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  • Accounting Alert

    February 2017

Public Benefit Entities: Omnibus amendments to PBE Standards

The New Zealand Accounting Standards Board (“NZASB”) has issued 2016 Omnibus Amendments to PBE Standards (“the Omnibus Amendments”).  The Omnibus Amendments apply to Tier 1 and Tier 2 public benefit entities (“PBEs”), which are those entities reporting under PBE Standards or PBE Standards Reduced Disclosure Regime. 

The Omnibus Amendments consist of:

  • Amendments arising from chapters one to four of the Public Benefit Entities’ Conceptual Framework (“PBE Conceptual Framework”)
  • Amendments arising from Improvements to IPSASs 2015
  • Amendments arising from International Accounting Standards Board (“IASB”) amendments
  • Editorial corrections.

PBE Conceptual Framework

The issue of the PBE Conceptual Framework resulted in changes to the qualitative characteristics of general purpose financial reporting.  The key change that the Omnibus Amendments made as a result of the issue of the PBE Conceptual Framework was to update references in the PBE Standards to the qualitative characteristics, which included replacing the qualitative characteristic of “reliability” with “faithful representation” (and “reliable” with “faithfully representative”). 

In addition, as the terms “reliable” and “reliably” are used throughout PBE Standards in various contexts (for example, in the recognition criteria in a number of PBE Standards), all PBE Standards using the words in such contexts were updated by adding an explanatory footnote to the first use of either word in such a context in each standard.  That footnote states: “information that is reliable is free from material error and bias, and can be depended on by users to faithfully represent that which it purports to represent or could be reasonably expected to represent.”

These amendments are effective for annual financial reporting periods beginning on or after 1 January 2017.  Earlier application is not permitted. 

Improvements to IPSASs 2015

The following amendments arose from Improvements to IPSASs 2015:

  • The amendment of PBE IPSAS 32 Service Concession Arrangements: Grantor to clarify that service concession assets must be accounted for in the same manner as other items of property, plant and equipment or other intangible assets.  These amendments are effective for annual financial reporting periods beginning on or after 1 January 2017, with earlier application permitted.
  • The amendment of PBE IPSAS 17 Property, Plant and Equipment (“PBE IPSAS 17”) and PBE IPSAS 27 Agriculture (“PBE IPSAS 27”) to require bearer plants to be accounted for as items of property, plant and equipment under the requirements of PBE IPSAS 17, rather than being accounted for under the requirements of PBE IPSAS 27.  The produce growing on bearer plants will continue to be accounted for in accordance with PBE IPSAS 27.  This change mirrors changes recently made to New Zealand equivalents to International Financial Reporting Standards.  These amendments are effective for annual financial reporting periods beginning on or after 1 January 2018, with earlier application permitted.
  • The amendment of PBE IPSAS 12 Inventories and PBE IPSAS 17 to better align certain terms with those used in Government Finance Statistics (which is an accounting framework developed by the International Monetary Fund to provide guidelines for the compilation of fiscal accounts by governments).  These amendments are effective for annual financial reporting periods beginning on or after 1 January 2017, with earlier application permitted.

IASB amendments

Two PBE Standards were amended by the Omnibus Amendments as a result of IASB amendments.

The first was PBE IAS 12 Income Taxes, which was amended to clarify how to account for deferred tax assets related to debt instruments measured at fair value.  These amendments are effective for annual financial reporting periods beginning on or after 1 January 2017, with earlier application permitted.

The second was PBE IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which was amended to require the disclosure of the income tax expense related to the gain or loss recognised on the measurement of fair value less costs to sell, or on the disposal, of the assets or disposal group(s) constituting the discontinued operation.  These amendments are effective for annual financial reporting periods beginning on or after 1 January 2017, with earlier application permitted.

Editorial corrections

The Omnibus Amendments made minor editorial corrections to a number of PBE Standards. 

 

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