Adoption of New Zealand equivalents to international financial reporting standards
In August 2003 the Government announced that the Crown would apply New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) in the preparation of its financial statements from Budget 2007. To comply with this decision Inland Revenue will apply NZ IFRS in the preparation of financial statements for the year ended 30 June 2008. However, as comparative figures must be presented on the same basis of accounting, the comparative figures for the year ending 30 June 2007, and an opening Statement of Forecast Financial Position at 1 July 2006, will need to be restated in accordance with NZ IFRS.
Inland Revenue has formed a project team to manage the transition to NZ IFRS. Independent external advice is sought where necessary. The project is monitored by an internal project steering committee chaired by the Group Manager Finance and Planning, in his capacity as Chief Financial Officer.
To date the project team has completed a high level assessment to identify key differences between current New Zealand Generally Accepted Accounting Practice (NZ GAAP) and NZ IFRS that have an impact on Inland Revenue. The project team is working towards the conversion timetable.
Key impacts will be in the following areas:
Loans and receivables
Under NZ IAS 39 - Financial Instruments: Recognition and Measurement, financial assets (including loans and receivables) are required to be recognised initially at fair value and subsequently at amortised cost.
Inland Revenue has significant debtor portfolios which are designated as "Loans and Receivables". These include tax debt, child support debt and family support debt. On transition to NZ IFRS, these debtor portfolios will be recognised at fair value in the Financial Schedules for Administered Accounts.
The student loan debt has been recognised at fair value in the current financial year.
Revenue recognition for taxes
There are currently no standards in place that deal comprehensively with accounting for revenues from non-exchange transactions by Inland Revenue. The International Public Sector Accounting Standards Board (IPSAS) has issued an Exposure Draft (ED 29) Revenue from Non-Exchange Transactions (Including Taxes and Transfers). Inland Revenue has reviewed ED 29 and made a submission to the IPSAS for consideration and awaits the outcome of the consultation.
This page does not form part of the Statement of Accounting Policies and has not been audited.