Doing business in New Zealand - Grant Thornton

NZ IFRS is an adaptation of IFRS to
provide financial reporting guidance
for not only profit oriented entities,
but also for entities that operate
in the public and Not for Profit
sectors. For listed companies, NZ
IFRS is now virtually identical to
Australian equivalents of IFRS. The
difference between these two bodies
of standards and those issued directly
by the International Accounting
Standards Board is that some additional
disclosures are required (eg, disclosure
of audit fees). Further details can
be found in New Zealand Financial
Reporting Standard 44 Additional
Disclosures.
Companies which satisfy all of the
following three criteria are permitted
to continue to apply “old NZ GAAP”
and, therefore, are not required to apply
NZ IFRS until further notice:
1 The company is not an issuer, as
defined by the Financial Reporting
Act 1993 (the Act), in either the
current or preceding accounting
period
2 The company is not required
by section 19 of the Act to file
its financial statements with the
Registrar of Companies
3 The company is not “large”, as
defined by section 19A of the Act
(which also aligns with the size
criteria for differential reporting)
Companies that are required to prepare
financial statements in accordance
with generally accepted accounting
practice in New Zealand (ie, companies
that are not “exempt”) and meet the
three criteria will continue to have a
choice between two sets of accounting
standards, the existing “old NZ GAAP”
and NZ IFRS.
Audit requirements
The financial statements of all
companies must be audited, except
where shareholders unanimously
resolve that no auditor be appointed.
That exception does not apply to:
• subsidiaries of foreign companies
(if there is a New Zealand holding
company, and then subsidiaries
below that, then only the parent and
consolidated financial statements of
the New Zealand holding company
need be audited)
• companies controlled by overseas
persons who hold more than 25% of
the voting shares, whether directly or
indirectly held
• entities that raise funds from the
public or are listed on New Zealand’s
stock exchange (issuers)
• branches of foreign companies.
On the New Zealand Companies Office
website there is a financial reporting
calculator where you can check whether
or not there is a need for an audit (www.
business.govt.nz/companies/learnabout/updating-company-details/
financial-reporting).
Differential reporting
An entity qualifies for differential
reporting exemptions (ie, it is a
qualifying entity) when it does not have
public accountability and:
• at balance date, all of its owners are
members of the entity’s governing
body
• the entity is not “large”.
A company is considered “large” where
it exceeds any two of the following
thresholds:
• Total income of $20 million
• Total assets of $10 million
• 50 employees
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