Targeted Review of the Accounting Standards Framework

In the latter half of 2019, the XRB conducted a Targeted Review of the New Zealand Accounting Standards Framework (ASF) and issued a Discussion Paper to receive feedback.

Consultation closed on 15 November 2019.

Background

In 2012 the XRB issued the New Zealand Accounting Standards Framework (the ASF).
This sets out our strategy for developing and issuing accounting standards for entities required to prepare financial statements in accordance with accounting standards issued by the XRB.

The ASF introduced a multi-sector, multi-standards, tiered approach to setting accounting standards in New Zealand and was issued in conjunction with the Government’s reforms to the financial reporting obligations of companies, registered charities, public sector entities (and other entities) through the enactment of the Financial Reporting Act 2013.

As of 2019, the ASF had been effective only for 4-5 years for most entities, so we considered it too soon to conduct a first-principles review of it. Instead, we implemented a targeted review, as we considered it timely and important to still “check-in” on whether the ASF had been functioning as anticipated and was achieving its original objectives.

We wanted to understand how well the framework was working in practice and uncover any unintended consequences or new developments since the framework was first developed.

In this targeted review we were also seeking feedback on three specific matters:

  1. The importance of maintaining close alignment between Public Benefit Entity (PBE) Standards (for Not-for-profit and Public Sector entities) and International Public Sector Accounting Standards (IPSAS).
  2. The importance of harmonisation with Australia for Tier 2 for-profit disclosures.
  3. If the PBE tier size criteria needed to be revisited (for NFP and public sector entities)

You can read a summary of the targeted review here.

Outcome

The XRB Board has completed its analysis of submissions received on the Discussion Paper. The responses indicate that in general, application of the framework has not resulted in significant unintended consequences, and that it is operating as intended. Therefore, based on the responses received, the XRB concluded no changes are required at this time.

We have published a Feedback Statement, which outlines the main matters raised by respondents.

Standards