Financial reporting update. Government Departments/Crown Entities Client Update, March 2018

Transcription

1 Financial reprting update Gvernment Departments/Crwn Entities Client Update, March 2018

2 Agenda Standards update What s new fr 30 June 2018 Sme future changes f interest What s in the pipeline

3 New r amended PBE standards fr 30 June 2018 N new PBE standards cme int effect fr 30 June 2018 A number f standards have been amended e.g: Amended Effective date Descriptin f change PBE IPSAS 12 PBE IPSAS 17 PBE IPSAS 32 PBE IAS 12/ PBE IFRS 5 1 Jan 2017 Replaces the term ammunitin with military inventries and includes a descriptin f military inventries. 1 Jan 2017 Replaces the term specialist military equipment with weapn systems and includes a descriptin f weapns systems. Clarifies sme missiles may be PPE. 1 Jan 2017 Clarifies that service cncessin assets shuld be gruped with similar assets as a class f assets fr the purpse f subsequent measurements, cnsistently with PBE IPSAS Jan 2017 Clarifies the accunting fr deferred tax assets fr unrealised lsses n debt instruments measured at fair value. Clarifies disclsure f incme tax expense.

4 New r amended PBE standards fr 30 June 2019 Amended Effective date Descriptin f change PBE IPSAS 17 1 Jan 2018 Changes the scpe f PBE IPSAS 17 t include bilgical assets that meet the definitin f bearer plants (e.g., fruit trees). PBE IPSAS 1 1 Jan 2018 The standard has been amended t refer t general purpse prspective financial statements instead. Prpsed early adptin effective fr 30 June 2019 PBE IFRS 9 1 Jan 2021 FSG prpse t adpt 1 July 2018 Early adptin by the Crwn: will apply t the Financial Statements f the Gvernment (FSG) fr 2018/19. Changes t classificatin, measurement, impairment, and hedge accunting requirements.

5 New r amended fr-prfit standards fr 30 June 2018 N new FP standards cme int effect fr 30 June 2018 A number f standards have been amended e.g: Amended Effective date Descriptin f change NZ IAS 7 (nt applicable t PBEs) 1 Jan 2017 Requires disclsures that enable users t evaluate changes in liabilities arising frm financing activities, including bth changes arising frm cash flws and nn-cash changes. Fr example, an pening t clsing recnciliatin.

6 Mdel financial statements Mdel financial statements N amendments effective fr 18J require adjustment t GD and CE Mdel Financial Statements. 30 June 2017 versin remains applicable. Will issue a revised DHB mdel fr 30 June 2018 t reflect the changes already applied t GD and CE Mdel Financial Statements. Will be issuing a revised Tier 3 mdel fr 30 June 2018

7 Future Accunting fr grups PBE IPSAS 34 - Separate Financial Statements; PBE IPSAS 35 - Cnslidated Financial Statements; PBE IPSAS 36 - Investments in Assciates and Jint Ventures; PBE IPSAS 37 - Jint Arrangements; PBE IPSAS 38 - Disclsure f Interests in Other Entities. Fr Prfits IFRS 10,11,12, IAS 27,28 already effective PBEs Perids beginning n r after 1 January 2019 (30 June 2020) (replaces PBE IPSAS 6,7,8) Requires brader and mre cmprehensive disclsures.

8 Future Service perfrmance PBE FRS 48 Service Perfrmance - Applies t reprting perids starting n r after 1 January 2021 (30 June 2022) Will replace the SSP requirements f PBE IPSAS 1 Applies t Tier 1 and 2 public sectr PBEs required by law t present perfrmance infrmatin in accrdance with GAAP and all Tier 1 and 2 nt-fr-prfit PBEs. We expect the public sectr is well placed t cmply Additinal disclsures may be necessary: Cmparative infrmatin nw mandatry Disclsure f significant judgements in reprting perfrmance infrmatin

9 Cntext f standard setting IFRSs develped by IAS IPSASs develped by IPSASB NZ External Reprting Bard (XBR) NZ IFRS (frprfits) PBE IPSAS (PBEs)

