• Accounting Alert

    February 2017

Public Benefit Entities: Exposure draft issued on approved budgets

The New Zealand Accounting Standards Board (“NZASB”) has issued Exposure Draft ED NZASB 2016-9 Approved Budget (Proposed Amendments to PBE IPSAS 1) (“the Exposure Draft”).  The amendments proposed by the Exposure Draft are relevant to Tier 1 and Tier 2 public benefit entities (“PBEs”), which are those entities that apply PBE Standards or PBE Standards Reduced Disclosure Regime. 

Currently, PBE IPSAS 1 Presentation of Financial Statements (“PBE IPSAS 1“) requires an entity that has made its approved budget publicly available to compare budget and actual amounts.  This comparison can be done either as a separate additional financial statement or as a budget column in the financial statements.

Despite this requirement, the term “approved budget” is not defined in PBE Standards (although it is defined in International Public Sector Accounting Standards, which PBE Standards are based on).  In addition, the term is not commonly used in New Zealand. 

PBE IPSAS 1 also currently requires an entity that has published general purpose prospective financial statements for the period of the financial statements to present a comparison of the prospective financial statements with the actual financial statements and explain major variances.  The term “general purpose prospective financial statements” is defined in PBE FRS 42 Prospective Financial Statements (“PBE FRS 42”) and PBE IPSAS 1 cross references to PBE FRS 42 in respect of that definition.

To eliminate the confusion associated with using both the undefined term “approved budget” and the defined term “general purpose prospective financial statements”, the Exposure Draft proposes:

  • Removing the term “approved budget” from PBE IPSAS 1 (which also means removing the requirement to compare the approved budget amounts with actual amounts)
  • Amending PBE IPSAS 1 to allow the comparison of general purpose prospective financial statements and actual financial statements to be presented either on the face of the financial statements or in the notes to the financial statements (the requirement to explain major variances would be retained). 

It is proposed that the effective date for these amendments will be 1 January 2018, with early adoption permitted.


For more on the above, please contact your local BDO representative.




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