NZASB Update #6

This NZASB Update provides you with an overview of the New Zealand Accounting Standards Board’s recent activities, any new standards or interpretations, as well as other matters of interest.


IPSASB exposure drafts

Before issuing a finalised accounting standard the NZASB and international standard-setting boards—such as the International Accounting Standards Board (IASB) and the International Public Sector Accounting Standards Board (IPSASB)—issue exposure drafts. These seek your feedback on proposals that will potentially affect you.

New proposals for lease accounting

NFP icon Public Sector icon Tier 1 and 2 logo

The IPSASB has published for comment ED 64 Leases. This contains proposals for how you will account for leases and disclose them in financial statements, including leases at below market-terms (concessionary leases).

The proposals remove the distinction between an operating lease and a finance lease. Instead, the lessee and the lessor both apply a right-of-use model to account for leases. 

Under the proposals:

  • a lessee could recognise on the statement of financial position a liability for future lease payments and a right-of-use asset at the commencement date of the lease.

Subsequently the liability is reduced as the lease payments are made and the right-of-use asset is amortised over the term of the lease; and 

  • a lessor could recognise on the statement of financial position an asset (for the lease payments due over the period of the lease) and a liability (for unearned revenue) at the commencement date of the lease.

The asset is reduced as the lease payments are received and revenue (reduction in the liability) is recognised over the term of the lease.

The proposed lessee accounting is the same as is in the equivalent for-profit standard, IFRS 16 Leases, issued by the IASB.

However, the proposed lessor accounting is not the same as IFRS 16, which retains the distinction between a finance lease and an operating lease that is currently found in IAS 17 Leases and IPSAS 13 Leases for lessor accounting and has been adopted in PBE IPSAS 13 Leases.

A new IPSAS on leases is likely to form the basis for a new PBE Standard in New Zealand. It is important that if you are potentially affected by this, you consider the proposals and provide your feedback.  Send your comments either to the NZASB by 31 May 2018, or you can make comments directly to the IPSASB by 30 June 2018.

Upcoming events

IPSASB Roundtables – Wellington and Auckland

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We are delighted that Ian Carruthers, Chair of the IPSASB, will be presenting at roundtables in:

  • Wellington on 8 February 2018 from 1:00PM–4:00PM; and
  • Auckland on 23 February 2018 from 9:00AM–12:00PM.

The roundtables will cover the IPSASB’s Proposed Strategy and Work Plan 2019–2023 Consultation, ED 63 Social Benefits and ED 64 Leases.

The majority of PBE Standards are based on standards issued by the IPSASB.  When the IPSASB finalises proposals, and issues a new standard, that standard is then considered for adoption in New Zealand.

Therefore, the IPSASB’s strategic objective, work programme and proposed standards will have a direct impact on the NZASB’s standard setting activities. Ian will be seeking views on the issues facing PBEs in New Zealand and whether these are represented in the IPSASB’s future strategy and work programme and will also address ED 63 and ED 64.

This a rare opportunity for you to directly engage with the IPSASB Chair and to provide your comments and observations straight to the IPSASB. 

The roundtables are free, but you will need to register in advance.

Register here

NZASB February Board meeting

7 February 2018, Wellington

The Board intends to discuss a range of topics affecting both PBEs and for-profit entities.

Agenda items include:

  • IPSASB ED 63 Social Benefits,
  • Guidance for Service Performance Reporting,
  • whether to develop a PBE insurance accounting standard based on IFRS 17 Insurance Contracts,
  • limited scope amendments to Tier 3 and Tier 4 PBE Accounting Requirements, and
  • Annual Improvements to NZ IFRSs 2015–2017 Cycle.

The NZASB meetings are open to the public.

You can access the public agenda, meeting papers and register to attend on the XRB website.  

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This NZASB Update is intended to provide subscribers with a summary of the recent activities of the New Zealand Accounting Standards Board (NZASB). Links to websites are correct at the time of publication. Subscribers should not rely on this newsletter as a definitive publication of updates. The External Reporting Board and its sub-Board the NZASB do not guarantee, and accept no legal liability whatsoever arising from or connected to, the accuracy, reliability, currency, timeliness or completeness of this newsletter. The information contained in this newsletter does not constitute advice and should not be relied upon as such.