NZ SMEs released from financial reporting straitjacket

14 September 2011

NZ SMEs released from financial reporting straitjacket

The New Zealand Institute of Chartered Accountants (NZICA) is set to develop a new set of condensed reporting guidelines for small and medium (SME) New Zealand businesses. The news comes as a result of the Minister of Commerce’s announcement today that SMEs will be exempt from preparing expensive and time-consuming end of year financial reports under the Companies Act.

Currently the Act requires all companies to prepare annual financial reports. Minister Simon Power has today confirmed that non-issuer companies that do not meet the definition of large, that is annual revenue of more than $30 million or assets of more than $60 million, will no longer be required to prepare general purpose financial reports.
This reflects moves in Australia and will be a welcome reduction in red tape for many businesses says NZICA Chief Executive Terry McLaughlin.

“The decision reflects New Zealand’s unique business landscape; it makes sense for smaller businesses to be exempt from preparing general purpose financial reports. What will be important now is to find the balance between cutting unnecessary bureaucracy and having the right tools for solid financial management and assessment of business health.”

“For example, businesses will still generate financial reports for tax purposes, if they have shareholders with vested interests or if they need to prepare financial reports for major creditors such as banks or lenders,” says Mr McLaughlin.

NZICA will undertake significant research and stakeholder consultation to ensure the new special purpose financial reporting guidelines are fit for purpose, with the intention that the guidelines developed be robust and simple.

“There are other countries that have developed similar financial reporting guidelines for SMEs; we will be looking at the lessons they have learned through the application of their guidelines,” says Mr McLaughlin.

About the New Zealand Institute of Chartered Accountants
NZICA is New Zealand’s largest professional body and represents more than 32,000 members in New Zealand and over 90 other countries. We act in the public interest through regulating the profession and promoting quality, integrity and expertise. Our members hold one of three prestigious professional accountancy designations: Chartered Accountant (CA), Associate Chartered Accountant (ACA) or Accounting Technician (AT).

ENDS

© Scoop Media