NZASB Update #26

This NZASB Update provides you with an overview of the New Zealand Accounting Standards Board’s recent activities, any new standards or interpretations, as well as other matters of interest.

NZASB Board meeting

Board meeting figures with speech bubbles


For-profitNot-for-profitPublic Sector


The final NZASB Board meeting for the year was held on 13 December 2018 in Wellington.

The Board approved for issue the following pronouncements:

  • Definition of a Business (Amendments to NZ IFRS 3); and
  • Definition of Material (Amendments to NZ IAS 1 and NZ IAS 8) and Definition of Material (Amendments to Conceptual Frameworks).

The Board also approved for issue the following Exposure Drafts (EDs) and Invitations to Comment (ITC):

  • PBE IFRS 17 Insurance Contracts; and
  • 2018 Amendments to XRB A1 Appendix A.

There is more information about these pronouncements and EDs later in this NZASB Update with links through to more detailed information on our website.

Other meeting highlights included:

  • discussing a draft External Reporting Board (XRB) position statement on Extended External Reporting (EER)[1] and the development of an EER navigational resource;
  • further discussion on the draft explanatory guidance on PBE FRS 48 Service Performance Reporting; and
  • approving the NZASB’s comment letter to the IASB on the Discussion Paper, DP/2018/1 Financial Instruments with Characteristics of Equity.

The public agenda and meeting papers are available on the XRB website.

Have a look


[1] EER is an umbrella term adopted by the XRB to refer to broader and more detailed types of reporting beyond the types of information presented in an entity’s statutory financial statements. EER can include reporting information on an entity’s governance, business model, risks, opportunities, prospects, strategies and its economic, environmental, social and cultural impacts.


Amending standards issued

Standards icon

Definition of a Business (Amendments to NZ IFRS 3)


For-profit


Tier 1 and Tier 2

The amendments clarify the definition of a business and provide guidance to help entities determine whether an acquisition is of a business or a group of assets. Distinguishing between a business and a group of assets is important, because an acquirer recognises goodwill only when acquiring a business.

Entities are required to apply the amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on or after the beginning of that period. Earlier application is permitted.

Have a look


Definition of Material (Amendments to NZ IAS 1 and NZ IAS 8) 


For-profit


Tier 1 and Tier 2

These amendments clarify the definition of material and how the definition should be applied.

The amended definition of material is as follows:

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

The explanatory paragraphs, which accompany the definition of material, have also been amended. References to the definition of material in other for-profit standards and conceptual frameworks have been aligned with the amended definition.

The amendments are effective for annual periods beginning on or after 1 January 2020 with early application permitted.

Have a look


Exposure Drafts issued for comment

2018 Amendments to XRB A1 Appendix A


For-profitNot-for-profitPublic Sector


Tier 1 and Tier 2

Appendix A of XRB A1 contains guidance on determining when an entity is a public benefit (PBE).

The main proposals in the ED are:

  • the inclusion of more guidance on the definition of a PBE; 
  • the identification of indicators that an entity considers in determining whether it is a PBE or a for-profit entity, some of which are new; and
  • revised illustrative examples.

open for comment icon Submissions are due to the XRB by 29 March 2019.

Access the ED


PBE IFRS 17 Insurance Contracts


Not-for-profitPublic Sector


Tier 1 and Tier 2

The ED on PBE IFRS 17 Insurance Contracts contains proposals to update the requirements for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the proposed standard. These proposals will align the requirements in PBE Standards with those in IFRS 17 Insurance Contracts (and NZ IFRS 17 Insurance Contracts), with the exception of the scope of the standard.

The NZASB is proposing to amend the scope of the PBE Standard to capture schemes:

  1. that are intended to be fully funded from contributions and levies; and
  2. where there is evidence that the entity manages the scheme in the same way as an issuer of insurance contracts, including assessing the financial performance and financial position of the arrangement on a regular basis.

When finalised, PBE IFRS 17 will supersede PBE IFRS 4 Insurance Contracts.

open for comment icon Submissions are due by 17 May 2019.

