March 2013

MoneyW
Works is po
owerful accountiing softw
waree that delivers much more than just the num
mbers.
Ingenious features saave everyone time annd cllever reports lead to
o betteer business deecisions.
It’s full of great id
deaas. Like the abbility to
o creeate your ownn ledgeer cateegories to repport on.
)EWMP]WLLS[GPMIRXXWLLS[WTIGM½GEEVIEWSJXLIMMVFYWMRIWWIWEEVITIIVJSVQMRRK8S½RHSYYX QSVI
XEPOHMVIIGXP]XSXLIITIISTPI[LSHIIZIPSTIH
H XLIIW]WXIQSV ZMWMX[[
[[QSRRI][SVOWRIXXR^^
0329TBNCAJD
Call 09 486 0282 an
nd we’ll send som
meone ro
ound
d to show you just ho
ow well MoneyWorkss works.
Cover2
MARCH 2013
NZICA RESOURCES
Financial Accounting and Reporting
Providing you with knowledge to support your business and personal growth.
IFRSs LEARNING AND
ASSESSMENT PROGRAMME
Understand and apply International
Financial Reporting Standards (IFRSs)
with confidence. This interactive
online learning programme consists
of 36 modules that will enable you to:
CORPORATE
eLEARNING
PUBLIC PRACTICE
CERTIFICATE
APPLICABLE FINANCIAL
REPORTING STANDARDS
2013
APPLICABLE FINANCIAL
REPORTING STANDARDS VOL 1
New Zealand Equivalents to International Financial
Reporting Standards for Tier 1 and Tier 2 For-Profit Entities
> understand and apply
IFRSs principles, concepts and
knowledge in a commercial
setting
> assess the standards’ commercial
impact on your business
PUBLICATION
Standard $260
Member $208
STUDENT EDITION –
NZ IFRS
> make informed business decisions
> provide practical business advice
> produce and interpret
New Zealand Equivalents to
International Financial Reporting
Standards for Tier 1 and Tier 2
For-Profit Entities.
3 VOL PUBLICATION
ALL
2013
STUDENT EDITION – NZ IFRS
New Zealand Equivalents to International Financial
Reporting Standards for Tier 1 and Tier 2 For-Profit Entities
Standard $950
Member $665
nzica.com/ifrscert
A customised version of the
Applicable Financial Reporting Standards, this publication
includes relevant standards
selected by NZ academics.
STUDENT
PUBLICATION
Student $119
All prices include GST and NZ postage where applicable
JN9539
To find out more visit nzica.com/resources or call 0800 4 NZICA
MARCH 2013
1
In this issue
On the cover:
CA DJ Melissa Robinson – p28.
EDITOR Aaron Watson ([email protected])
ASSISTANT EDITOR Jennifer Black
DESIGN & PHOTOGRAPHY David Geard
SUBSCRIPTIONS Customer Service Centre
(contact: [email protected]) Tel: 04-474 7840
CIRCULATION 31,500 copies printed
PUBLISHER The Chartered Accountants Journal is published
monthly (except January) by the New Zealand Institute of Chartered
Accountants, PO Box 11-342,
Level 7, Tower Building
50 Customhouse Quay
Wellington 6011
Tel: 04-474 7840
Fax: 04-499 8033
Web: www.nzica.com
All material appearing in The Chartered Accountants Journal is
copyright.
Editorial material does not necessarily reflect the views of the Editor or
the New Zealand Institute of Chartered Accountants.
PRINTING The Chartered Accountants Journal is printed by Webstar.
ADVERTISING Advertising sales by
Rosie Payne
DDI: 09-917-5931
Mob: +64 27 491 3570
Email: [email protected]
Gavin Leary
DDI: 09-927 7112
Email: [email protected]
The Chartered Accountants Journal is the official magazine of the New
Zealand Institute of Chartered Accountants.
ISSN 2253-3877 (Print)
ISSN 2253-3885 (Online)
2
MARCH 2013
28
Hit the decks
It started as a hobby, but Melissa Robinson CA’s
skill as a DJ has seen her put down the
calculator, take a career break, and really hit the
decks
26
New CE “just a boy from the ‘Naki”
NZICA’s new chief executive Craig Norgate
FCA reached corporate heights in the dairy
industry at a young age, and but insists that
despite his successes he’s still just “a boy from
the ’Naki”
33
Work/Play
The Journal’s new feature highlighting life
beyond the office
News
6 Quizzical Corner – General knowledge
South African connection
Representatives of the South African Institute of Chartered Accountants
(SAICA) visited NZICA in January
Public Sector Conference
8 Future strength
Why are we discussing the creation of a new institute with ICAA?
10 Revision of NZICA’s Code of Ethics
Proposed changes to the Code of Ethics will affect all members
12 Single institute discussed
Collaboration delivers benefits
14 Immigration 1950s
Immigration and land ownership have always been highly contentious issues
in New Zealand
15 Condolences
16 Partner News
19 New admissions
Congratulations to our people on the rise
20 Ask Uncle Tom
Discipline must sometimes be imposed
22 Financial reporting – a changed landscape
The completion of NZICA’s Financial Reporting Bill submission provides
a timely basis to take stock of significant financial reporting changes and
indicate what is being done to support members
26 New CE “just a boy from the ‘Naki”
NZICA’s new acting chief executive Craig Norgate FCA reached corporate
heights in the dairy industry at a young age, and but insists that despite his
successes he’s still just “a boy from the ‘Naki”
28 Hit the decks
It started as a hobby, but Melissa Robinson CA’s skill as a DJ has seen her
put down the calculator, take a career break, and really hit the decks
30 SFR for NFPs
Simple Format Reporting Standards for Not-for-Profit Entities (NFPs)
33 Work/Play
The Journal’s new feature highlighting life beyond the office
43 What’s your tax plan?
With a few weeks left until 31 March 2013, tax planning for clients should
be a priority
MARCH 2013
3
44 Succession/exiting the family business
The current age profile of New Zealand is alarming with a million
people over the age of 60
46 This is the end
The reality is that a third of weddings will be followed down the line
by a divorce
48 Risk vs return
Ensuring a comfortable financial future is a key goal for all of us.
We look at ten options for maximising your nest egg?
Regulars
50 Concern about going concern
An auditor plays a vital role in deciding whether an entity can
remain viable and continue in business as a going concern
52 Helping your clients to a happy new year
The end of the financial year is the perfect time to build a closer
relationship with your clients
54 Audit just not sexy
There is a growing worry that audit is just not sexy enough for
today’s part qualified accountants
56 Cabinet reshuffle puts the heat on Shearer
Will David Shearer follow John Key’s bold approach to shuffling his
nearest colleagues?
58 You can’t have it both ways
Improve your business by a focus on throughput rather than
chargeable hours
60 Peer-to-peer lending
Technology could spell the end of the “mono banking culture”
64 Image Matters
Emma Atkins, Prov CA from Auckland, gets a new look to go with a
new workplace
66 Library – what’s new
68 Library – financial accounting and reporting
70 Trusted advice
There are a number of things to consider to ensure trusts are
administered well and litigation risks are minimised
74 SmartMove
76 Classifieds
78 IR’s view of your satisfaction
Are members satisfied? Results from Inland Revenue
4
MARCH 2013
Smartpayroll
New
P5
MARCH 2013
5
Latest
South African
connection
Quizzical
Corner
Compiled by Quizmaster d Flash
• General knowledge •
1. Who is hosting the 2022 Football World
Cup?
2. In which country is Mt Kilimanjaro?
3. Which actor has featured in more
Quentin Tarantino movies than anyone
else?
4. Who was TIME magazine’s Man of the
Year in 1938?
5. Who is the all-time leading scorer in the
NBA?
6. Which shark can swim in both saltwater
and freshwater?
7. Who wrote the novel Ulysses?
8. Which film franchise is currently the
most profitable of all time?
9. Which has greater land area, North or
South Korea?
10. From which American state did The
Doors originate?
1.Qatar 2.Tanzania 3.Samuel L Jackson
4.Adolf Hitler 5.Kareem Abdul-Jabbar
6.Bull shark 7.James Joyce 8.Harry Potter
9.North Korea 10.California
ANSWERS
Scores
1–3
Caterpillar
4–7
Cocoon
8–10
Butterfly
6
MARCH 2013
REPRESENTATIVES OF THE South African
Institute of Chartered Accountants (SAICA)
visited NZICA in late January to catch up on
changes at the New Zealand Institute.
SAICA Chief Executive Officer Matsobane
Matlwa CA and Senior Executive Azim Omar
CA spent just under a week meeting with
outgoing Chief Executive Terry Mclaughlin FCA,
and incoming CE Craig Norgate FCA, along
with the executive team and representatives of
the Chartered Accountants Program.
“It is a benchmark study, to see what NZICA
is doing so that we might investigate some
of the things that we see here for our own
institute,” says Matlwa.
“It is something we do every few years,
part of improving our systems, process and
practices.”
Omar says the development of the new
Chartered Accountants Program was one of the
projects SAICA was particularly interested in.
“We have also looked at the changes
in governance that you have undertaken,
particularly in regard to the roles of your Board
SAICA Chief Executive Officer Matsobane
Matlwa CA (left) and Senior Executive Azim
Omar CA
and Council. It is quite different to what we
have in South Africa.”
SAICA faces funding challenges, and is
seeking ways to attract more people to the
profession.
“We would like to increase the number
of people qualifying, and one of the bigger
challenges for SAICA is to keep people working
for us for longer – and to develop a succession
plan for the executive team,” says Matlwa.
The pair spent just under a week in New
Zealand and say they enjoyed their visit very
much.
Public Sector Conference
NZICA’s Public Sector Conference later this
month will focus on change, and how this
will likely affect the shape of the public
sector in the future.
The theme for the conference at the
Amora Hotel in Wellington on 21-22 March
is “Leading innovation and change”.
Attracting, retaining and engaging great
staff is a focus of this conference.
Panel sessions also feature in the
program, with one titled: Better Public
Services – collaborating and innovating
across public sector agencies. CEO of the
Department of Prime Minister and Cabinet
Andrew Kibblewhite and Colin MacDonald,
Chief Executive and Government Chief
Information Officer, Department of Internal
Affairs will provide background on the
Government’s Better Public Services
programme.
The conference will also examine how
to create an environment conducive to
learning, adapting and innovation, and what
innovation means in a public sector setting.
Diane Turner from the Canterbury
Earthquake Recovery Authority (CERA) will
share case studies of innovation in response
to these quakes.
Economic recovery is also on the agenda,
with the chief executive officer of the
Ministry of Business Innovation David Smol
looking at the Government’s plan in this
area.
There is still time to register online so
visit nzica.com/publicsectorconference and
secure your place by 11 March.
Toyota
Repeat
Page7
Steve Price,
Toyota Financial Services
brand ambassador
“Let’s have a little talk about
the birds and the bees…”
Even fleet leasing has a natural lifecycle – from the time
vehicles are manufactured right through to their final
ownership many kilometres down the line.
At Toyota Financial Services, we’re unique because our value chain drives
that entire lifecycle, helping you find more value and savings in all areas of
your fleet cost centre. Which is better for your business – naturally.
Visit tfs.co.nz or call 0508 46 86 96 to find out more.
