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This study examines the impact of the Financial Reporting Standard No. 44 New Zealand Additional Disclosures (FRS 44) amendment issued by the New Zealand Accounting Standards Board (NZASB). The FRS 44 amendment aligned disclosure requirements for managerial assessments of going concern risk in financial reports with auditing standards for periods ending on or after 30 September 2020. We first present descriptive evidence on the frequency of going concern opinions (GCO), frequency of going concern issues identified as key audit matters (GCKAM), and frequency and content of managerial assessments of going concern risk (GCMA) before and after the FRS 44 amendment. Second, we show lower audit fees and shorter audit lags for financially distressed companies post‐FRS 44 implementation. This suggests that the harmonisation of accounting and auditing disclosure requirements alleviates tension during the going concern decision‐making process for affected companies, subsequently leading to reduced audit fees. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to provide a snapshot of voluntary sustainability assurance in New Zealand (NZ) in 2020. we assess the frequency of different assurance elements and discuss aspects of current practices that potentially contribute to the audit expectation gap. we also test whether the determinants of voluntary sustainability assurance in NZ are consistent with international findings. Design/methodology/approach: For 118 companies listed on the New Zealand Stock Exchange in 2020, we hand collected data on whether sustainability information was assured, subject matter assured, assurance level, outcome, provider, disclosure of detailed procedures, standard referenced and criteria applied. we then examine the influences of voluntary sustainability assurance using both univariate and regression analysis. Findings: Approximately 20% of listed companies that disclosed sustainability information provide a sustainability assurance report, indicating low levels of assurance compared to international practices. we note that the presence of different forms of assurance and certification, placement of sustainability information before financial statements and the associated audit report and mixture of assurance levels potentially contribute to the audit expectation gap. Further, voluntary sustainability assurance practices are diverse, and there are notable differences between Big Four accounting firms and other providers in terms of assurance level and standard referenced. Consistent with prior studies, we find size and industry classification as two main drivers of voluntary sustainability assurance. Originality/value: We contribute NZ-specific insights to the sustainability assurance literature. The findings on voluntary sustainability assurance practices and reflection on the audit expectation gap are timely and relevant to the new climate-related disclosure mandate and pending assurance requirements. [ABSTRACT FROM AUTHOR]

This paper examines the impact of capitalising operating leases on the financial ratios for New Zealand councils (local government). It finds that required financial management and leverage ratios significantly worsen, but by an immaterial amount. In contrast, return on assets significantly increases by a material amount. This extends the constructive lease capitalisation literature to public benefit entities. This paper also discusses the role of councils as both lessees and lessors and that any change to lessor accounting for operating leases would have a greater impact on councils, although likely still immaterial. As a recent exposure draft suggests the convergence of International Public Sector Accounting Standard lease accounting with International Financial Reporting Standard 16, this paper provides timely evidence to standard‐setters. [ABSTRACT FROM AUTHOR]

Non‐generally accepted accounting practice (non‐GAAP) earnings provoke mixed opinions on their usefulness. We provide evidence over a 15‐year period that captures changes to accounting standards, economic conditions and regulatory guidance notes on non‐GAAP earnings. First, many firms do not use non‐GAAP earnings measures, with its popularity peaking at almost 59% in 2012 compared to below 33% in 2004, before decreasing to under 48% by 2018. The most common adjustments are tax, interest and depreciation, consistent with the preference for operating performance metrics. We document an improvement in the frequency of 'Unknown' adjustments (those that cannot be reconciled), reaching 32% in 2007, but it was not until 2013 that a significant improvement occurred. As this coincides with the timing of a Financial Markets Authority (FMA) guidance note requiring non‐GAAP earnings reconciliations, implying greater disclosure transparency needs clear regulatory guidelines. Second, we find an elevated use of asset impairment, restructuring and fair value adjustments around the Global Financial Crisis (GFC), which suggests managers perceive GAAP earnings have to be supplemented during major economic shocks. This paper describes non‐GAAP earnings disclosures in New Zealand. While they are not generally used by the majority of firms, their usage peaked at the time of the global financial crisis. Greater disclosure transparency may have been encouraged by clear regulatory guidelines. [ABSTRACT FROM AUTHOR]

