The Financial Reporting Act, which changes financial reporting obligations for most companies, comes into effect on 1 April 2014. Small and medium-sized companies in New Zealand will need to make sure they understand how the changes made by the Act affect their financial reporting obligations.
In the case of medium-sized companies, these companies will no longer be required to produce complex financial statements under the Financial Reporting Act. This will mean a substantial reduction in compliance costs for most companies with annual revenue between $2 million and $30 million. The changes made by the Act followed public consultation on the measures and is part of government plans to reduce compliance costs for small and medium businesses.
The Financial Reporting Act mandates that small and medium sized companies will have no general-purpose reporting obligations from 1 April 2014; and instead they will be required to prepare simplified statements. The Order in Council sets minimum requirements for the simplified statements, which should result in significant compliance cost savings for many businesses.