/ZBZyr]´Zs~k„s~k©o[[¸ªš8{ry]
TFS9411_M
MARCH 2013
7
Latest
Future strength
Why are we discussing the creation
of a new institute with ICAA?
By Graham Crombie FCA, NZICA Board Chair
AS I’VE TRAVELLED AROUND New Zealand over the past month the single most
asked question from members has been “why?”
Why are we entertaining creating a new institute with the Institute of Chartered
Accountants in Australia (ICAA)? Why do we need to go down this path? Why do I
think this is in the best interests of NZICA members?
Without wanting to jump the gun of the Council consultation process taking
place, I think the time is right to start addressing some fundamental questions.
THE NZICA REALITY
Members are demanding more advanced services and education offerings from
NZICA.
Your needs are increasing and you are looking to your Institute for tools and
services that grow your skills, develop your career, make it easier to run a practice
or to do business. At the same time members are increasingly based around the
world.
The challenge, as a membership body of 28,000 full members, is to develop the
scale of financial reserves to make the investments required to service these needs.
A good example of this is the new Chartered Accountants Program. NZICA
has invested approximately $2m in a program that has had total investment of
more than $11m. We have significantly benefited from being able to develop the
Program collaboratively with ICAA.
The Program we collectively delivered on 4 February 2013 takes training of
future Chartered Accountants to a whole new level. It is interactive, delivered
online and includes integration of a technology platform that will enable us to
make world-class enhancements to the Program into the future.
8
MARCH 2013
A future-fit Chartered Accountants Program is the
backbone of our brand. The Program must be the best
in order to attract the best talent. We simply couldn’t
contemplate delivering such a step change on our
own.
RESPONSIVENESS
Your Board wants to be responsive to the dynamic
needs of members with relevant services. The
reality is that these services, coupled with required
ongoing enhancements to the Chartered Accountants
Program, often necessitate increasingly advanced IT
platforms and investment.
The decisions the Board and management
make are a constant trade-off. As our membership
demographics change and the membership becomes
increasingly fragmented these trade-offs are going to
become more significant and apparent.
WHAT TO DO ABOUT IT?
It’s our role as strategic trustees of the profession
in New Zealand to consider the options. As business
advisers yourselves you will recognise that the
options are basically 1) increase revenue, 2) stop
doing something, or 3) collaborate with a partner.
Here’s what that might look
like for NZICA:
It’s my view that we must pick our partner early so
we still have some cards to play.
Option one
COMPETITION
Fees are increased significantly
(say 30%+) over the next few
years in order to lift current
service levels for a changing
and increasingly fragmented
membership and maintain a
sustainable business model.
Further significant
enhancements would be a
challenge.
The first step in this increase
would need to occur this year.
CPA Australia (CPAA) is growing in presence in New
Zealand and is competing fiercely in overseas markets.
To date we’ve held significant CPAA progress at bay
but we won’t be able to do this in the long term. Why
not? Defending our market share diverts resources from
other activities and we simply don’t have the financial
resources to fight dollar for dollar.
A more sustainable approach is to neutralise their
scale advantage, and ensure that the CA designation
is preferred by employers and graduates in the
marketplace.
Option two
Significantly scale back service
offerings to members and
potentially structure the business
purely as a registration and
professional standards body
with limited service offerings
Is this really an option?
Option three
Find a partner that can add value and shares our vision.
ision.
The reality, of course, is that organisations
respond with a blend of these actions.
GLOBALISATION
This local context is exacerbated by
consolidation of accounting bodies, and
competition.
Globalisation is real and it is changing the
make-up of membership bodies all over the
world.
Examples include significant consolidation of
ment
accounting bodies in Canada, the global advancement
nts
of the Association of Chartered Certified Accountants
te of
(ACCA), the 2011 MOU between Chartered Institute
an
Management Accountants (CIMA) and the American
nd
Institute of Certified Public Accountants (AICPA), and
recent news that ten bodies in the Asian region aree
planning to join forces to leverage off each other.
A small institute like NZICA must take advantage
ntage
of first mover status to ensure our members aree
best positioned for further consolidation of the
profession.
A small Institute
like NZICA must
take advantage
of first mover
status to ensure
our members are
best positioned
for further
consolidation of
the profession
~ Graham Crombie FCA
MY PROMISE TO YOU
Our natural inclination is to want more detail, and you
will get it as part of the member consultation process
which will likely commence in May (assuming approval
from Council). My promise to you is that we will tell it
like it is.
I also promise you that what is being considered
is not a takeover of NZICA by ICAA. The proposal at
present is for:
• a new entity for members in the region, attractive
and relevant to members in other countries
• a modern, relevant entity with lifelong education
offerings equal to or better than any institute in the
world
• the most efficient and cost-effective body
possible
• a body that is built on tradition but ready for the
future.
YOUR OPPORTUNITY TO INFLUENCE
As I write this, the NZICA Council and trans-Tasman
Council Working Group are putting the proposal
through its paces. With their seal of support full member
consultation could occur in May.
The consultation period will be your opportunity to
influence the discussion, and feed back on whether
or not you believe the proposal best addresses the
challenges we’re facing.
In the meantime I’d welcome your thoughts, and invite
you to share them with me via letters to the Journal.
Next month you can expect a summary of the
feedback received and my response. You can also email
me directly at [email protected].
Graham Crombie FCA, NZICA Board Chair.
MARCH 2013
9
Latest
Revision of NZICA’s Code of Ethics
Proposed changes to the Code of Ethics will affect all
members.
By Zowie Murray CA and Dr Michael Fraser
THE PROFESSIONAL STANDARDS Board (PSB) of NZICA is intending to issue an
exposure draft of the Code of Ethics (Revised). This will result in the withdrawal
of the Code of Ethics: Independence in Assurance Engagements, which will be
incorporated into the Code of Ethics (Revised). At the time of writing the PSB was
ensuring the final amendments discussed at the 7 February meeting are made in
preparation for a March exposure.
AN IFAC-BASED CODE
In the NZICA Code all the rules and requirements are
directly linked to a fundamental principle, whereas
in the IFAC Code the fundamental principles stand
alone in Part A. Professional accountants are required
to comply with the fundamental principles. There are
minimal additional requirements in this Part.
The fundamental principles are similar, but not
identical.
IFAC
Integrity
Objectivity
Objectivity and
Independence
(independence
is only required
when performing
certain types of
engagements)
PURPOSE OF REVISION
The proposed standard will enable international and national alignment with the
International Ethics Standards Board for Accountants (IESBA) and the New Zealand
Auditing and Assurance Standards Board (NZAuASB) respectively. This alignment
is necessary when International Federation of Accountants (IFAC) member
obligations are considered.
Further to the case for international alignment are the requirements imposed
by the NZICA Act 1996. The Act requires that NZICA always has “a Code of Ethics
that governs the professional conduct of its members”. The Code of Ethics sets
out fundamental principles and provides guidance on professional conduct. These
principles sustain public confidence in the accounting profession and are positive
points of difference between our members and other accountants. Compliance
with the Code of Ethics is mandatory for our members, regardless of the nature of
their work.
BACKGROUND: INTERNATIONAL CONVERGENCE
In July 2009, the IESBA of IFAC released a revised Code of Ethics for Professional
Accountants, effective from 1 January 2011. This release was significant because,
in NZICA’s capacity as an IFAC member body, a requirement to “apply no less
stringent standards than those stated in the IFAC Code” exists, unless prohibited
by law or regulation.
Subsequent to the IESBA release, the External Reporting Board’s (XRB) NZAuASB
issued a Professional and Ethical Standard directly aligned with Parts A and B
of the IFAC Code . The NZAuASB Professional and Ethical Standards have direct
relevance for NZICA members providing assurance services. In September 2011,
a pronouncement was approved by NZICA’s Council that made it a requirement
for all NZICA members to adhere to the auditing and assurance standards issued
by the NZAuASB, and indirectly with their Professional and Ethical Standards.
Therefore, the IESBA release simultaneously imposes the requirement for NZICA
to revisit the COE and COE: Independence and to ensure consistency with the
NZAuASB’s relevant Professional and Ethical Standards.
The adoption of an IFAC-based approach to the Code of Ethics by the NZAuASB,
combined with IFAC member obligations, signals change to the current Code as the
proposed IFAC structure is inherently different. The consequences of not revisiting
the COE and COE: Independence would be twofold. First, failure to change may
mean a breach of IFAC membership obligations. Second, the requirements for
audit practitioners who would have to abide by two materially different Codes (the
NZAuASB and NZICA) would create an environment giving rise to uncertainty.
10
MARCH 2013
NZICA
Integrity
Competence
Professional
Competence and Due
Care
Confidentiality
Professional
Behaviour
Quality Performance
(includes due care
and diligence,
timeliness,
compliance with
technical and
professional
standards)
Professional
Behaviour
(includes
confidentiality)
The IFAC Code has a much fuller description of
the conceptual framework with identification and
description of the categories of threats and categories
of safeguards.
INVITATION TO COMMENT – COMING SOON
An Invitation to Comment will be made upon the
release of the exposure draft and will summarise
key differences between the exposure draft and
the current NZICA Code. The PSB anticipate a three
month comment period, during this time submissions
from members will be invited. The PSB will be
proposing that the Code of Ethics becomes effective
from 1 January 2014. This date is the same as the
effective date for the NZAuASB Professional and
Ethical Standards.
Once released, the exposure draft will be available
on nzica.com along with a summary of the proposed
changes. The PSB will be interested in hearing your
views. This feedback can be emailed to submission.
[email protected].
Zowie Murray CA and Dr Michael Fraser are
members of NZICA’s Technical Services Team.
MYOBTaxSeminars2013
Stay one step ahead
MARCH 2013
11
Latest
Single institute
discussed
Collaboration delivers benefits
ON 22 FEBRUARY the Council Working
Accountants Program successfully launched
in early February is an example of how
NZICA has significantly benefited through
collaboration with ICAA.
The program is redefining the way
chartered accountants are trained. It is
delivered online, is interactive and features
integration of a technology platform that will
allow us to make world-class enhancements
to the Program into the future.
The Financial Reporting & Accounting (FIN)
module was the first to go live, followed a
week later by Management Accounting and
Applied Finance (MAAF).
The Program has enjoyed a strong start,
with registration and term one module
enrolments exceeding expectations. Feedback
from employers suggests numbers for terms
two and three are going to be large.
There is already evidence of the global
reach of this program with one candidate
approved to study a module in Yemen.
This trans-Tasman Program has had total
investment of more than $11 million, with
$2 million of that coming from NZICA. This is
an excellent example of how the creation of
Group (CWG) convened in Auckland to
review detail on the proposal to create a
new single institute with the Institute of
Chartered Accountants in Australia (ICAA).
The group of six NZICA Councillors and
nine ICAA Councillors considered and gave
feedback on a variety of issues including
the member value proposition of the
proposal.
The CWG will now go back to their
respective Councils and provide their
views on the proposal. These meetings will
occur on 4 March in Australia and on 27
March in New Zealand. Following these
discussions, and a meeting of the ICAA
and NZICA Boards, a decision will be made
about going to full member consultation
on the proposal.
If agreed, full member consultation
will begin on 7 May 2013 when a
comprehensive member consultation
document on the proposal is released for
feedback.
More information on the proposal with
ICAA can be found on page 8.
