Date posted: 22/11/2021

Reporting and audit thresholds set to increase

In brief

  • The amendments increase monetary amounts to account for inflation
  • Various pieces of legislation are amended, which impacts a range of entities including companies and charities
  • It impacts which of those are required to prepare general purpose financial statements and have them audited

The Financial Reporting (Inflation Adjustments) Regulations 2021 have been issued and amend various sections of the Financial Reporting Act 2013, the Charities Act 2005, the Companies Act 1993, and the Friendly Societies and Credit Unions Act 1982. The amendments adjust monetary amounts to account for inflation. This has the effect of increasing various reporting and audit thresholds specified in legislation as outlined in the table below. These regulations, and hence the new thresholds, come into force on 1 January 2022.

Section 45(1) of the Financial Reporting Act 2013

Extant

In each of the 2 preceding accounting periods, 

a) the total assets of the entity and its subsidiaries (if any) exceed $60 million as at the balance date, or
b) the total revenue of the entity and its subsidiaries (if any) exceeds $30 million 

New
 
In each of the 2 preceding accounting periods, 

a) the total assets of the entity and its subsidiaries (if any) exceed $66 million as at the balance date, or
b) the total revenue of the entity and its subsidiaries (if any) exceeds $33 million 

Impact
 
Meaning of “large” (other than an overseas company or a subsidiary of an overseas company) – those that are required to prepare general purpose financial statements 

Section 45(2) of the Financial Reporting Act 2013

Extant

In each of the 2 preceding accounting periods, 

a) the total assets of the entity and its subsidiaries (if any) exceed $20 million as at the balance date, or
b) the total revenue of the entity and its subsidiaries (if any) exceeds $10 million 

New
 
In each of the 2 preceding accounting periods, 

a) the total assets of the entity and its subsidiaries (if any) exceed $22 million as at the balance date, or
b) the total revenue of the entity and its subsidiaries (if any) exceeds $11 million 

Impact
 
Meaning of “large” for an overseas company or a subsidiary of an overseas company – those that are required to prepare general purpose financial statements and have them audited

Section 46 of the Financial Reporting Act 2013

Extant

In each of the 2 preceding accounting periods, the total operating payments of the entity are $125,000 or more

New

In each of the 2 preceding accounting periods, the total operating payments of the entity are $140,000 or more

Impact

Leaning of a ‘specified not-for-profit entity’ – those that required to prepare general purpose financial statements in accordance with generally accepted accounting practice (ie they cannot use the Tier 4 cash accounting standard)

Section 204 of the Companies Act 1993

Extant

In each of the 2 preceding accounting periods, 

a) the total assets of the business exceeds $20 million as at the balance date, or
b) the total revenue of business exceeds $10 million 

New
 
In each of the 2 preceding accounting periods, 

a) the total assets of the business exceeds $22 million as at the balance date, or
b) the total revenue of the business exceeds $11 million 

Impact
 
The meaning of ‘large’ for a New Zealand business of an overseas company – those that are required to prepare general purpose financial statements (calculated as if that business were an entity) and have them audited

Section 42D(1)(a) of the Charities Act 2005

Extant

In each of the 2 preceding accounting periods, the total operating expenditure of the entity and all entities it controls (if any) is $1 million or more

New


In each of the 2 preceding accounting periods, the total operating expenditure of the entity and all entities it controls (if any) is $1.1 million or more

Impact

Meaning of a ‘medium’ charitable entity – those that are required to have their financial statements reviewed

Section 42D(1)(b)(ii) of the Charities Act 2005

Extant

In each of the 2 preceding accounting periods, the total operating expenditure of the entity and all entities it controls (if any) is $500,000 or more but less than $1 million

New

In each of the 2 preceding accounting periods, the total operating expenditure of the entity and all entities it controls (if any) is $550,000 or more but less than $1.1 million

Impact

Meaning of a ‘large’ charitable entity – those that are required to have their financial statements reviewed

Section 64(2) of the Friendly Societies and Credit Unions Act 1982

Extant

In each of the 2 preceding accounting periods, the total operating expenditure of the society or branch is $30 million or more

New

In each of the 2 preceding accounting periods, the total operating expenditure of the society or branch is $33 million or more

Impact

Those that are required to prepare general purpose financial reports and have them audited

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