Access the ED


Onerous Contracts – Cost of Fulfilling a Contract (Proposed amendments to IAS 37)


For-profit


Tier 1 and Tier 2

The ED issued by the IASB proposes to amend IAS 37 Provisions, Contingent Liabilities and Contingent Assets to specify the costs an entity includes in determining the “cost of fulfilling” a contract, for the purpose of assessing whether a contract is onerous.

The proposals clarify that the costs of fulfilling a contract include both incremental costs and an allocation of other costs directly related to the contract.

open for comment icon Submissions close with the NZASB by 27 February 2019, or you can send your comments directly to the to the IASB by 15 April 2019.

Have a look

 


Webinar on PBE Financial Instruments exposure drafts


Not-for-profitPublic Sector


Tier 1 and Tier 2

Webinar spelled out in a row of coloured blocks

We have recorded a webinar which discusses the proposals in the following EDs:

  • NZASB ED 2018-5 PBE IPSAS 41 Financial Instruments

This ED contains proposals to update the requirements for the recognition and measurement of financial instruments for Tier 1 and 2 PBEs. These proposals will align the requirements in PBE Standards with the recently issued IPSAS 41 Financial Instruments (and NZ IFRS 9 Financial Instruments).

  • NZASB ED 2018-6 Effective Date of PBE IFRS 9

This ED proposes to defer the effective date of PBE IFRS 9 Financial Instruments by a year to 1 January 2022 (to prevent it from becoming mandatorily effective before the effective date of PBE IPSAS 41).

The webinar gives an overview of the proposed requirements in PBE IPSAS 41. The webinar looks at the proposals from the perspective of entities that are currently applying PBE IPSAS 29 Financial Instruments: Recognition and Measurement, and those that have early adopted PBE IFRS 9 Financial Instruments.

Comments are due to the NZASB by 28 February 2019.

The consultation documents and the webinar are available on the website.

Watch the webinar

Access the consultation documents


Have your say...

Before issuing a finalised accounting standard the NZASB and the international standard-setting boards, IASB and International Public Sector Accounting Standards Board (IPSASB), issue consultation documents. These documents seek your feedback on proposals that could potentially affect you.

We are currently consulting on the matters set out in the tables below. 

We welcome your comments and feedback, either formal or informal, by the due dates below. Tell us how these changes could affect your entity or the entities you work with.

 


For-profit


ID

Title

Comments due to the NZASB

Comments due to the IASB

IASB DP/2018/1

Financial Instruments with Characteristics of Equity

Closed

7 Jan 2019

IASB ED/2018/2

Onerous Contracts – Cost of Fulfilling a Contract (Proposed amendments to IAS 37)

27 Feb 2019

15 Apr 2019


Not-for-profitPublic Sector


 

ID

Title

Comments due to the NZASB

NZASB ED 2018-4

PBE IPSAS 40 PBE Combinations

31 Jan 2019

NZASB ED 2018-5

PBE IPSAS 41 Financial Instruments

28 Feb 2019

NZASB ED 2018-6

Effective Date of PBE IFRS 9

28 Feb 2019

NZASB ED 2018-7

PBE IFRS 17 Insurance Contracts

17 May 2019


For-profitNot-for-profitPublic Sector


ID

Title

Comments due to the XRB

XRB ED 2018

2018 Amendments to XRB A1 Appendix 1

29 March 2019


Season's Greetings

The NZASB and the Accounting Standards team at the XRB thank you for your contributions to our work programme over the past year.  Your comments and feedback are an important part of making sure our standards are appropriate for the New Zealand reporting environment. Have a happy holiday break, and our best wishes for 2019!

XRB will be closed from midday on Monday 24 December and re-opens on Monday 7 January 2019.


This NZASB Update is intended to provide subscribers with a summary of the recent activities of the New Zealand Accounting Standards Board (NZASB). Links to websites are correct at the time of publication. Subscribers should not rely on this newsletter as a definitive publication of updates. The External Reporting Board and its sub-Board the NZASB do not guarantee, and accept no legal liability whatsoever arising from or connected to, the accuracy, reliability, currency, timeliness or completeness of this newsletter. The information contained in this newsletter does not constitute advice and should not be relied upon as such.


This NZASB Update refers to the work of the International Accounting Standards Board (IASB) and uses registered trademarks of the IFRS Foundation (for example, IFRS® Standards, IFRIC® Interpretations and IASB® papers).