BRIEFCASE
Correction
In last month’s issue Michele Embling FCA’s
article “New standards regime in place” was
incorrectly attributed in the header to Michael
Embling. The error is regretted.
Public lecture
Alan Auerbach, Professor of Economics and
Law from the University of California, Berkley
and the 2013 Robin Oliver Scholarship
Visiting Lecturer in Tax Policy will give a
public lecture on 12 March. The lecture is
titled “International Tax Reviews and New
Zealand’s Tax Working Group: What can
we learn?” It is being held at Rutherford
House, Victoria Business School with light
refreshments from 5.30pm before the lecture
at 6pm.
RSVP to [email protected]
12
MARCH 2013
THE NEW TRANS-TASMAN Chartered
a new, single trans-Tasman institute would
benefit current NZICA members. Plainly
speaking, we would get a lot more bang for
our buck.
NZICA Solutions Architect Gareth Bezett
says working with ICAA has allowed the
project to be built on a greater scale with
investment in more robust technology. An
example is the new data centre in Sydney that
will run the entire IT infrastructure, he says.
“We couldn’t have done that on our own,
but with the two of us combined we’ve got
this amazing capability.”
The chartered accountants brand is
currently under threat in New Zealand
through lack of definition. Members often
find there is a lack of understanding from
the general public that an accountant and
a chartered accountant are not one and the
same.
A Chartered Accountants Program that can
stand strong into the future is the backbone
of NZICA’s brand and strategy to attract the
best talent.
By pooling resources with ICAA to create
the CA Program, NZICA has been able to
deliver far more than it could have on its own.
MARCH 2013
13
Latest
Immigration 1950s
Immigration and land
ownership have always been
highly contentious issues in
New Zealand.
IN JUNE 1956, the then Minister of Immigration, the
Hon JR Hanan, addressed the Wellington Branch of
the Society on the subject of immigrants and their
countries of origin. He also discussed the economic
value of immigrants in general coming to settle in
New Zealand. His address was printed in the Journal
the following month.
The basic policy underlying the Government
immigration programme, said Mr Hanan, had been
to bring into the country, in reasonable numbers, the
type of people who are able to offer some worthwhile contribution towards our national development,
including the production of essential goods and the
maintenance of essential services. Equally important,
he said, was that the migrants should be readily
assimilated into the New Zealand community.
“I should emphasise that,” he said, “in New
Zealand, the policy is, and always has been, to
give preference to British people from the United
Kingdom. Selection from non-British sources has been
made only to the extent that people of the desired
types have not been available in sufficient numbers
from the United Kingdom.”
Why, he asked rhetorically, is such a selective policy
in place rather than, “let them all come?”
“I think it is fairly obvious that, lacking any
substantial natural resources of iron, steel and other
raw materials necessary for the development of
industry on a really large scale, adoption by New
Zealand of the open door policy along the lines of
that adopted in North America in the nineteenth
century would have been absurd, despite the fact that
New Zealand could provide food for a population of
19 million people.”
Additionally, he said, the continued maintenance
14
MARCH 2013
English immigrants from
the Atlantis, by William
Raine, 1951.
The idea of
groups of aliens
cornering
large slices of
New Zealand
farming areas
or establishing
‘foreign
quarters’ in our
cities and towns
is however
anathema
to most New
Zealanders
~ Hon. J R Hanan
of the well-know homogenous character of the New
Zealand population, generally recognised as the most
marked in the world, is likely to continue to exercise a
profound influence on immigration policy.
Some countries, he said, are less concerned than
New Zealand with the concept of assimilability.
“Several important immigration countries for instance
appear to be reasonably content if a new settler can
be quickly integrated with the rest of the community
or stand on his own two feet.
“These countries appear to accord only a
secondary place to our concept of assimilability, and
in some of them large ‘colonies’ of aliens have been
established and are still forming.
“The idea of groups of aliens cornering large
slices of New Zealand farming areas or establishing
‘foreign quarters’ in our cities and towns is however
anathema to most New Zealanders.”
He said while it was New Zealand’s policy to give
all alien permanent residents the unrestricted right
to acquire and occupy freehold property, “we do not
want whole areas ‘pegged out’ by them”.
He suggested this could be explained by the
fact that New Zealand is a small country, drawing
similarities between the kind of lodgers desired at
a large hotel as opposed to a small guest house.
“There is a vast gap between acceptable criteria for
permanent lodgers to a thousand-room hotel, and the
acceptable criteria for a small guest house in which
the occupants must of necessity be at many times in
close proximity to each other.”
The Rt Hon Thomas went on to say that large
colonies of non-nationals living in cities overseas
were not always appreciated.
“An implicit element [of Government policy] is the
desire that people whose stock originated
in Great Britain shall always have an
overwhelming preponderance in the total
population in New Zealand. We believe in
selective and, where necessary, assisted
immigration to ensure that end.”
The result of the pro-British policy he
said, resulted in a net gain of four British to
one non-British person admitted into New
Zealand, “a noteworthy achievement which
compares more favourably with Australia,
which is barely maintaining one for one...”
There is no doubt, he said, that while the
post-war immigration policy had materially
assisted New Zealand development and
expansion, immigration in itself did not solve
labour shortages.
“In fact, it could well be argued that
because of the short-term inflationary results
immigration exerts in the way of increased
demand for housing, educational and
health facilities and for consumer goods,
its contribution as a solution to the labour
problem is very small.”
But, he concluded that long-term,
immigration would outweigh the short-term
disadvantages.
The Rt Hon Thomas’ address no doubt
reflected the prevailing views of the white
population of New Zealand at the time. In
many respects, however, little really seems to
have changed.
According to the Longitudinal Immigration
Survey conducted by Statistics NZ and Labour
Group, Ministry of Business, Innovation
& Employment, 32% of New Zealand’s
migrants in 2009 were of British/Irish origin.
ALEXANDRA JOHNSON is a freelance Wellington
writer.
CONDOLENCES
The New Zealand Institute of Chartered
Accountants extends its sincere
condolences to the families of:
David Carson-Parker CA (Honorary Retired)
of Wellington, who had been a member of
NZICA since 23 July 1954.
Geoffrey Hamer Kay CA (Honorary Retired)
of Palmerston North, who had been a member
of NZICA since 23 May 1957
Colwell Francis Alston Keen FCA (Honorary
Retired) of Auckland, who had been a member
of NZICA since 1958.
David Benjamin Kelly CA of Wellington who
had been a member of NZICA since 11 June
1990.
David Spencer Kent CA of Auckland who had
been a member of NZICA since 10 March 1981.
ADVERTORIAL
From the suburbs to the world
As business becomes more global, public
practices here and abroad are weighing
up the benefits of joining an accounting
network.
Levonne Underwood CA knows how
beneficial it can be to have membership in
an Asia Pacific network. Her firm, Accru
Smith Chilcott, has been part of the
Accru network for around 28 years. The
catalyst for joining was a client looking
at setting up a business in Australia who
wanted the firm to help them.
“It was important to us that we could
fully assist our client. Referring them
to a firm we had a relationship with
ensured that we were kept fully informed.
We already had a relationship with the
Sydney firm so joining the Accru network
made sense,” Underwood says.
Accru has six offices in Australia and
one in New Zealand. Each firm maintains
its own autonomy, independence and
structure while at the same time taking
advantage of the benefits that the group
offers.
“It suits us well,” Underwood says.
“We can prioritise our own goals but
at the same time share knowledge and
information across offices with different
strengths and specialties.”
Accru Smith Chilcott has been able
to leverage Accru connections not only
to help their clients, but also to improve
practice performance and HR processes,
implement business tools and develop
niche services.
Underwood says another advantage
has been the development of its audit
practice.
“Businesses with national or overseas
branches will often require an auditor
with offices in these locations. We get
enquiries via the Accru website from
businesses looking to set up in both
Australia and New Zealand because they
see we have this broad reach.”
Accru firms also use their membership
of CPA Associates International (CPAAI),
a worldwide association of around 150
accounting firms and 7,000 staff, to help
clients expand globally and deal with
cross-border tax issues.
“There are many quality CPAAI firms
and it’s good to be able to refer clients to
partners we are comfortable with,” she
says.
Similarly, Accru Smith Chilcott
receives inbound referrals from Accru
and CPAAI firms in their specialist areas,
such as US tax for expats.
On a personal level, Underwood says
being part of the Accru group has meant
she has been able to develop the Auckland
firm and her own career without having
to join a larger firm.
“The Accru brand has definitely helped
us attract and retain high calibre staff.
Today’s generation likes to feel part of
something bigger and Accru can offer
that with international training, staff
exchanges and conferences.”
Given the natural disasters Australia
and New Zealand have both experienced,
risk mitigation is also now a real benefit
of network membership.
“If you’re hit by an earthquake, flood or
power outage, a support network ready to
share their resources can help you get up
and running quickly.”
Accru is in a growth phase looking for
quality new members
MARCH 2013
15
PARTNER NEWS
Cut your software maintenance costs
TO PROVIDE FURTHER value to its several
thousand accountant partners, MYOB
has launched an exclusive new rebate for
accountants in practice who are members of
its Connected Accounting Program.
The offer, which was announced at
the company’s 2013 annual Accountants
Roadshow, can reduce or entirely remove
your MYOB Practice Solutions software
maintenance costs.
Each time one of your clients subscribes
to an MYOB Live solution as a result of
your referral, you can reduce your Practice
Solutions software maintenance cost for the
next five years by an amount equal to 10% of
the client’s total purchase amount.
Visit the my.MYOB Referral Portal for
more information or contact the MYOB Live
Advisors team on 0800 69 62 72. These
advisors exist solely to assist accounting
practices that wish to move their clients to
these MYOB Live solutions:
• LiveAccounts - a simple online-only
accounting system, and
• AccountRight Live - a fully featured
accounting system that enables clients to
seamlessly switch between working online
and offline.
Get started today. Speak with a Live Advisor
about special offers for practices looking to
join the Connected Accounting Program and
promotions for Connected Accounting Practices.
Accuro’s community votes for donation to SPCA
THIS MONTH WELLINGTON SPCA received
a $5,000 donation from health insurer
Accuro, after being named the winner of a
competition run on Accuro’s Facebook page.
Kelleigh Aston, Accuro’s General
Manager Sales and Marketing, presented
the donation to the CEO of Wellington SPCA
(and some of the animals currently in their
care).
Ms Aston said “Instead of Christmas
cards and gifts, each year Accuro donates to
a charity chosen by its member and advisor
community”.
“In November we invited our members,
insurance advisors and Facebook friends to
vote for which charity should receive 2012’s
donation. Wellington SPCA emerged as the
clear choice.
“It’s great to see our community
supporting SPCA in what is traditionally
one of its busiest times of year, and as
Wellington SPCA prepares to move to the
old Fever Hospital site.
“Wellington is home to the leading SPCA
in New Zealand, rescuing, rehabilitating and
re-homing over 6,000 abused, neglected
and homeless animals each year.”
Iain Torrance, CEO of Wellington SPCA,
said that the funding from Accuro’s
Facebook competition will help them to
help animals in need
“As the second-largest SPCA in New
Zealand, we receive no direct funding from
the Government and rely entirely on the
generosity of the public – so this donation
from Accuro will go a long way towards
helping the multitude of animals that come
into our care each year, ensuring they
receive the help they desperately need.”