10 Financial Reprting the Future Big 3 NZ IFRS 9 Financial instruments/ PBE IFRS 9 NZ IFRS 15 Revenue frm Cntracts with Custmers NZ IFRS 16 Leases Fr Prfits Perids beginning n r after 1 January 2018 (30 June 2019) Perids beginning n r after 1 January 2018 (30 June 2019) Perids beginning n r after 1 January 2019 (30 June 2020) PBEs Perids beginning n r after 1 January 2021 (30 June 2022) Early adptin? FSG 2019 IPSAS prject n revenue and nn-exchange expenditure in prgress IPSAS Leases prject in prgress

11 IFRS 9 Financial Instruments PBE IFRS 9 is a FI standard fr PBEs, based n NZ IFRS 9 The mandatry effective date frm 31 December 2021 yearends prvides PBEs with flexibility t early adpt t minimise mixed grup issues New: Classificatin requirements fr financial assets Impairment mdel Hedge accunting requirements

12 IFRS 9 Financial Instruments - FSG Treasury advice as per Treasury Circular 2017/09: Early adptin by the Crwn: will apply t the Financial Statements f the Gvernment (FSG) fr 2018/19 Assessing changes in disclsures and understanding hw this will impact the CFISnet Data Lad and ther Crwn reprting templates. Guidance fr entities with rutine trade receivables and term depsits: nting

13 IFRS 9 Financial Instruments Key messages Determine what is in scpe f standard Need t carefully cnsider the business mdel fr hlding bnd investments as this affects hw instrument is measured Fr share investments nt held fr trading, need t designate at fair value thrugh OCI if yu dn t want t measure at fair value thrugh prfit/lss Whether cncessinary lans pass the SPPI test will need careful cnsideratin Expected credit lss mdel fr lan prtflis may be cmplex Need t decide whether t restate cmparatives Entities may need t seek external accunting advice n cmplex issues

14 IFRS 9 Financial Instruments - Impairment Instruments that are credit impaired at initial recgnitin always remain in stage 3

15 Revenue and nn-exchange expenses Fr-prfits must apply a new revenue standard, NZ IFRS 15, frm 31 December 2018 year ends N IFRS 15 PBE equivalent under develpment in NZ, but In 2017 IPSASB issued a cnsultatin paper n: Revenue accunting by PBEs Accunting fr nn-exchange expenses, fr example, grants Submissins clsed n 22 Nvember 2017 and a number f PBEs in NZ prvided a submissin n the CP. IPSASB is cnsidering the CP respnses and next steps. A finalised standard is expected t be several years away.

16 NZ IFRS 16 Leases Fr-prfits must apply a new lease standard, NZ IFRS 16, frm 31 December 2019 year ends NZ IFRS 16 requires lessees t recgnise mst leases n the balance sheet Lease liability n the balance sheet, with assciated right t use asset Lessr accunting largely unchanged frm NZ IAS 17 Leases N NZ IFRS 16 PBE equivalent under develpment in NZ, but..

17 IPSASB Leases Prject Update Status f IPSASB wrk: They have a leases prject. Release f expsure draft (ED 64) January Pssible release f standard mid Timing issues between applicatin f NZ IFRS 16 and an IPSAS standard: Risk fr PBE mixed grup cnslidatins in having t reverse FP lessee accunting balances.

18 IPSASB Leases Prject Update Lessee accunting: same apprach as IFRS 16 Lessr accunting Bk a receivable and deferred revenue liability Spread deferred liability ver the lease term Recgnise underlying asset in entirety as per nrmal Includes guidance n cncessinary leases. If yu have significant leases as lessr r cncessinary leases, we encurage entities t read the ED and submit t XRB/IPSASB Cmments t XRB by 31 May 2018 Cmments t IPSASB by 30 June 2018

19 ED n Scial Benefits IPSASB Expsure Draft addressing the accunting fr benefits such as Gvernment super, unemplyment benefits, and benefit schemes funded frm cntributins (e.g. ACC) Cntrversial area f accunting Prpsals are bradly cnsistent with current accunting An insurance apprach ptin is prpsed fr schemes intended t be fully funded frm cntributins, subject t satisfactin f criteria Insurance accunting prpsed t fllw IFRS 17 Insurance Cntracts

20 IPSASB Wrk Plan

21 Questins?