Financial reporting standards for the public sector: New Zealand's 21st-century experience

Abstract

New Zealand was seen as world-leading when public sector financial reports were prepared using sector-neutral accounting standards from 1995 onwards. The decision in 2002 to adopt IFRS was disruptive, effecting new understandings of ‘sector-neutral’, and the standard-setter's approach was unsuccessful in meeting public sector users’ needs. The development of a new strategy finalized in 2012 has created a multi-standards framework, including adapted IPSASB standards applicable from 1 July 2014. While neutrality is still prized, it is within a framework of meeting users’ needs. This paper traces the influences expediting these changes.

Keywords:

• Public sector accounting
• sector-neutral
• standard-setting
• transaction-neutral

Acknowledgements

Kevin Simpkins was directly involved in standard-setting, including having been technical director of the NZSA (1989–1993), a member of the FRSB from 1995–2002, the ASRB/XRB 2008–2014, and an IPSASB member 2000–2003. He was also deputy auditor-general from 2002–2005 and a member of the NFPSAC from 2006–2009. Carolyn Cordery has been a member of the NZASB since 2011 and was chair of the NFPSAC from 2006–2010. The views expressed in this paper are their own.

Notes

* Subsequently the New Zealand Institute of Chartered Accountants and, from the 2014 merger with the Institute of Chartered Accountants Australia, ‘Chartered Accountants Australia and New Zealand’. The term ‘NZSA’ is used in this paper.

* Those standards continued to be modified for unique factors arising in New Zealand, including the broader application of the standards to all entities.

* This effectively further reduced public sector input to the standard-setting process, with the Treasury providing the only remaining public sector representative to the FRSB.