Navigating the “step-up” to adopting NZ IFRS
When “stepping-up” into New Zealand equivalents to International Financial Reporting Standards framework (NZ IFRS) many entities mistakenly assume that the impact with simply be more disclosures (that is, “My accounts will just get longer”).
True… one of the consequences of NZ IFRS is increased disclosures … however this is just the tip of the iceberg.
NZ IFRS is a comprehensive and principle-based accounting framework, that results in both new and amended accounting treatments - compared to those applied previously by an entity in its Special Purpose Financial Statements (SPFS).
Accordingly, the road to a complete and accurate adoption of NZ IFRS is neither straight nor uncluttered. Successful navigation requires you to make deliberate, and informed decisions along the way.
The consequence of failing to do so may ultimately result in materially misstated financial statements, not just in the year of adoption but every year thereafter.
Having materially misstated financial statements has consequential impacts in terms of compromised relationships with regulators and other stakeholders (including the Companies Office, Inland Revenue Department, Banks and financiers, and of course Shareholders), which could in turn erode shareholder value.
The “step-up” to NZ IFRS represents a significant “change” to the business, and like implementing any other significant change within a business the only way to successfully tackle any change is to adequately “plan” for it by:
- Giving it the respect and attention it deserves.
- Approaching it as a stepped process to be worked through.
- Project manage it (by building a Project Steering Committee behind it, assigning key roles and responsibilities, and engaging external experts where required).