Government seeks a better deal for small companies

Government is poised to decide on how to simplify financial reporting obligations for small businesses, Commerce Minister Lianne Dalziel said today.

Reporting obligations for small companies are the subject of a discussion document, produced by the Ministry of Economic Development, and released today for public consultation, as part of a review of the Exempt Companies Regime (of the Financial Reporting Act). The work follows recommendations by the Commerce Select Committee and Ministerial Panel on Business Compliance Costs.

“It is recognised that the Financial Reporting Act was written with large companies in mind and we now need to look at the Exempt Companies Regime, which aims to provide a low cost system for most small companies by limiting reporting requirements to core information,” Lianne Dalziel said.

“The key issue is whether the ECR should be retained at all or whether small companies should be truly exempt from statutory financial reporting requirements.

“The main argument for retaining the regime is that it fosters financial discipline, management and planning. The alternative view is that the information required under the ECR is of little, if any, use to anyone and imposes unnecessary compliance costs on small businesses compared to the perceived benefits.

“Through the consultation process, it is hoped that stakeholders will provide reliable information on whether the ECR should be removed, or if it is retained, what changes are needed to make the regime more effective while meeting the cost-benefit test in a small company environment.

“I am excited by this phase of work, because of the potential to resolve a source of irritation and frustration amongst small businesses for a long time. As a government, we remain committed to reducing compliance costs, and I am looking forward to seeing the results of this consultation phase,” Lianne Dalziel said. “This government believes that company reporting should provide accurate, accessible information but at a reasonable cost.”

Submissions close on 6 December 2002, after which the Ministry will report back to government on the issue. The government plans to introduce a Financial Reporting Bill to implement any changes to the Exempt Companies Regime in 2003.

© Scoop Media