciding what information to provide to users; and
• auditors – the disclosure requirements will help align the requirements in accounting standards with the requirements in auditing standards (for auditors to assess the adequacy of going concern disclosures).

Both amending standards are effective for accounting periods ending on or after 30 September 2020. Early adoption is permitted.

Have a look - Amendments to FRS-44

Have a look - Amendments to PBE IPSAS 1

COVID-19 Response: Service Performance Reporting — deferral of effective date

The Board approved the amending standard which defers the effective date of PBE FRS 48 (em>Service Performance Reporting (SPR) by one year, from 1 January 2021 to 1 January 2022. Entities can still choose to early adopt PBE FRS 48.

The Board received feedback in support of the deferral. Other minor clarifying amendments are also included in the amending standard.

The NZASB wanted to assist constituents who were struggling with the effects of COVID-19 on their activities. Implementation plans for SPR were disrupted, and the date deferral allows entities to focus on dealing with the economic effects of COVID-19 on their operating environment.

The NZASB also received feedback that the process of focusing on service performance reporting can have a positive impact on an entity’s strategic thinking and communications with stakeholders, both of which will be critical through the recovery period.

Article: Implementation of NZ IFRS 16 Leases 

Many entities are currently preparing financial statements which reflect the first-time implementation of NZ IFRS 16 Leases. The new requirements for lessees introduced in NZ  IFRS 16 will bring almost all leases onto the balance sheet, to enhance transparency and comparability in financial reports. Short-term and low-value leases will not be included on the balance sheet under the new requirements.

We have recently published an article, in collaboration with the New Zealand Institute of Directors, which explains why the new lease requirements were introduced and how they will improve financial reporting. The article also discusses a new practical expedient for lessees in response to the COVID-19 pandemic regarding whether a rent concession granted due to COVID-19 is a lease modification. 

Have a look

Have your say... 

Before issuing a finalised accounting standard the NZASB and the international standard-setting boards, the IASB and the IPSASB, issue consultation documents. These documents seek your feedback on proposals that could potentially affect you.

We are currently consulting on the matters set out in the table below. 

Tell us how these changes could affect your entity or the entities you work with.

We welcome your comments and feedback, either formal or informal, by the due dates below.

IASB Consultation Documents

* Note: the due date for comments to the NZASB has been extended to
2 November 2020.

IPSASB Consultation Documents