Commerce minister Craig Foss has introduced a bill to overhaul financial reporting rules.

The Financial Reporting Bill is designed to cut compliance costs for small- to medium-sized business.

Mr Foss has three main objectives:

• To reduce compliance costs by removing or reducing reporting obligations where they are unnecessary or excessive. In particular, the bill proposes removing a requirement for non-large non-issuer companies to prepare general-purpose financial reports. It will instead, be left to shareholders to decide whether financial reports will need to be prepared.
• To strengthen the law where the current reporting requirements do not adequately meet users’ needs. The main change will be to empower the external reporting board to issue financial reporting standards for a range of entities, including registered charities. Although registered charities are currently required to attach financial statements to their annual returns, the quality of reporting is often not up to the required standard due to the absence of clear rules to govern their preparation.
• To make several other changes where the current financial reporting settings are inconsistent with the three indicators of financial reporting.

“The bill will cut the compliance burden faced by many of New Zealand’s small- and medium-sized companies,” Mr Foss says.

“These smaller companies shouldn’t necessarily have to produce the same complex financial statements that are required from large companies.

"Cutting down on expensive and unnecessary reporting obligations will help build a productive and effective economy”

The bill would repeal and replace the Financial Reporting Act 1993.