This paper examines the effect of capitalising operating leases on the total liabilities to total assets and surplus to total asset ratios for a sample of New Zealand charities. It finds that both ratios have significantly increased post‐capitalisation and that expenditures change. This extends the constructive lease capitalisation literature to the not‐for‐profit sector. This paper also discusses the characteristics of charities' operating leases and how they differ from the for‐profit sector. Overall, this paper provides timely evidence to standard setters, especially considering the current exposure draft converging International Public Sector Accounting Standard lease accounting with International Financial Reporting Standard 16 Leases. This commentary examines the effect of capitalising operating leases on key ratios of New Zealand charities. It finds that the ratios have increased and expenditures have changed post‐capitalisation. [ABSTRACT FROM AUTHOR]

We provide descriptive evidence on enforcement actions (i.e., regulatory enquiries and their outcomes) following the adoption of International Financial Reporting Standards (IFRS) in New Zealand. The most common enquiries made by the Securities Commission of New Zealand post‐IFRS adoption period (2007–2010) relate to IFRS transition, financial statement presentation, financial instrument disclosures and related party disclosures. We conclude that the perspective of public enforcement (securities regulators) differs from that of private enforcement (auditors) and focuses on disclosure issues. We discuss the implications of this result for current International Accounting Standards Board (IASB) issues, such as materiality and professional judgment in principles‐based standards. [ABSTRACT FROM AUTHOR]

This paper examines summary annual reports (SAR) as an alternative channel for communicating financial information. We use a sample of New Zealand local governments (councils) that are required to report audited SAR. Using various measures, we compare document length and readability of SAR and annual reports (AR). We find that SAR are approximately 10 percent of the AR length and both have a ___very difficult___ readability score. We then use a disclosure index to examine the relation between SAR report length and the level of disclosures. After controlling for other factors that impact the level of disclosure, we conclude that the reduction in SAR is driven by lower levels of content. We then discuss the policy implications of our findings. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to investigate whether constituents respond to local government accounting data. Since 2006, New Zealand local authorities (councils) have been required to disclose long-term accounting data relating to forecast operating revenue and expenses. Design/methodology/approach – The authors test whether the difference between the actual operating expenditure as reported in the annual report and as forecasted is associated with electoral outcomes. Findings – The authors find that accounting performance and the sign of accounting performance (i.e. expenditure over-runs) are associated with greater councilor re-election. Furthermore, accounting performance is also associated with greater voter turnout. Originality/value – The production and disclosure of council planning data is based on the perceived accountability of the council to its constituents. The authors find that accounting, in an electoral context, has both information content and conveys good/bad news about accounting performance to voters. [ABSTRACT FROM AUTHOR]

International Financial Reporting Standards ( IFRS) are often described as principles-based; however, we show that IFRS and Australian pre- IFRS expense-related standards are more rules-based than pre- IFRS expense disclosure in New Zealand. Thus, we examine expense disclosure in New Zealand and Australia around IFRS adoption to provide evidence on the effect of more or less rules-based standards on voluntary disclosure. First, we add to the rules versus principles-based standards debate by finding higher voluntary expense disclosure under more rules-based standards (e.g. IFRS). This contrasts with expectations, as we would expect fewer voluntary disclosures under more rules-based standards as there would be fewer possible voluntary disclosures. Second, we document that New Zealand firms have significantly less voluntary expense disclosure than size- and industry-matched Australian firms in both the pre- and post- IFRS period. However, all measures of expense disclosure significantly improved post- IFRS for New Zealand, whilst little change occurred for Australian firms. Thus, there is greater financial statement comparability across these countries post- IFRS, but not full harmonization. Third, we show that the relationship between most firm characteristics and expense disclosure is weaker post- IFRS. In addition, cross-listed firms and loss-making firms have a higher level of expense disclosure, as contrasted with firms in the investment and property industry which have a lower percentage of unspecified expenses but also report fewer voluntary expenses. [ABSTRACT FROM AUTHOR]