After some years of not really being part of the economic discussion in New Zealand inflation is again in the news. While inflation is generally seen as concerning it can also mean that financial levels set previously may be out of date.
Thankfully our legislators have recognised the existence of inflation and have recently revised the statutory thresholds for reporting and auditing for some NZ entities.
Financial reporting and assurance
Some types of NZ entities are required by law, due to their nature or significance, to prepare annual financial statements in accordance with accounting standards issued by the External Reporting Board (XRB). The legislation that specifies these reporting requirements also in some cases specifies audit or review requirements.
The policy logic behind this is that due to their type and/or significance that these entities should have a level of public accountability in order to help maintain public trust and confidence. Requiring them to follow generally accepted accounting standards (GAAP) set by an expert independent Crown Entity standard setter such as our XRB provides a consistent reporting framework to attempt to help achieve this.
The types of entities covered include large companies & partnerships, Friendly Societies and Credit Unions and Charities. However, a piece of amending legislation called the Financial Reporting (Inflation Adjustments) Regulations 2021 amends the various bits of core legislation specifying the reporting and assurance requirements.