Instead of the volumes of standards we used to have, the IRD standards applying to most businesses are summarised on one page. You may feel like I'm cheating saying one page - a web page can be longer than a printed page - but the standard starts halfway down the web page and is very brief. Your first response is likely to be "that's incredibly simple - where's the rest". However, there are a couple of issues I'd like to point out.

 

It says you have to produce a profit and loss and a balance sheet. (Unlike the XRB statements it doesn't include a statement of cash flows.) There is no reference to what is to be included in these - but these terms themselves imply basic accounting standards. I've seen people throw reports together that make no sense. If they submitted these to IRD they would probably not be regarded as valid. So while it is true standards like the XRB and the old NZICA standards don't apply and your account reports can be a lot simpler, the core figures must still make sense from an accounting perspective, at least as defined by IRD.

 

The second thing is that as professional accountants, we are encouraged to see standards as a minimum. So we have the option of basically doing as we have in the past - plus IRD's new requirements. For now, we're largely sticking with what we have fairly much always done, with additional information required by IRD. The approach was supported by about 3/4 of those who attended a webinar in late March 2015.

 

Also, some may require reports for other than tax purposes. These include banks, other shareholders and so on. They may not require full XRB reporting - but they'll at least want satisfaction the accounts can be relied on. And they'll probably want comparatives on the same basis. So this won't apply to all - but it's something else to be considered as this reduced reporting settles down.

 

Some may say why not do the bare minimum? Won't we cost clients more money? If we were starting from scratch that might be so. But there's actually less effort required to keep what we've already standardised on. Believe it or not, we don't enjoy needless work. The less time we spend on actually producing accounts (as opposed to getting the accounting data right in the first place) the happier we are. But whether you use us or another professional accountant, you're unlikely to see much happening in the way of lowering your fees. Some may even raise them to reflect the increased information required by IRD. (Hopefully not significantly.)

 

If you want more detail on how to determine if you fall into the more formal accounting standards:

XRB Know your standard