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New Accounting Standards Framework - Tiers

Public sector for-profit entities with reporting periods beginning on or after 1 December 2012Public sector public benefit entities with reporting periods beginning on or after 1 July 2014
EntitiesAccounting StandardsEntitiesAccounting Standards
Tier 1 Expenses >$30m or publicly accountable NZ IFRS Expenses >$30m or publicly accountable PBE Accounting Standards
Tier 2 Expenses ≤ $30m and not publicly accountable

Can elect to report as a tier 2 entity
NZ IFRS Reduced Disclosure Regime
(NZ IFRS RDR)
Expenses >$2m and ≤ $30m and not publicly accountable

Can elect to report as a tier 2 entity
PBE Accounting Standards Reduced Disclosure Regime
Tier 3 Not publicly accountable and either all of its owners are members of
the entity’s governing body or not large. If an entity’s parent or ultimate controlling party has the coercive power to tax, rate or levy, it must satisfy the not large criterion.

Can elect to report as a tier 3 entity
NZ IFRS Differential Reporting
(NZ IFRS Diff Rep)
This tier will be removed for periods beginning on or after 1 April 2015.
Expenses ≤$2m which are not in tier 4 and not publicly accountable

Can elect to report as a tier 3 entity
PBE Simple Format Reporting Standard – Accrual
Tier 4 Applied “old GAAP” at 30 June
2011, not publicly accountable, not required to file financial statements under section 19 of the Financial Reporting Act 1993, and not large.

Can elect to report as a tier 4 entity
Old GAAP
This tier will be removed for periods beginning on or after 1 April 2015.
The following entities if total operating payments are less than $125,000: Cemeteries, reserve boards, administering bodies, patriotic councils, Māori Purposes Fund Board, and Ngati Whakaue Education Endowment Trust Board

Can elect to report as a tier 4 entity
PBE Simple Format Reporting Standard – Cash

Availability of standards: The standards can be downloaded at www.xrb.govt.nz.

Relevant definitions – XRB A1 Accounting Standards Framework

Public sector – Public entities as defined in the Public Audit Act 2001 and all Offices of Parliament.

Total expenses – Total expenses (including income tax expense) recognised in the profit/loss or surplus/deficit, excluding the components of other comprehensive income. Where the entity is a group, total expenses is applied to the group comprising the parent and all its subsidiaries.

Public accountability:

a) In accordance with the International Accounting Standards Board’s definition, an entity has public accountability if:

  • its debt or equity instruments are traded, or to be traded, in a public market; or
  • it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses.

b) An entity is deemed to have public accountability in a New Zealand context if:

For-profit entities with reporting periods beginning on or after 1 December 2012 but before 1 April 2014:

  • It is an issuer as defined by the Securities Act 1978 or any other Act (for example, the Financial Reporting Act), a registered bank, a deposit taker, or a registered superannuation scheme.

For-profit entities with reporting periods beginning on or after 1 April 2014 and public benefit entities with reporting periods beginning on or after 1 July 2014:

  • It is a FMC reporting entity or a class of FMC reporting entities that is considered to have a higher level of public accountability than other FMC reporting entities under section 461K of the Financial Markets Conduct Act 2013. This includes the following entities: issuers of equity securities or debt securities under a regulated offer, listed issuers, registered banks, licensed insurers, credit unions, and building societies.
  • It is an FMC reporting entity or a class of FMC reporting entities that is considered to have a higher level of public accountability by a notice issued by the Financial Markets Authority (FMA) under section 461L(1)(a) of the Financial Markets Conduct Act 2013; or
  • It is an issuer under the transitional provisions of the Financial Reporting Act 2013.

Large – An entity is large if it exceeds two of total income of $20m, total assets of $10m, or 50 employees.

Relevant definitions – XRB A2 Meaning of Specified Statutory Size Thresholds

Total operating payments - The total amount of any payment (including grant payments and income tax payments, where applicable), other than a capital payment, made by the entity during the accounting period. A capital payment is a payment during the accounting period for the purchase of a resource with an expected life greater than twelve months, to be owned or partly owned and used by the entity to support the entity’s activities or to provide services or products. Capital payments do not include payments for operating purposes or payments for resources to be passed to other entities.

Page last updated: 2 February 2015