“Accuro is thrilled that our community
has chosen to help Wellington SPCA make a
positive difference in the lives of animals,”
Kelleigh Aston said.
Accuro Health Insurance is a not-forprofit member organisation that’s been
providing outstanding medical insurance to
New Zealanders for over 40 years. For the
fourth year in a row Accuro was evaluated
by Consumer NZ as providing the best cover
for the lowest possible price. Accuro is Latin
for “taking care.”
As an NZICA member you are entitled to
the following discounts at Accuro:
• NZICA 10% discount
• Direct debit discount of 3%
• One month free if you pay annually –
this equates to a 9% discount
For more information visit nzica.com/
privileges/accuro or call 0800 222 876.
Check out the latest Member Privileges at nzica.com/privileges
The BMW
X Range
www.bmw.co.nz
NEW BMW X1 - THE COMPACT SUV.
BMW X3
THE URBAN SUV.
BMW X5
THE BENCHMARK 7 SEATER.
NEW BMW X6
THE 5 SEAT COUPÉ.
0% FINANCE ACROSS THE BMW X RANGE.
Now is the perfect time to get some X in your life. From the versatile X1 through to the 2012 SUV
of the year X5, BMW has a wide range of performance SUVs to suit any active Kiwi lifestyle.
Combining BMW’s cutting edge styling, class leading diesel engines and xDrive technology,
it’s no wonder these perfectly engineered vehicles are New Zealand’s best selling premium SUVs.
(QTCNKOKVGFVKOGVCMGCFXCPVCIGQHVJKUWPDGCVCDNG²PCPEGQHHGTCETQUUVJGGPVKTG
BMW X Range, starting from just $65,600 drive away.
INTELLIGENT ALL-WHEEL DRIVE
*Subject to BMW Financial Services lending criteria. Offer based on a hire purchase agreement consisting of 1/3 deposit, 1/3 due on month 12 and 1/3
due on month
MARCH
2013 24 with an interest
rate of 0% and a $250 booking fee. Visit an Authorised BMW Dealership for full terms and conditions. Offer ends 31/3/2013. NZICA members receive a 5% discount off RRP as per
VJGOGODGTUJKRDGPG²VUVJCVYKNNDGCFLWUVGFHQTCVVJG&GCNGTUJKR
17
BMW2097
So if you’re thinking about upgrading your current vehicle, make sure you test drive the Ultimate
&TKXKPI/CEJKPG8KUKV[QWTPGCTGUVCWVJQTKUGF$/9&GCNGTUJKRVQFC[CPF²PFQWVYJ[$/9
is the number one selling premium car brand in New Zealand and around the world.
18
MARCH 2013
Chartered Accountants + Business Advisors
Latest
MARCH
PROFILE
New admissions
Congratulations to our
people on the rise.
ALIETA HAVEA ACA
The following admissions to NZICA’s Chartered
Accountants, Associate Chartered Accountants and
Accounting Technicians Colleges, and Certificates of
Public Practice have been confirmed.
CA COLLEGE
Alter, Glen ...................................... Auckland
Anstis, Heidi Elizabeth ..................Canterbury
Baxter, Cara Ann ............................ Auckland
Bolton, John Peter ....... Waikato/Bay of Plenty
Butler, Alyce Jane.......................... Wellington
Chong, Gabriel Lun Hua ...................... Otago
Cook, Marny Lorraine .................... Northland
Galang, Ricky Ramos ...................... Auckland
King, Simon Robert......................... Auckland
Kramer, Nikita ................................ Auckland
Lathan, David John ........Coastal Bay of Plenty
Leung, Carman Ka Man .................. Auckland
Li, Shan Shan ............................ Waikato/BoP
Livschitz, Jenny Lynne ..................... Auckland
Lord, Benjamin Michael ............................ UK
Luff, Nigel Albert ..........................Canterbury
MacKinnon, Calum Andrew .......... Manawatu
Maddox-Strong, Elizabeth Amy .........Taranaki
Mills, Kieran Leigh ............................Taranaki
Mitchell, Rachel Christina ............. Wellington
Montofre, Cristian Edgardo ............. Auckland
O’Connor, Samuel James .............. Wellington
Oliver, Phillip Henry ......................Canterbury
Peterson, Luisa Patricia Anselmi ... Waikato/BoP
Ratanjee, Rajesh Jayantilal .......... South Africa
Rivers, Luke Daniel ......................... Auckland
Roche, Susan Frances ................... Wellington
Scorrar, Katrina Gae............................ Nelson
Smith, Katrina Louise ................. Waikato/BoP
Thompson, Michelle Joyce .............. Auckland
Vermunt, Jacob Matheus Te Teira Toheriri ............
..............................................................Auckland
Wang, Dan ................................ Waikato/BoP
Zhou, Jing Si ................................ Wellington
ACA COLLEGE
Baldock, Sarah .......................... Waikato/BoP
Havea, Alieta .................... Marlborough
Jiawan, Nitasha Neema .............Marlborough
Lan, Lan ......................................... Auckland
Lin, Shu-Wei................................... Auckland
Ma, Haojia ..................................... Auckland
Mathew, John Kutty........................ Auckland
Montero, Josephine ...................... Wellington
Rowe, Timothy John ...................... Wellington
Sieberhagen, Christiaan Frederick Beyers .......
...................................................... Auckland
Smith, Kirsten Charmian ...............Canterbury
Wu, Ruoquan ............................... Wellington
AT COLLEGE
Appleton, Kim Rachelle .................. Auckland
Keene, Scott .................................Canterbury
Lumsden, Bridget .........................Canterbury
McMillan, Brenda Jan .................... Southland
Popescu, Mihaela ........................... Auckland
Trethewey, Ryan ............. Gisborne/East Coast
PUBLIC PRACTICE CERTIFICATES
Cashmore, Wendy Jane .............. Waikato/BoP
Gatley, Jan Mary........................ Waikato/BoP
Hall, Susan Irene Mary .................... Auckland
Naiker, Sajeil Sagneeth ................... Auckland
Stewart, Daimon Jared......................Taranaki
Tong, Matthew Jeremy ................. Wellington
Urquhart, Bruce Alexander .............. Auckland
Senior Accountant, Parkers Business
Solutions Ltd, Blenheim
What do you do?
As the senior accountant my role involves
tax advice, business consultancy, project
work, auditing and managing the practice.
How long have you been there?
I’ve been at Parkers going on six years
now. I did my training here alongside
three other graduates who have recently
qualified – two as ACAs and one as a CA.
Why did you choose accounting as a
career?
I’ve had a passion for numbers since
college. I worked as an accountant in
Auckland, Brisbane and Melbourne and
decided to complete my training as
a registered accountant at Parkers in
Blenheim. My work at Parkers is very
rewarding as I get to work with clients in
various industries around Marlborough.
I am looking forward to gaining my CA
qualification in the near future.
What has been the highlight of summer
so far for you?
It has been having daylight hours in the
evenings to do gardening, and also taking
my children to the local pool.
What keeps you busy in your spare time?
I volunteer as a hot hula instructor for
the Kimi Hauora Wairau Marlborough
PHO physical exercise programme, so I’m
always thinking up new routines for my
Friday classes.
Where was your most recent holiday
destination?
We spent Christmas in a holiday house
in Rarangi. The beach was a bit rough
for my children but they still enjoyed
splashing around in the sand and making
sandcastles.
What is one goal you’re hoping to
achieve before the end of 2013?
I’m going to try and better my time in the
Saint Clair Vineyard Half Marathon by at
least 30 minutes.
Why would you recommend accounting
to school leavers?
Accounting opens up the doors to different
careers, not just accountancy. It also allows
you to work in different industries which
can give you new challenges.
MARCH 2013
19
Latest
Ask Uncle Tom
Discipline must sometimes be imposed.
BY TOM DAVIES FCA
F
ear and discipline – we need more
of both.
Some time ago I was in a
supermarket where a mum with
four young children was having
trouble with one, a tyke of about
seven or eight. Young Johnny had invented a
new game. When some old lady came down
the aisle with her trolley he would rush at it
and push it into the shelves, bringing down
tins, packets and whatever else.
He’d performed this stunt several times in
different aisles, and mum was in tears, staff
were scurrying around, and the manager was
waving his arms. Exhortations to behave had
no effect and threats were ineffective. I gather
his pocket money had been sequestered until
his 85th birthday, and future rights to the
family car were similarly curtailed.
And then I noticed him eyeing my trolley.
I bent down and whispered things in his ear,
things that I would personally do to him if
he continued to think about what I thought
he was thinking about, the sort of things
which if spoken louder would definitely put
me in breach of the anti-smacking legislation
and also the laws on common assault, not to
mention those dealing with profanity.
The effect was instantaneous. Johnny had
never been spoken to like this or fixed with
my steely gaze. He straightened up, stood to
one side, and just about saluted as I passed
on, mum beaming her thanks. Order was
restored.
I learned all this at college at a time when
caning was de rigeur for misbehaviour. On
one occasion when I must have not been
paying the required level of attention, the
master said, “Davies, you have 30 seconds
20
MARCH 2013
He didn’t
just have a
cane, he had
a clutch of
six or eight of
them in the
corner of the
classroom,
and when
you sinned
you were
invited to
select the
cane of your
choice
to tell me all you know of the campaigns of
Belisarius, failing which I shall use the next
30 seconds in an attempt on the College’s
record of how many thwacks I can put
across your backside in the allotted time”.
I considered telling him that I would only
require five seconds, but realised that would
not be a wise response.
It’s amazing how the prospect of severe
pain can spur the memory, and I was able to
fill in 30 seconds on Belisarius’ achievements,
both military and marital.
This particular master had discipline
down to an art form. He didn’t just have a
cane, he had a clutch of six or eight of them
in the corner of the classroom, and when you
sinned you were invited to select the cane of
your choice. A bit like the headsman asking
Ann Boleyn to test the edge of the axe with
her finger (actually, I think they used a sword
in her case).
Much debate went into the consideration
of whether to choose a long cane or a shorter
version from the selection available. The
advantages of the short cane was that it
was difficult to use double-handed, and the
shorter length meant that the all-important
tip speed in the swing was likely to be lower
than that of a long cane. On the other hand,
it was difficult to swing a long cane properly
in a crowded and cluttered classroom.
It was a bit academic because either
way it was going to hurt like bloody hell.
Punishment was a public affair, doubtless
“pour encourager les autres” [to encourage
the others], which it certainly did, as the real
threat of intense pain turned an unruly mob
of teenagers into a definitely ruly lot.
So much for education. Members are
going to have to indulge in quite a
bit of it in the next year or so, and
although conceivably there could
be disciplinary action for getting it
wrong, in these genteel times it won’t
be as harsh as above.
I’m referring to the coming
introduction of multiple accounting
standards regimes.
For many years we have been
used to “one size fits all” as regards
accounting standards, although
with minor variations such as
differential reporting and exempt
companies, and more recently a
different threshold for full NZ IFRS.
That is changing, and there will be
standards applicable to different
types of reporting entities such as
profit-earning, not-for-profit and
public sector, and size thresholds
within these categories together with
a standard for World Peace.
At the very bottom, no formal
reporting
standards
will
be
statutorily mandatory, but NZICA
will provide a recommended set of
standards.
