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This study reports on surveys conducted with users of financial reports in New Zealand. We compare findings for users of reports of two types of for‐profit entities, namely those with public accountability (public entities) and those with no public accountability (private entities). The findings indicate that both types of users have similar perceptions regarding the usefulness of financial statements, with the income statement and balance sheet rated as the most useful components. Furthermore, both types of users, especially private users, perceive financial statements as the most important information source for decision making. Public users have a greater interest in supplementary information than private users. The findings of this study contribute to the debate around differential reporting for private companies and have policy implications with regard to the user‐needs approach to accounting standard setting. This paper examines perceptions of users of financial reports in public and private for‐profit entities in New Zealand. Results indicate that both user groups perceive financial statements to be useful but private users attribute higher importance to such statements. Both user groups also attribute different weightings to other supplementary information. [ABSTRACT FROM AUTHOR]

This study examines New Zealand (NZ) local government's sustainability disclosure during the five years prior to changes in the legislative environment through the introduction of the Environmental Reporting Bill. Local councils appeared to persistently increase their social and environmental disclosure practices in view of the forthcoming Bill. This is consistent with the underpinnings of legitimacy theory in that pending legislation may introduce restrictive policies and rules in the future that are not consistent with current reporting practices. The highest reporting categories were public agency and the environment, which indicates councils' drive to maintain legitimacy. Further, the results show that local government environmental reporting focused on non-monetary, and to a lesser extent monetary, information. In the absence of mandatory guidelines, the results also indicate that NZ local councils have voluntarily reported sustainability information consistent with GRI indicators. [ABSTRACT FROM AUTHOR]

This study examines the impact of improvements in institutional oversight specifically for compliance with International Financial Reporting Standards on accrual quality in Europe. The sample comprises 9339 firm-year observations from a treatment sample of three European countries that had either non-existent or relatively weak institutional oversight systems at the start of the sample period 2006-2010 but improved oversight systems thereafter, and a benchmark sample of six other European countries that had institutional oversight systems from the start of this sample period. After controlling for legal system, rule of law and other variables, we find incremental improvement in accrual quality in the treatment sample relative to the benchmark sample from the pre-enforcement period 2006-2007 to the enforcement period 2008-2010. The results suggest that institutional oversight has an incrementally positive impact on accrual quality over and above that attributable to legal system, rule of law and other variables. The results are robust to different measures of accrual quality, alternative enforcement proxy and alternative samples. [ABSTRACT FROM AUTHOR]

The last 30 years have seen public sector accounting in many countries undergo considerable change. More recently, some governments adopted accrual accounting and International Public Sector Accounting Standards (IPSAS), some adopted modified International Financial Reporting Standards (IFRS) while others continued with cash-based accounting. New Zealand (NZ) has, for more than two decades, followed a sector neutral approach to financial reporting and standard setting where the same accounting standards were applied to all entities in all sectors: for-profit, not-for-profit and the public sector. This period included the adoption of IFRS by for-profit entities with minor modifications for the public sector. The suitability of IFRS for the public sector has been questioned and, recently, standard setters in NZ decided to adopt a sector-specific standard-setting approach with multiple tiers for each sector. The for-profit sector will continue to follow IFRS but reporting standards for the public sector will be based on IPSAS. In this period of change we sought the views of preparers of public sector financial reports regarding the users of such reports and their preferences for the public sector reporting framework. We also sought the views of the preparers regarding the usefulness of each financial statement for users, and whether the benefits of reporting by their organisations exceeds the costs. The findings indicate support for maintaining IFRS as a basis for reporting in the NZ public sector. However, IPSAS modified to NZ conditions is also perceived as an acceptable option by respondents in this study. The income statement is, in the opinion of the respondents in this study, the most useful statement while cash flows appear to hold little value. A high proportion of respondents believe that the benefits of reporting exceed the costs, which contradicts the view that such reports are mainly compliance documents that provide little value. This finding contributes to the continuing debate on costs versus benefits on the recent introduction of IPSAS as the reporting framework for the public sector and the perceived appropriateness of IPSAS in public sector reporting. [ABSTRACT FROM AUTHOR]

This study examines the behaviour of earnings, accruals and impairment losses of failed finance companies in New Zealand. It draws on conservatism in the development of research hypotheses about accounting variables that are likely to contain clues to future failures of finance companies. The hypotheses are tested by examining the trend of earnings after tax (EAT), accruals and impairment losses of 32 finance companies that failed from 2006 to 2011. Data were collected from the annual reports of the sampled companies and the first reports of receivers of failed companies. The study finds that EAT and accruals declined, and impairment losses increased significantly in the last two financial statements prior to failure, when compared with other years. This suggests that changes in EAT, accruals and impairment losses may provide indications of impending failure. [ABSTRACT FROM AUTHOR]

