New leases standard for PBEs

Proposals for Tier 1 and Tier 2 public sector and not-for-profit entities

We recently sought feedback on our Exposure Draft (ED), which proposes a new lease accounting standard. The proposals are based on the recently-issued IPSASB standard IPSAS 43 Leases, which is aligned with the for-profit standard IFRS 16 Leases.

The proposals require lessees to recognise almost all leases on the statement of financial position. For lessors, the accounting requirements remain largely unchanged.

The proposals will allow New Zealand public benefit entities (PBEs) to benefit from the latest international thinking on lease accounting. The proposals will enhance transparency around PBEs’ leases, and make it easier for ‘mixed groups’ containing both PBEs and for-profit entities to prepare group financial statements.

We have previously consulted in New Zealand on the IPSASB's exposure drafts (EDs) on leases, which the IPSASB has finalised in IPSAS 43. The feedback we received indicated broad support for the proposals to align lease accounting with IFRS 16 (except for concerns with respect to accounting for concessionary leases).

Note on concessionary leases

Our proposals do not include fair value measurement requirements for concessionary leases (i.e. leases with below-market terms). The IPSASB is considering this matter under a separate project which will likely result in a separate consultation in 2023.

Consultation Document

Consultation Document

This consultation is on the proposed new lease accounting standard for Tiers 1 & 2 Public Benefit Entities.

Click here to read the Consultation Document and the Exposure Draft.


15-minute overview

15-minute overview

You can view our short presentation on the consultation here.

Submissions closed on 25 November 2022.

Thank you to everyone who provided feedback on this consultation.  We are now working through the feedback received to inform next steps for this work.  A preliminary review of submissions has identified the following key themes:

  • Support from the public sector to align PBE lease accounting requirements with NZ IFRS 16
  • Concern from not-for-profit entities regarding the cost/benefit of bringing most leases onto the balance sheet as right-of-use assets and lease liabilities.

We will continue analysing the feedback received and provide this to the Accounting Standards Board who will consider this at their February meeting.  We anticipate communicating the next steps early in 2023.  

Individual submissions can be viewed below.