Have we gone overboard? Well,
perhaps, but I’m not going to get into
a discussion of that subject. What
it does mean is that some serious
education will need to be planned
so that members and their staff are
up to speed on these requirements,
how they will apply to individual
clients, and what mods are required
to system templates to meet these
new presentations.
Don’t under estimate the time that
all this will require. Keep an eye out
for Journal articles on the subject,
and you can expect a rash of these in
coming months.
On the question of accounting
standards,
following
legislative
changes these are now issued by the
External Reporting Board (XRB)
and no longer by NZICA’s Financial
Reporting Standards Board (FRSB)
or approved by the Accounting
Standards Review Board (ASRB).
If you want the latest standards
you should now refer to the XRB’s
website (xrb.govt.nz) rather than
NZICA’s website where they used to
be located.
There is a new exposure draft on a
revised review engagement standard
which I draw to your attention.
NZICA’s practice reviewers have
been concerned for some time that
the conduct of review engagements
in some cases was a bit minimalist,
with not nearly enough analysis
of the financial statements being
performed or sufficient enquiry of
the client’s management. The new
standard, assuming the exposure
draft is approved more or less as it
is, will be a bit more prescriptive as
to what work should be performed.
Have a look at it, and you may care
to adopt some of its provisions now.
Another matter that some members
with small practices are overlooking
is mandatory professional indemnity
cover. The usual debate is over the
level of cover required. Practice
Review believes $500,000 should
be the starting point, but personally
I think $1 million should be the
minimum.
What a practitioner needs to do
is to review the client list critically
for what could go wrong. In most
cases it is likely to be dodgy tax
advice, or a failure to do something
properly or by the required time. If
so, what’s the exposure likely to be,
and don’t forget to add on potential
IR penalties and interest that your
clients might be lumbered as a result
of your errors. There are also legal
fees to think about, even if you are
successful in defending yourself.
All depressing stuff, but it’s much
less depressing regarding a bill for
an insurance premium than a much
larger statement of claim.
Just to return to this discipline bit,
when I was discussing this subject
someone suggested that I was
overlooking the effect on a child’s
psyche of brutal thrashings and
beatings. Haven’t noticed it affecting
me, but of course that’s only my
opinion and who am I to judge? But
let’s look at the history.
For 5000 years educators have
resorted to physical chastisement
to instil both knowledge and good
behaviour. Consider Ramses II.
There’s an Egyptian hieroglyphic
purportedly depicting the royal
tutors administering to the royal
buttocks, but it didn’t seem to hold
back Ramses’ career. Of course the
Hittites might claim that childhood
beatings made him overly aggressive,
but they would say that, wouldn’t
they, seeing that they had such a
rough time from him.
And then there was Alexander
the Great, famously tutored by
Aristotle who is rumoured to have
applied the sandal when necessary
to his pupil. This clearly drove him
to drink more than he should, and
to indulge in one or two other less
than savoury practices in today’s
thinking, but you have to admit his
career was spectacular and he never
lost a battle.
And if you turn to the philosopher
emperor, Marcus Aurelius, one
would expect him of all people to
be against physical discipline, but
he found time to drop writing his
Meditations so he could apply some
hard discipline as required.
So, 5000 years of educators
can’t be that wrong, and it is sheer
arrogance for some expert (selfdeclared) today, whose children are
doubtless cherubic in temperament,
to pontificate that smacking a child
is beastly and should be a criminal
offence.
I look forward 30 years on, to
sitting in my wheelchair listening to
news that Parliament has completed
a weeding out of silly knee-jerk
legislation so that no longer do cars
have to be preceded by a man with
a red flag and smacking disobedient
children is back in, and how could
people ever have been so silly in the
first place to legislate against it.
Tom Davies FCA is Director –
Professional Support at NZICA.
MARCH 2013
21
BUSINESS
Financial
reporting –
a changed
landscape
The completion of NZICA’s Financial
Reporting Bill submission provides
a timely basis to take stock of
significant financial reporting
changes and explain what is being
done to support members.
DR MICHAEL FRASER AND ZOWIE MURRAY CA
N
ew Zealand’s financial accounting reform is
characterised by a new Accounting Standards
Framework for Public Benefit Entities (PBEs)
and For-Profit Entities, multi-tier standards, and
forthcoming legislation to ensure a consistent
overarching framework.
The first of these notable characteristics is the adoption of two sets
of standards: one set for for-profit entities based on International
Financial Reporting Standards (IFRS), and another set for PBEs
based primarily on International Public Sector Accounting Standards
(IPSAS) modified as necessary for the New Zealand environment,
together with Simple Format Reporting Standards for smaller entities.
This change is premised on different users having different
requirements that are not adequately addressed under a “one size fits
all” approach.
The second notable characteristic is the multi-tier framework
that permits different entities to apply different suites of accounting
standards according to public accountability, economic significance
and separation.
The application of a multi-tiered framework allows standard setters
to differentiate the entities to report in varying levels of complexity
according to the above criteria. While a multi-tier approach
appears complex when viewed as a whole it does simplify reporting
requirements when viewed at the entity level.
The third notable characteristic is that of legislative reform. Such
reform permits the “who should report” type questions to be addressed
and associated pieces of legislation to be updated. The legislative
reform had its genesis in the Ministry of Economic Development’s
(MED) Discussion Document issued in September 2009 entitled The
Statutory Framework for Financial Reporting. Furthermore, it has
22
MARCH 2013
the potential to reduce the “compliance
burden” for many New Zealand reporting
entities.
FINANCIAL REPORTING BILL
The Financial Reporting Bill (the Bill)
received its first reading in November
2012. The proposed legislation removes
the statutory requirement for many New
Zealand companies and overseas companies
that conduct business in New Zealand to
prepare general purpose financial reports
(GPFR) in accordance with New Zealand
generally accepted accounting practice
(GAAP).
These companies are neither publicly
accountable nor large (that is with revenue
greater than $30m or assets greater than
$60m). Unless they elect to prepare GPFR,
these entities instead can prepare special
purpose financial reports (SPFR).
The proposed legislation also provides
that registered charities must prepare
financial statements in accordance with
the External Reporting Board’s (XRB)
applicable financial reporting standards
which, depending on the size of the
registered charity, may reflect GAAP (ie
accrual accounting) or non-GAAP (ie cash
accounting). Registered charities with
operating payments of $40,000 or more are required to follow the
GAAP standards, rather than the non-GAAP standards issued by
the XRB.
Lastly, the proposed legislation provides for several other changes
that affect various types of entities in order to align requirements
to prepare financial statements, have them audited and filed or
distributed with the indicators of financial reporting (public
accountability, economic significance and separation between owners
and management).
The Technical Services Team has presented a webinar, written
articles, maintained a “project page” on the NZICA website and
prepared a submission for the Commerce Select Committee; take a
look at nzica.com/Technical/Financial-reporting/Financial-reportingbill.aspx. A NZICA Financial Reporting Bill tool that will assist
members and entities navigate their preparation, audit and distribution
obligations is currently under development.
XRB MULTI-TIER STRATEGY
The implementation of the Accounting Standards Framework requires
the development and issuing of several new suites of accounting
standards.
This development is not dependent on the aforementioned law
change as the changes are made by the XRB under their current legal
mandate. Differentiated tiers extend the “one size does not fit all”
argument and provides some basis for simplification when considered
at an entity level. The XRB plans to issue exposure drafts and then
finalise and issue the suites of standards in a five-stage process.
Different release and submission dates will apply to each stage. The
roll-out approach is summarised in the following table.
For-Profit Sector
PBE - Public Sector
PBE - NFP Sector
Tier 1
NZ IFRS
Exists – no change
PBE Standards
Submission Closed
Issue Standard:
Q2, 2013
Effective date:
1/7/14
PBE Standards
Issue ED: Q3, 2013
Issue Standard:
Q4, 2014
Effective date:
1/4/15
Tier 2
NZ IFRS RDR
Submission Closed
Issue Standard:
Q4, 2012
Adopt date: Q4,
2012
PBE Standards
RDR
Submission Closed
Issue Standard:
Q2, 2013
Effective date:
1/7/14
PBE Standards
RDR
Issue ED: Q3, 2013
Issue Standard:
Q3, 2014
Effective date:
1/4/15
NZ IFRS Diff Rep
Exists – no change
Simple Format
(Accrual)
Issue ED: Dec 2012
Issue Standard:
Q2, 2013
Effective date:
1/7/14
Simple Format
(Accrual)
Issue ED: Dec 2012
Issue Standard:
Q4, 2013
Effective date:
1/4/15
Old GAAP
Exists – no change
Simple Format
(Cash)
Issue ED: Dec 2012
Issue Standard:
Q2, 2013
Effective date:
1/7/14
Simple Format
(Cash)
Issue ED: Dec 2012
Issue Standard:
Q4, 2013
Effective date:
1/4/15
Tier 3
Tier 4
The NZASB have now issued the suite
of standards for Tier 2 of the for-profit
framework. These standards are applicable
for annual reporting periods beginning on
or after 1 December 2012, so are essentially
available now to any unfinished IFRS
accounts as long as the entity is eligible
to apply NZ IFRS RDR and elect to early
adopt.
The Technical Services Team has submitted
on packages one and two, see; nzica.com/
Technical/Technical-Services/TechnicalSubmissions.aspx, and is currently working
on preparing submissions for packages
three and four. Package five on the PBE
Accounting Standards for NFPs in Tiers 1
and 2 is expected to be issued September
2013. Tiers 3 and 4 of the for-profit
framework are temporary tiers, the NZ IFRS
differential reporting and “Old GAAP”
(FRSs and SSAPs) suites of standards will
be withdrawn upon enactment of the Bill.
The Technical Services Team is interested
in member’s thoughts on the Exposure
Drafts for the simple format reporting
standards for public sector entities and
NFPs in Tiers 3 and 4. You can contribute
to NZICA’s submissions by emailing your
comments to submission.feedback@nzica.
com.
SME FINANCIAL REPORTING GUIDELINES
The intention of the aforementioned Bill,
once enacted, is to provide relief for many
small- and medium-sized New Zealand
companies (SMEs) from preparing GPFR in
accordance with New Zealand GAAP.
Assuming that these SMEs do not elect
to prepare GPFR (ie NZ GAAP compliant
financial statements), they can prepare SPFR
and will be able to use an NZICA accounting
framework (currently in development)
in order to meet their external financial
reporting requirements to key SPFR users
including the IR, the banking and finance
sector and other important users.
IR intends to establish a “statutory
obligation to prepare at a minimum
special purpose financial statements for the
purposes of assessment and collection of
tax”. The Technical Services Team expects
that the requirement will be effective for
tax years commencing 1 April 2014, which
will include income years commencing on
MARCH 2013
23
BUSINESS
or after 2 October 2013. The changes giving
relief for qualifying SMEs from preparing
GPFR will be effective once such SMEs are
required to prepare SPFR under the Income
Tax Administration Act amendments. With
this in mind the following summary is
provided.
Balance Date
Last General
Purpose
Financial
Reports
First Special
Purpose
Financial
Reports
31 December
31 December
2013
31 December
2014
31 March
31 March
2014
31 March
2015
30 June
30 June
2014
30 June
2015
Note this tentative timeframe is dependent on
legislative events and not subject to NZICA
control.
