- The new revenue and financial instruments standards will be used for the first time on financial reports for the year ended 30 June 2019
- This is also the comparative year for the new leases standard
- We have tools and resources to help with the implementation of AASB / NZ IFRS 9, 15 and 16
Financial reporting in Australia and New Zealand is on the brink of the biggest change since the adoption of IFRS. Three new accounting standards are about to significantly change the accounting treatment of financial instruments, revenue and leases – with potential implications for the whole business.
Management and boards need to be aware that this is the first time the new revenue and financial instruments standards will apply to entities with a 30 June year-end. For some entities, the new revenue standard will impact when revenue is recognised, which could result in a mismatch between the timing of the recognition of revenue, and the expenses associated with earning that revenue. Management and boards may wish to renegotiate contracts and other agreements to maintain the original intent. Under the new financial instruments standard, there is potential for less profit or loss volatility, and an increased ability to hedge. Therefore, management and boards may wish to reconsider treasury and risk management models.
This is also the comparative year for the new leases standard. It must be applied retrospectively to leases already in effect on the transition date. The start of the comparative period – 1 July 2018 – is the date of transition. So changes should already have been made to systems and processes to ensure sufficient data capture. Most leases will be recognised on the balance sheet, causing the profile of expenses to also change (i.e. finance costs and depreciation instead of lease charges). Management and boards need to consider the new standard's potential impact on many commonly used financial metrics, such as those attached to debt covenants and employee incentive schemes (e.g. EBITDA). This may even lead to the reconsideration of current leasing arrangements, and the reassessment of previous lease versus buy decisions.
We have produced a number of resources to help with the application of the new accounting standards, AASB / NZ IFRS 9, 15 and 16, for the first time. If you are not across these changes yet, the following may be of use.
Interactive online tools to give you an overview of the key requirements.Find out more
We have recorded webinars available on demand.Learn More
Technical articles written by subject matter experts.Read More
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