The New Zealand government has unveiled
proposals simplifying the financial reporting framework for small
and medium-sized businesses and registered charities.

The proposed reforms are a response to a
review which found the financial reporting framework too costly and
ineffective.

Under the new proposals, non-issuer companies
which do not meet the definition of large companies, which have an
annual turnover of more than $30m, or assets of more than $60m,
will be asked to prepare targeted reports for tax purposes, rather
than financial statements under the Companies Act.

The government said the changes will reduce
the number of companies required to prepare general purpose
financial reporting from 460,000 to less than 10,000 and the
changes are expected to cut business compliance costs by $90m a
year.

“The new framework will promote accountability
of senior management and ensure people with an interest in the
economic performance of a company can have confidence in the
information they receive,” New Zealand government commerce minister
Simon Power said.

The External Reporting Board is expecting to
release a consultation shortly and will continue to consult with
the community and voluntary sector in the process of creating the
simple format reports for charities.