The Technical Services Team is developing
the framework and guidelines with input from
various NZICA working groups and advisory
groups. Having already engaged with key
The
framework
will
provide an
appropriate
basis of
accounting
for the
preparers
of SPFR of
SMEs
SPFR users, including IR and the banking
sector, to understand their financial reporting
requirements, the recent focus has been
around developing the technical component
of the framework. The framework will
provide an appropriate basis of accounting
for the preparers of SPFR of SMEs.
The guidelines will contain information
to enable members to understand how to
apply the New Zealand financial reporting
framework (ie determine whether GPFR or
SPFR are required) and the SME financial
reporting framework.
It is not expected to mandate use by
members, however users may require their
use from SMEs. It is currently anticipated
that the draft framework will be provided
to members for comment mid-2013, with an
expected release date of 30 September 2013.
A further update will be provided in the May
Journal.
Dr Michael Fraser is the Director of the Technical
Services Team and Zowie Murray CA is a
Technical Advisor within the team.
Tame your
client’s terminal tax.
Cover their shortfall with someone
else’s surplus using TAX PURCHASE
from Tax Management NZ.
It’s used by most of NZ’s
Top 200 companies plus all major
accounting firms.
Call the tax masters on 0800 829 888 or visit www.tmnz.co.nz/accountants/taxpurchase
NZICA/G/TT
24
MARCH 2013
Marketing Impact
New
N
ew
If your organisation is using a mail house for your AR
or other customer messages, chances are you’ll be
exploring options to reduce your increasing costs
without compromise.
Maybe you’re looking to reduce mail processing and
postage costs by substituting mail with email. Or to
reduce the cost of managing customer queries and
payment processing.
With 34 years of experience, Marketing Impact
has established a bulk mail production and digital
capability that’s second to none - and this capability
is offered through our three production sites in
Auckland, Wellington and Christchurch.
AUCKLAND
0LFKDHO©*ULI½WK©General Manager
P 09 526 8513 M 027 497 9001
[email protected]
We’re an independent New Zealand owned mail
house that’s equally comfortable processing mail
as we are email – and we offer the scale, integrity
and sophistication to meet any need. Right now
we’re doing just this for some of New Zealand’s best
known organisations.
Our goals are simple – to enable clients to
reduce communication costs and exploit new
messaging opportunities to deliver a better
customer experience.
If you’re looking for savings, they’re a phone call away.
WELLINGTON
Sue Darroch General Manager
P 04 381 4155 M 027 4458470
[email protected]
CHRISTCHURCH
Mark Palmer General Manager
P 03 374 8053 M 027 557 3026
[email protected]
MARCH 2013
marketingimpact.co.nz
25
PROFILE
New CE “just
a boy from the
’Naki”
NZICA’s new chief executive
Craig Norgate FCA reached
corporate heights in the
dairy industry at a young
age, but insists that despite
his successes he’s still just “a
boy from the ’Naki”.
BY JENNIFER BLACK
C
raig Norgate FCA has spent the past couple of years
winding back his New Zealand-based interests and laying
the path for a move abroad. So it has surprised many who
know him that he has suddenly become NZICA’s new chief
executive (CE).
Norgate says when NZICA Board Chair Graham
Crombie FCA approached him about the CE vacancy following the
resignation of Terry McLaughlin FCA, he initially thought “yeah, I could
consider this”.
He had just completed a term on NZICA’s Board and had recently
spent time in the United Kingdom building up his network with the
intention of moving abroad – preferably to Asia – this year.
“I was meeting people who need to know you for doors to open.”
But as he hadn’t committed to any roles, he was in a position to help
out at NZICA .
Crombie didn’t give him much time to decide, wanting an answer
within a couple of hours.
“Graham called me on the Sunday and I started on the Wednesday.”
He says he felt a sense of duty to the organisation and to NZICA
staff with McLaughlin leaving and the prospect of a new trans-Tasman
institute on the horizon.
“I also felt [while on the Board] that the discussions hadn’t been
heading in the right direction… so I saw that as some unfinished business.
I do believe that getting together with the Australians is the right thing to
do, provided it is done in the right manner.”
He anticipates two big challenges at NZICA.
“Making sure staff don’t have any more anxiety around this [new
26
MARCH 2013
institute] project than is absolutely necessary,
and making sure that if we are going to create
a new institute with Australia it genuinely is a
new institute and that it’s done right and will
serve members in this country well.”
Norgate believes regardless of whether
or not the membership is in favour of a new
institute, the organisation has to change.
“The reality is we just don’t have the
resources to really respond to the sort of things
members should be getting from us in today’s
world.
“We can’t afford to invest by ourselves in
the sort of technology that’s needed to deliver
a world-class Chartered Accountants Program,
so piggybacking on what the Australians are
doing has been very beneficial for us.”
Norgate believes the chartered accountant
designation is currently misunderstood in New
Zealand.
“Most people will identify with accountants
but they won’t distinguish between a CA
and anybody else. The pre-eminence of our
brand is under threat – that’s one thing we
need to invest in and that’s another reason
we’re considering the creation of a new transTasman CA institute.”
Norgate would like to see chartered
accountants viewed as trusted business leaders,
as they were when he was a student.
“That’s a big leap from what most people
would perceive today.”
In his new role Norgate divides his time
between Wellington and Sydney – not quite
the overseas experience he had anticipated for
2013.
He left his last corporate role – with
Fonterra – in 2003 and at that time had
planned to continue his career offshore with a
large corporate organisation, preferably in the
United States.
“But my wife reminded me that we’d decided
to stay in New Zealand to bring up our family
here, and that she’d been doing a pretty good
job of it, so it was time for me to do my bit.”
Their youngest, 18-year-old Alexandria, has
now finished school and started university in
Brisbane a year ago. Jordan, 21, is in Dunedin
and Dylan, 23, is in Christchurch.
So Norgate and wife of 27 years, Jane, had
planned to move overseas and rejoin corporate
life sometime this year, but Crombie’s call
changed those plans.
While the couple still intends to move abroad
Norgate says it won’t be until there is some real
direction with the new institute project, which
he believes will be “loosely a year”.
Even if members decide not to create a new
body, he wants to have put enough work into
making sure any alternative is sensible and
secure, he says.
He’s enjoying his new role at NZICA which
sees him sitting at a desk among staff – a far
cry from his first CEO digs.
“I had the mahogany panelled office which
was larger than most boardrooms, across the
building from the rest of the staff.”
He says he’s far more comfortable with
the arrangement at NZICA and likes to be
approachable.
“My philosophy is that you’re there to serve
staff, as they’re the only ones there to serve
your customers on a daily basis.”
Born and bred in Hawera, Norgate insists
he’s still “just a boy from the ’Naki”.
This boy from the ’Naki made his way up
the ranks quickly after leaving school, focusing
his career in the dairy industry.
He is proud of gaining his qualification at
just 23.
“It was ACA in those days – that starts aging me.”
After studying at Massey University he moved to Hastings and took
up his first management role at the Department of Maori Affairs at age
21.
But Taranaki called him back after a year and he joined meat company
Lowe Walker in 1987. When the chief financial officer (CFO) went on a
long holiday, Norgate found himself holding the reins through the share
market crash, which meant a steep learning curve.
He then worked for a subsidiary of the Dairy Board, the Lactose
Company, becoming CFO within six months.
Norgate had then hoped to head overseas, but felt obliged to stay in
Taranaki after the death of his father.
“I felt a real responsibility to hang around in Taranaki for my mother,
as my brother was already planning to head overseas.”
His next role was one his father had held – General Manager of Kiwi
Dairy. Norgate stayed there for a decade, through many mergers that
saw Kiwi Dairy grow from a turnover of $285m to $4.4b and ended
with the creation of Fonterra in 2001, where he was CEO through its
formative two years.
Graham called me on the Sunday and
I started on the Wednesday
Norgate ended his corporate career at 38. For the past ten years he
has been involved with a number of companies at board level, primarily
mentoring CEOs. These include Sealord Group, Port Taranaki and the
Taranaki Rugby Football Union – “still a great source of pride – they’re
still my team”.
Norgate has managed to mould his work around his family for the
past decade, and he has made family time a priority in previous roles,
despite a busy schedule.
When his children were young and he was working in Taranaki he
made a point of leaving the office at 5.30pm.
“One reason was because unless I left, nobody else would, but also I
wanted to get home and spend some time with the children before they
went to bed.”
He would then work at home for a few hours in the evening, a habit
that has remained with him since.
Norgate laughs when asks what keeps him busy in his spare time, as
his current travel schedule doesn’t allow for much of that. He rues the
fact this new role doesn’t allow much time for exercise.
As for whether he achieves work–life balance, Norgate laughs again.
“Not in most people’s definition.”
But he says he doesn’t get stressed and deals with problems either by
solving them, or accepting he can’t solve them.
“I generally sleep very well at night.”
MARCH 2013
27
PROFILE
Hit the decks
It started as a hobby, but
Melissa Robinson CA’s skill as
a DJ has seen her put down
the calculator, take a career
break and really hit the
decks.
BY JENNIFER BLACK
B
risbane-based Melissa Robinson CA has always been
a high achiever. Born in Matamata, she got such good
grades at high school in Cambridge she skipped seventh
form and went straight to university. Architecture was
her top career choice, but the University of Waikato
didn’t offer this subject. As she was younger than her
fellow students she wanted to keep living at home for a bit longer
so she compromised and chose another path – management studies
and accounting.
“Numbers just work for me – they come naturally.”
After gaining a Bachelor of Management Studies Honours degree,
majoring in accounting and strategic management, Robinson moved
to Auckland for a graduate role at BDO Spicers and completed a
professional accounting course. She then moved into the property
industry, which she is passionate about, working at Cooper and
Company (previously Bluewater).
Life got busy with numerous interests outside of work, including
28
MARCH 2013
DJ gigs every weekend, gym workouts,
increasing her property portfolio and
establishing a clothing line.
So something had to give.
“Even though I was absolutely loving
everything I was doing it was all so
demanding of my time, and there was only
so much of me to share around.”
In late 2008 she felt she needed to choose
a key focus.
“I wasn’t prepared to give up anything I
was doing, so instead of choosing one or the
other I decided ‘I’ll choose none’.”
A few months later she set off to Australia
with her DJ gear on what was intended to
be the first stop on her OE.
When the bank balance made it clear
she needed to find a job, she wasn’t sure
whether to focus on accounting, DJing, or
something new altogether. But the decision
was made for her.
“I had the rare opportunity to play at
one of the best nightclubs in Queensland,
The Met, where I was offered a residency
in their main room, and I still hold that set
to this day.
“One gig led to another, and another,
and after almost four years I haven’t had
to ‘pick up a calculator’ yet.”
She has always been interested in music
and while managing a busy student bar in
Hamilton she used to pester her bosses to
let her “learn to be the DJ”.
“Unfortunately they valued me too much
in my supervisory role and I never got the
opportunity.”
But she did get the opportunity a few
years later when she got into a relationship
with a budding DJ who had the vinyl and
equipment she needed to get started, and
the expertise to teach her.
Robinson, aka DJ Disko Diva, says
effectively she runs herself as a business
with her DJ work.
“Although a lot of different parties have
a vested interest in how well you do, at the
end of the day they aren’t there chasing
you along, pushing you.”
When asked if her training as a chartered
accountant has helped in her career as a DJ,
she says she believes any sort of training
teaches discipline, which is a necessity in
any endeavour.
