Businesses face new financial reporting rules
"What a relief for some companies not to have to file an annual return – this is such a time-consuming process for small businesses."Featured comment
More than 450,000 New Zealand companies may have to adopt new accounting processes as a new bill moves through Parliament this year.
The Financial Reporting Bill 2012 replaces the Financial Reporting Act 1993, bringing it up-to-date and aligning company reporting rules with those in Australia.
Submissions on the bill – which had its first reading in November – close on January 18.
Grant Thornton's national technical director Mark Hucklesby says the existing act is not aligned with business reporting requirements in Australia, does not recognise the unique reporting requirements of charities and fails to capture large partnerships.
"For many businesses, particularly small- and medium-sized companies with annual revenues of less than $30 million or total assets less than $60 million, the bill will come as good news.
"They will be able to substantially reduce their accounting compliance costs and in many instances may also be relieved from having to complete an annual audit," Mr Hucklesby says.
However, he says the bill may be seen as bad for other businesses.
"With more than 450,000 companies soon to be able to use special purposes financial statements, currently used in Australia, well entrenched accounting processes that have been in place for the last 20 years will almost certainly have to change."
National MP Jonathan Young, chairman of the Commerce Select Committee, says the bill has significant implications for New Zealand's 28,000 registered charities.
"Clear rules are required to improve charity reporting.
"As we have those clear rules and as we have accurate and efficient reporting regarding our charities, once again we will build confidence in New Zealanders in the donation dollars that they give," Mr Young said during the bill's first reading.
Green Party leader Russel Norman argued it would "be good to see a further extension in New Zealand into environmental reporting for companies".