How are our standards set?

 

Accounting standards engender confidence in the financial reporting of the private, public and not-for-profit sectors. Audit & assurance standards ensure trust in an organisation's financial reports.

Process for issuing standards  

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. 

You can view diagrams of the different standard setting processes following the links above. 

These diagrams are intended only as a straightforward guide to the full process.

For a detailed description of how our standards are set, read the following documents alongside these diagrams.  They set out the full processes for setting both accounting standards and auditing & assurance standards:

  • Overview of the Accounting Standard Setting Process
    pdf EG A2 539 KB
  • Overview of the Auditing and Assurance Standard Setting Process
    pdf EG Au2 466 KB

Final sign-off 

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.

Public notification

When we issue a standard, amendment, or pronouncement we notify this publicly on our website and via our NZASB Update or NZAuASB Update as appropriate.  

Changes to accounting standards are also posted to our Recent Approvals page.

This notification also appears in the NZ Gazette — the official Government newsletter.

Regulations disallowance

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.

Process for revoking standards

Flowchart showing the accounting standard revocation processThe Financial Reporting Act 2013 requires that the same due process that applies to issuing standards (and authoritative notices) also applies to any revocations.

Before the NZASB revokes a standard or an authoritative notice in either sector, it must ensure that people or organisations likely to be affected have been adequately consulted.

Following a 90-day comment period, and the NZASB considers the comments, finalises the revocation and approves it for issue.