“All aspects of accounting and small
business enterprise that surround it are a
direct help to the many functions I need to
cover by myself.”
Robinson laughs when asked if she is a
“full-time DJ”.
“The term ‘full-time’ and ‘DJ’ go
together like chalk and cheese and are very
rarely used in the same sentence – but it
is the only work I have done while I have
been over here.”
But she has had a number of other
projects on the go, including renovating
a unit and learning to produce music, and
says there is no such thing as a “typical
day” in her life.
She says her time in Australia has passed
incredibly quickly and she questions
One gig led
to another,
and another,
and after
almost four
years I
haven’t had
to ‘pick up a
calculator’
yet
DJ Disko Diva, aka Melissa Robinson CA, at
work behind the mixer.
whether she should travel further abroad.
“Travelling from New Zealand to
Brisbane to return home isn’t a very
adventurous OE… I should seriously think
about moving on to more diverse shores
before considering returning home to the
Land of the Long White Cloud (which my
mum would love).”
While she doesn’t think she could ever
work as a CA again “in a pure sense”, she
does think she will return to the corporate
workforce.
“Possibly in an accounting role that is
more managerial or even in a niche role
incorporating my strategic management
background and also the diversity in my
lifestyle.”
She confesses she has never been
interested in “ catching the worm”, having
strong nocturnal tendencies which she plans
to rein in a little over the coming months.
“I may need a good year to become
accustomed to starting first thing [in the
morning] though.”
MARCH 2013
29
BUSINESS
SFR for NFPs
Simple Format Reporting Standards for
Not-for-Profit Entities
BY MICHELE EMBLING FCA
L
ate last year the New Zealand Accounting Standards Board
(NZASB) issued an Invitation to Comment and related
exposure draft for Simple Format Reporting Standards for
Not-for-Profit Entities (NFPs).
These proposals are a major innovation in financial
reporting in New Zealand. They are also the first time that
an accounting standard has been developed specifically for NFPs.
NEW LEGISLATIVE REQUIREMENTS
The Financial Reporting Bill 2012 was introduced to Parliament in
July last year and is currently being considered by the Commerce
Select Committee.
The Bill requires registered charities to comply with External
Reporting Board (XRB) standards when preparing their annual
financial reports for filing on the Charities Register. This requirement,
which is expected to apply for periods beginning on or after 1 April
2015, is a change from current practice. Under current arrangements
registered charities must file annual financial reports but the basis of
their preparation is undefined.
The new legislative requirement has a number of implications,
including for accounting standards.
When the Bill is enacted, the XRB will be responsible for setting
accounting standards for registered charities for the first time. This
means that the standards issued by the NZASB (which is the accounting
standard setting arm of the XRB) must be fit for this purpose, as well as
for for-profit entities and public sector entities.
In addition to differences resulting from the nature and type of
transactions, the NFP sector in New Zealand has another unique
characteristic: the small size of many of the entities. Of the approximately
25,000 registered charities, around 96% have annual expenditure of
less than $2 million, close to 60% have annual expenditure of less than
$40,000, and just over 13% have annual expenditure less than $1,000. 1
Further, many of these small charities have limited financial expertise
sitting around their governance tables; and there is also no guarantee
that the treasurer has much familiarity with common accounting
practice or the requirements of technical accounting standards. It is
therefore unrealistic to expect that smaller charities will be able to
comply with a complex set of accounting standards such as NZ IFRS
or the full PBE Standards (which are based on International Public
Sector Accounting Standards (IPSAS)). The compliance costs of such a
requirement would most certainly outweigh the benefits.
For the smallest of entities, even just using accrual accounting is
likely to be very challenging. The Financial Reporting Bill recognises
this by allowing very small entities (which the Bill defines as entities
with operating payments of $40,000 or less) to use cash accounting when
30
MARCH 2013
preparing their financial reports. However, in
doing so, these entities must still comply with
XRB Accounting Standards. This means that
an accounting standard for cash accounting
by very small registered charities is now
required.
FRAMEWORK FOR NFPS
The XRB was very conscious of these issues
when it was developing the new Accounting
Standards Framework. That Framework,
which was finalised and issued in April 20122,
makes specific provision for small NFPs.
The reference to NFPs, rather than just
registered charities, is deliberate. While the
Financial Reporting Bill only applies to
registered charities, the feedback that the
XRB received from the NFP sector during
the development of the Accounting Standards
Framework indicated that many NFPs
other than registered charities were likely to
voluntarily adopt the new standards.
The NZASB has therefore focused on
developing standards for the whole sector
rather than just registered charities – even
though it will only be registered charities
which will be legally required to apply them.
The Accounting Standards Framework
is given legal effect through Standard
XRB A1. This is the overarching standard
that establishes which suite of accounting
standards reporting entities must follow.
The initial version of XRB A1 Application
of Accounting Standards was issued in July
2011 and reflected the accounting standards
framework as it existed at that time. As the
new Accounting Standards Framework is
significantly different from the old framework,
XRB A1 is being rewritten. This is occurring in
three stages and reflects the staged timing for
the roll-out of the new Accounting Standards
Framework established by the XRB Board.
Under that roll-out, the for-profit aspects of
the new Accounting Standards Framework
will be effective before the public sector
aspects, which in turn will be effective before
the not-for-profit sector aspects.
The Accounting Standards Framework as
it applies to NFPs is contained in the third
rewrite (XRB A1 Accounting Standards
Framework (For-profit Entities plus Public
Sector PBEs plus NFPs Update)) which was
issued as an exposure draft in December
20123 . It is summarised in Table 1 opposite.
TABLE 1: NFP PBE TIERS AND ACCOUNTING STANDARDS
Not-For-Profit Public Benefit Entities
Entities
Accounting Standards
Tier 1
• Publicly accountable (as
defined); or
• Large (expenses > $30
million)
PBE Standards
Tier 2
Non-publicly accountable
with expenses ≤$30 million
which elect to be in Tier 2
PBE Standards Reduced
Disclosure Regime
(PBE Standards RDR)
Tier 3
Non-publicly accountable
with expenses ≤$2 million
which elect to be in Tier 3.
PBE Simple Format
Reporting – Accrual (Notfor-Profit)
(PBE SFR–A (NFP))
Tier 4
Entities allowed by law to
use cash accounting
which elect to be in Tier 4.
PBE Simple Format
Reporting – Cash (Not-forProfit)
(PBE SFR–C (NFP))
As can be seen from the table, the Framework consists of four tiers
with the main criterion for each tier being entity size. The majority
of NFPs (and 96% of registered charities) will be able4 to report in
accordance with Tier 3 or Tier 4. The establishment of these two tiers,
and the decision to develop simple format reporting standards for these
tiers, is specifically to cater for the large number of small NFPs.
However, all NFP entities that have “public accountability” must
report in accordance with Tier 1 PBE Standards, regardless of their size.
In this context, public accountability has a particular technical meaning
which is defined in ED XRB A1 (FP Entities + PS PBEs + NFPs Update).
That definition of public accountability comprises entities that meet the
International Accounting Standards Board (IASB) definition of public
accountability or that are deemed to be publicly accountable in New
Zealand.
The use of this new definition of public accountability in the Accounting
Standards Framework rather than referring solely to “issuers” is a change
from past practice. The second part of the IASB definition (holding assets
in a fiduciary capacity) means that the proposed definition is wider than
the term “issuer” as historically used in New Zealand.
SIMPLE FORMAT REPORTING
The NZASB is working on developing accounting standards for all
four NFP tiers. As the vast majority of NFPs are likely to be in Tier 3 or
Tier 4, priority has been given to developing the simple format reporting
standards for those tiers5.
In December 2012, the NZASB issued a “NFP Simple Format
Reporting Exposure Drafts Package”. The package consisted of:
• ED XRB A1 (FP Entities + PS PBEs + NFPs Update) (as discussed
above)
• EDs for the Simple Format Reporting Standards for Tiers 3 and 4
• EDs for optional reporting Templates and accompanying Guidance
Notes.6
The package contains a number of innovations not previously seen in
New Zealand. The first of these is in relation to the proposed Standards
themselves. These have been written as single, standalone documents.
This means that all the reporting
requirements for (eg Tier 3 entities) are
contained in the one, single Tier 3 Simple
Format Reporting Standard – not a
multitude of different standards as is the
case with the Tier 1 PBE Standards or NZ
IFRS. The proposed simple format reporting
standards also use less technical language
than conventionally used in accounting
standards.
Compared to the Tier 1 PBE Standards, the
Tier 3 and Tier 4 standards are significantly
simplified in terms of both content and the
way in which transactions and balances are
accounted for.
A significant challenge for the NZASB
has been to ensure that the requirements are
simple enough, without them being so simple
that they do not provide adequate guidance.
This is something we are particularly keen to
get feedback on through the exposure draft
process.
A second important innovation is the
objective and focus of the information
required to be reported. In developing
the EDs for the simple format reporting
standards the NZASB has drawn on the
report of the Simple Format Working Group
established by the ASRB in 2010.7 Both the
Working Group and the NZASB are of the
view that the reporting requirements should
allow an NFP entity to “tell its performance
story”:
• Who are we?
• Why do we exist?
• What did we do?
• When did we do it?
• What did it cost?
• How was it funded?
• What do we need to continue?
In telling this “story” the most important
part is often the non-financial information.
Accordingly, the simple format reporting EDs
are proposing that entities should prepare a
Performance Report, which includes both
financial and non-financial information,
and that contains the follows sections (or
statements):
• entity Information (who are we, why do
we exist)
• Statement of Service Performance (what
do we do, when do we do it)
• financial information (what did it cost,
MARCH 2013
31
BUSINESS
how was it funded, what do we need to continue)
• accounting policies (how we account).
Both the proposed Tier 3 simple format reporting standard and the
proposed Tier 4 simple format reporting standard take this approach.
In both the proposed standards, the fundamental “tell the story”
requirements are exactly the same, including the requirement for entity
and service performance information. The main difference between the
two proposed standards is the way in which financial information must
be reported.
• The proposed Tier 3 (accrual) standard requires a Statement
of Financial Performance, Statement of Financial Position, and
Statement of Cash Flows, together with accompanying Notes.
• The proposed Tier 4 (cash) standard requires a Statement of Receipts
and Payments, and a Statement of Resources and Commitments.
The proposed standards are structured around these various
statements. Each section indicates the information that must be reported
in the statement concerned, together with how that information is to
be recorded (recognition and measurement requirements). Additional
optional information that may be reported is also indicated. Where
applicable the format that must be used for the statement is provided.
As outlined earlier, in developing the proposed simple format
reporting standards, the NZASB was very aware that Tier 3 and Tier
4 NFPs are small and generally have simple transactions, and that the
expertise needed to prepare complex general purpose financial reports
may not be available to all entities in the sector. The innovations
outlined above where developed with this in mind.
However, there is a limit to the amount of simplification that is
possible, or to the extent to which an accounting standard (which when
issued by the XRB is a legal document) can be written in a way that
makes it easy for a non-accountant to be able to generate a performance
report directly from it. The NZASB has therefore developed a draft
template and associated Guidance Notes which were released as part of
the NFP Simple Format Reporting Exposure Drafts Package.
