Transparent and consistent financial reporting ultimately builds greater trust and confidence with your stakeholders – whether they be your shareholders, donors, funders or customers, or tax or rate payers.
- Financial Reporting Strategy
- Accounting Standards Framework
- Auditing & Assurance Standards Framework
- Recent history of our Standards Frameworks
- Policy statements
Many New Zealand organisations, whether business, not-for-profit or government, have external financial reporting obligations.
These are some of the laws that require external reporting:
- Charities Act 2005
- Companies Act 1993
- Financial Markets Conduct Act 2013
- Public Finance Act 1989
- Crown Entities Act 2004
- Local Government Act 2002.
Essentially, the law states which types of entities must prepare financial statements that apply XRB standards, publish financial statements and obtain assurance on them.
The XRB standards themselves then state what and how entities must report.
Under certain laws, some entities may opt to follow XRB accounting standards, if they choose to. But, even if your entity is not required by any law to follow our accounting standards, you can still choose to apply them voluntarily.
Firstly, for its external financial reporting, your entity will have to apply a particular tier of accounting standards, depending on what sector you operate in.
You can use our Find your standard tool to help you quickly locate your reporting obligations and the accounting standards that apply to your entity.
Secondly, your entity may be required to have an independent audit or review of its financial results.
All these requirements are incorporated into a financial reporting strategy for New Zealand developed by the External Reporting Board.
This is our major strategic activity.
The strategy and the frameworks it establishes together ensure that the accounting and auditing & assurance standards we set and apply to entities give New Zealanders trust and confidence in the financial reporting of our organisations — whether they are large companies, charities or government agencies.
We focus on the needs of the users of reports, rather than just the needs of those who use our standards to prepare reports.
Our reporting strategy sets down the overall framework for the requirements for entities to externally report their financial results, and involves establishing and maintaining two frameworks:
Accounting Standards Framework
This comprises a multi-sector, multi-tiered approach and sets out the full range of standards that apply, based on your entity's sector and tier. The range of accounting standards varies for different sectors and tiers.
This tiered approach is intended to match the benefits with the cost of preparing financial statements, based on the size of the entity.
Auditing & Assurance Standards Framework
This comprises establishing which auditing & assurance standards apply, what the basis for those standards should be, whether a full audit is required or a more simple review, and ensures that practitioners can follow the same professional, consistent practices when auditing and reviewing financial reports.
Engagement with stakeholders is a major strategic priority for the XRB.
Our Stakeholder Engagement Strategy aims to encourage greater communication and engagement, both generally and around specific proposals.
Key aspects of our engagement strategy include:
- a less-formal submission process;
- targeting groups likely to be most affected by proposals;
- individual networking;
- scheduled meetings; and
- public engagement.
This activity covers all sectors and perspectives, including users and preparers of reports and assurance providers.
We have also established an External Reporting Advisory Panel (XRAP) to provide a forum for the XRB Board, NZASB and NZAuASB to consult with individuals and representatives of organisations affected by our work.
Alignment with international standards
Our strategy is to adopt international standards, which are modified to reflect our unique New Zealand conditions. We also look to harmonise our standards with Australia.
This approach is designed to ensure we keep pace with international practice while also reducing our standard-setting costs.
The NZASB and NZAuASB engage with international bodies at early stages in the development of standards. We help determine the content of standards to ensure New Zealand needs are considered.