Standard Setting Process
Accounting standards engender confidence in the financial reporting of the private, public and not-for-profit sectors. Audit & assurance standards ensure accountability and transparency.
How our standards are set
The process for issuing new standards is designed to ensure excellence and transparency.
Section 22 of the Financial Reporting Act 2013 requires us to ensure all who would be affected by the issue of a standard or an amendment are consulted and have an opportunity to provide feedback, suggestions and insights.
The XRB Board has developed a set of due process guidelines which the NZASB and the NZAuASB must follow before issuing a standard, amendment to a standard, or other pronouncement.
The processes for setting accounting standards and auditing & assurance standards are consistent and set out in these documents:
- Overview of the Accounting Standard Setting ProcessEG A2 378 KB
- Overview of the Auditing and Assurance Standard Setting ProcessEG Au2 466 KB
Before a new standard (or amendment, authoritative notice or other pronouncement for issue) can be approved, the standard-setting Board must be assured that:
- reasonable steps have been taken to consult with persons or organisations likely to be affected by the proposed standard/amendment/pronouncement
- the proposed standard/amendment/pronouncement is likely to achieve its objectives
- the advantages of the proposed standard/amendment/pronouncement are sufficient to justify its issue.
The standard-setting Board prepares a certificate signing memo which outlines the due process followed, the major issues raised by the constituency during that process, and the conclusions reached by the standard-setting Board in considering them.
The XRB Board Chair signs the certificate and the standard-setting Board can then issue the standard/amendment/ pronouncement.
When we issue a standard, amendment, or pronouncement we notify this publicly on our website and via an online newsletter in the form of a Board Communiqué.
This notification also appears in the NZ Gazette — the official Government newsletter.
The standard, amendment or pronouncement then takes effect on the 28th day after its publication in the NZ Gazette.
Standards are treated as Regulations and must be tabled in Parliament within 16 sitting days of the standard (or amendment) being issued.
Parliament may, by resolution within 21 sitting days, disallow a standard.
The parliamentary process surrounding this involves consideration of the issued standard by the Regulations Review Committee.
The standard setting process is governed by the Financial Reporting Act 2013.