While many countries have adopted International Financial Reporting Standards (IFRS) for private sector enterprises, New Zealand (NZ), Australia and the United Kingdom adopted IFRS for all sectors, including the public sector. This approach is consistent with the concept of sector-neutral accounting standards that gained wide acceptance in NZ and Australia in the early 1990s. Although a number of studies have assessed the impact of IFRS adoption in the private sector, and the public sector has provided some evidence as to the effects of IFRS adoption on financial statements, the costs of adopting IFRS have not been examined. One measure of cost is the change in audit fees in an IFRS reporting environment. The authors examine the impact of IFRS adoption in the NZ public sector on audit fees and audit effort. They obtained data regarding audit fees and audit effort in the NZ public sector and compared the pre-adoption year with the first year of adoption for all segments. Their results indicate a substantial increase in audit fees and audit effort in the first year of IFRS adoption for all segments, with some variation across the segments. Two sectors, local authorities and energy companies, have had significant increases in audit fees and audit effort. These findings provide some empirical evidence regarding the cost of transition to IFRS and are of interest to researchers and regulators in countries that are currently considering transitioning to IFRS or IFRS-based International Public Sector Accounting Standards standards in reporting for the public sector. [ABSTRACT FROM AUTHOR]

Following a sector neutral approach to standard setting for about a decade, New Zealand adopted International Financial Reporting Standards (IFRS) for profit-oriented entities and all other sectors including the public sector, from 2007 with the option to adopt early in 2005. Some studies have examined the impact of IFRS adoption on the accounts of profit-oriented entities and found that this change had a significant impact on assets, liabilities and equity. This study examines the impact of adoption of IFRS on New Zealand public sector entities' financial statements. We analyse and compare the reconciliation notes of IFRS and pre-IFRS New Zealand Generally Accepted Accounting Principles (NZ GAAP) reported in the first IFRS annual reports of all New Zealand public sector entities. The results indicate that there have been some significant increases in assets and liabilities, and significant decreases to overall equity in some sub-sectors of the public sector. The primary causes of such changes were recognition of employee entitlements (IAS 19) and recognition of derivative financial instruments (IAS 39) for many public sector entities, as well as remeasurement of deferred taxation for public sector commercial enterprises (IAS 12). In addition, public sector entities made many reclassifications between current and non-current financial statement elements that did not impact on the aggregate balances of the entities' balance sheets. In general, the findings of this study are similar to findings of studies that examined the impact of IFRS on private enterprises. The findings of this study contribute to the understanding of the implication of IFRS adoption and might be useful to policy makers and regulators who are currently reviewing the applicability of IFRS to public sectors in Australia and New Zealand and other countries. [ABSTRACT FROM AUTHOR]

The impact of the adoption of International Financial Reporting Standards (IFRS) on the accounts and the quality of earnings of New Zealand firms is examined. Our analysis of IFRS adjustments for the last period under pre-IFRS NZ Generally Accepted Accounting Principles (GAAP) reveals that total assets, total liabilities and net profit were significantly higher under IFRS than under pre-IFRS GAAP. Profit and equity under IFRS were increased by adjustments for goodwill and other intangibles and investment property, and decreased by adjustments for employee benefits and share-based payments. Using data for 2002-2009, we find that absolute discretionary accruals were significantly higher under IFRS than under pre-IFRS NZ GAAP, suggesting lower earnings quality under IFRS than under pre-IFRS NZ GAAP. However, we find no significant differences in signed discretionary accruals and the ability of earnings to predict one-year-ahead cash flows between pre-IFRS NZ GAAP and IFRS. These results are consistent across alternative measures of accruals quality, sample selection and whether firms elected to adopt IFRS in 2005 rather than comply with them in 2007. [ABSTRACT FROM AUTHOR]

The development of the Internet as a global medium for the dissemination of corporate financial information creates a new reporting environment. Extensive literature examines the determinants of voluntary financial reporting through traditional media such as print–based annual reports. This paper extends this literature by examining the voluntary adoption of the Internet as a medium for transmitting financial reports and determinants of such voluntary practice by New Zealand companies. The results indicate that some determinants of traditional financial reporting—firm size, liquidity, industrial sector and spread of shareholding—are determinants of voluntary adoption of Internet financial reporting (IFR). However, other firm characteristics, such as leverage, profitability and internationalization do not explain the choice to use the Internet as a medium for corporate financial reporting. [ABSTRACT FROM AUTHOR]

This study examines the judgement processes of New Zealand financial controllers when determining whether an investor is capable of exercising significant influence over an investee. The results of this study provide evidence that the "20% interest" threshold is the most important factor in these judgement processes. Further, the results indicate a high degree of inter-subject consensus and intra-subject consistency and self-insight which could be attributed to the high weight given to the "20% interest" threshold. Although the "20% interest" threshold is often criticised for being arbitrary, the results of this study suggest that the use of this cut-off as a judgement cue may help achieve greater consistency and comparability in financial reporting. [ABSTRACT FROM AUTHOR]