The template, developed using a spreadsheet workbook, is to
assist entities in preparing the Performance Report. Preparers enter
data directly into the spreadsheet, this then populates the relevant
statements, allowing the Performance Report to then be printed. A set
of Guidance Notes accompanies the template. These outline how the
spreadsheets work, together with guidance on some of the judgements
that will need to be made.
It is intended that use of the template and associated Guidance Notes
will be entirely optional and the template and Guidance Notes will have
no legal status. They are merely a tool to assist preparers – particularly
those that are non-accountants.
TELL US WHAT YOU THINK!
The NZASB is very keen to hear what constituents think about our
NFP simple format reporting proposals. It is an area in which New
Zealand is once again trailblazing and so we want to be sure that
we have got the balance as right as possible. So please send us your
comments. Submissions are due by 28 June 2013 and can be sent to
[email protected].
32
MARCH 2013
We are also organising a series of
seminars on the NFP Simple Format
Reporting Package. These are being
organised in conjunction with DIA
Charities and the Association of NGOs of
Aotearoa (ANGOA). They will be run in
16 different centres over the March – May
period. Further information is available at
xrb.govt.nz.
1 These statistics are based on information
currently reported by entities in their
annual returns to DIA Charities
(previously the Charities Commission).
2 The new Accounting Standards
Framework is available at www.xrb.
govt.nz
3 This Exposure Draft, together with an
accompanying Invitation to Comment, is
also available on the XRB website: www.
xrb.govt.nz. Submissions are due with
the XRB by 28 June 2013.
4 In common with the approach taken
with the for-profit and public sectors, the
ED proposes that all entities be required
to report in accordance with Tier 1 PBE
Accounting Standards (PBE Standards)
unless (a) they meet the criteria to report
in accordance with Tier 2 or Tier 3 or
Tier 4 and (b) they elect to report in
accordance with the relevant tier.
5 Work is also underway to enhance
the Tier 1 and Tier 2 PBE Standards
developed for use by public sector
public benefit entities. An exposure draft
incorporating the NFP enhancements is
expected to be issued towards the end of
2013.
6 This package is available at: http://www.
xrb.govt.nz/Site/Accounting_Standards/
Exposure_Drafts/NFP_Simple_Format_
Reporting_EDs.aspx
7 The Simple Format Working Group was
an advisory group comprised of persons
from the NFP sector. It was tasked with
considering what should be included in
Simple Format Reports. The Working
Group’s report is available at http://
xrb.govt.nz/Site/Financial_Reporting_
Strategy/ASRB_History/default.aspx
Michele Embling FCA is a member of the
External Reporting Board and Chair of the New
Zealand Accounting Standards Board.
A Journal special supplement
New in The Journal – winner of Magazine of the Year 2012 –
Work/Play is an exciting new section looking at luxury items, adventures and
experiences for professionals who work hard and play hard.
Directory
•36•
Regent Seven Seas Cruises
Cruising as it was meant to be
P: 0800 Cruise (278 473)
W: rssc.com
•38•
SkyCity
www.skycityauckland.co.nz
0800 SKYCITY (0800 759 2489)
•40•
bellotta
www.skycityauckland.co.nz/Restaurants/Bellota
•41•
Iconic Motor Homes
Luxury rentals and sales
P: 03 366 4364 or 09 275 3306
E: [email protected]
W: iconicmotorhomes.com
•66•
Francis Travel Marketing
Providing world class travel opportunities
P: 09 444 2298 or 0800 422 784
E: [email protected]
W: francistravelmarketing.co.nz
•43•
Hotel De Brett
Cuisine Restaurant of the Year 2012 finalist
2 High St, Auckland
P: 09 925 9000
E: [email protected]
W: hoteldebrett.com
•44•
Air New Zealand holidays
The choice is yours
P: 0800 737 767
W: airnz.co.nz/holidays-stores
Welcome to the luxury and lifestyle feature Work/Play.
New to the Journal – winner of MPA Membership Magazine of the Year 2012
– Work/Play will explore luxury items, adventures and experiences for highearning professionals.
This month’s advertisers offer opportunities to indulge in two of life’s great
pleasures – fine dining and travel.
Auckland is a city of cosmopolitan dining options and the foodies among
you would be well advised to experience the award-winning cuisine of The
Grill at Sky City. Voted Restaurant of the Year 2012 by Cuisine magazine, The
Grill specialises in fresh Kiwi produce presented in a relaxed, uncomplicated
atmosphere. Honest fare for real people.
Hotel de Brett, also highly rated by Cuisine, offers a lively atmosphere in its art
deco Housebar, street views in the snug Cornerbar, and fine dining from the
Kitchen at the bottom of High Street in the centre of Auckland city.
If the back to work blues have set you thinking about your next holiday,
why not talk to Francis Travel marketing, who can set you up with the trip
of a lifetime to Antarctica? The organisation is aligned with a number of
international travel providers and is a local expert on Thailand and on popular
world cruises.
If a cruise trip is on the agenda, Regent Seven Seas Cruises is another local
expert. Regent is currently offering special trips to explore Alaska, one of the
world’s wildest nature spots, in pure luxury.
And of course a first stop should always be Air New Zealand, where you
can ensure your travel to and from New Zealand is at an internationally
competitive price, no matter where you go in the world.
To inquire about Work/Play
contributions please contact
Gavin Leary:
[email protected]
enjoy ...
IT’S ALL INCLUDED.
Enjoy the most inclusive luxury cruise experience ever.
This is cruising as it was meant to be — a world where
everything is included, without exception and without
compromise. Expect gratifying luxuries. Anticipate the
world’s most exotic destinations. Indulge in world-class
cuisine. Regent Seven Seas Cruises promises an
extraordinary experience.
Enjoy… it’s all included.
THE
all-inclusive
REGENT EXPERIENCE
đƫ FREE Unlimited Shore Excursions
đƫ FREE Luxury Hotel Package*
đƫ FREE Beverages including fine wines and premium spirits
đƫ FREE Pre-Paid Gratuities
đƫ FREE In-suite mini-bar replenished daily
đƫ FREE 24-hour room service and no additional
charge for specialty restaurants
Alaska
EXPLORE
MAY THROUGH AUGUST 2013
7 - 12 night ultra-luxury cruise
in a suite starting from only
$5,125* per guest!
*New Zealand dollars, double occupancy.
Based on Seven Seas Navigator’s
12 June 2013 sailing. Subject to availability.
Please see brochure for full conditions.
A SAMPLING OF
FREE UNLIMITED SHORE
EXCURSIONS INCLUDED
IN YOUR CRUISE FARE
SITKA, ALASKA
Advanced Bike Trip
Originally US$149 .......................... now FREE
KETCHIKAN, ALASKA
Rainforest Canoe & Nature Trail
Originally US$149 ........................... now FREE
FOR ENQUIRIES SEE YOUR TRAVEL PROFESSIONAL
FOR A BROCHURE CALL: 0800 CRUISE (278 473)
WWW.RSSC.COM
MARCH 2013
35
Reach for the Sky
01
SKYCITY is Auckland’s premier entertainment hub.
Centrally located in Auckland’s CBD, SKYCITY
has over 20 restaurants and bars including
the Federal Street premium dining district,
two of Auckland’s top hotels, a world-class
casino, Convention Centre and the iconic Sky
Tower.
Centrally located, SKYCITY’s two hotels are
the perfect place to stay whether you’re in
town for business or pleasure.
The five-star SKYCITY Grand Hotel on Federal
Street oozes luxury from the moment you
arrive. With modern and spacious rooms,
a dedicated business suite, rejuvenating
East Day Spa, full gym and lap pool
facilities, impressive bar and fine dining
restaurant options, the SKYCITY Grand is a
perfect example of elegance and style in
accommodation.
The four-star SKYCITY Hotel located across
the road is another accommodation option.
Packages are available all year round for
both hotels. You’ll feel like royalty with the
top-class service and the ability to visit most
places throughout SKYCITY and charge all
incidentals to your room card and pay once
at the end of your stay.
SKYCITY is home to two award-winning
restaurants in its Federal Street premium
dining district, with Al Brown’s Depot –
Metro’s Restaurant of the Year last year
and The Grill by Sean Connolly, which was
36
MARCH 2013
awarded Cuisine NZ Restaurant of the Year
for 2012.
If you are after private dining to host a
corporate group of up to 20 people, The Grill’s
private dining room is the perfect venue.
Call 09 3637067 or visit thegrillnz.co.nz for
details.
Across from The Grill on Federal Street lies
Bellota, Peter Gordon’s Spanish tapas bar, the
perfect place to relax and enjoy authentic
tapas and some of the finest Spanish wine.
If a magnificent view is what you are after
then Orbit Revolving Restaurant, 190 metres
high in the Sky Tower, is the perfect place to
host a client or international guest. Enjoy
seasonal menus for lunch or dinner while
taking in the sights of Auckland, with the
restaurant rotating a full 360 degrees each
hour.
With cuisine ranging from fine dining, bistro,
authentic Spanish tapas or Chinese Yum Cha,
SKYCITY’s restaurants and bars are sure to fill
the gap at the end of a busy day.
After dinner at one of our fine restaurants,
why not head up to SKYCITY’s world-class
casino and try your hand at the many
different table games and gaming machines
available. All the favourites including Baccarat,
Blackjack, Roulette, Caribbean Stud Poker
and Texas Hold’em Poker are available with a
number of different playing options for our
VIP customers. Whether you are a beginner or
a regular, there’s something for everyone.
02
03
01 - A perfect place to stay for
business or pleasure
02 - SKYCITY Hotel Harbour View
Premium King Room
03 - Deluxe-bathroom
Enjoy a divine
and quick
meal from our
‘Grilled For
Time’ menu
per perso
on
pe
er person
n
Available for lunch, Monday to Friday 12pm—2.30pm,
and for dinner, daily for diners seated between 5.30pm and 6.30pm.
Bookings recommended, phone 09 363 7067 or visit thegrillnz.co.nz
90 Federal Street, SKYCITY. Available for a limited time.
MARCH 2013
37
Top tapas
Bellota, Sky City Auckland
Reviewed by Kathleen Payne
Right in the heart of the city, I discovered that
I didn’t have to fork out for an airfare to take a
holiday.
As I stepped into Bellota tapas bar I felt as though
I could have been right back in Barcelona, if it
weren’t for the buzz of Kiwi accents from the
packed restaurant. It’s not even correct to call it a
restaurant, for it is indeed a tapas bar. They don’t take
reservations, and on this busy Thursday night couples
were tucked in every booth celebrating Valentine’s
Day in cosy seclusion.
You can sit at the bar with your choice of cocktail
or international beer and wine while you wait for a
table, but tapas is not a process that can be rushed,
and you’re just as well off ordering from there like
they do in Spain.
The menu is not for the faint of heart or indecisive.
Unfortunately, I’m both. But the staff are happy to
help a tapas rookie. They don’t even mock you as
you attempt to attempt to order “vieiras al albariño”
or, my favourite, “albondigas con calçots rebozados
y salsa de asafran”… we stuck with “the meatballs
please”.
My date and I sat in a booth carved into the side of the
wall, with dim atmospheric lighting. The booths were
perfect for a couple, and the live musician playing
Latin music over the PA added that final touch.
Tapas is an ongoing ordering process, and the waiting
staff were very attentive. Front of house manager, the
lovely Brazilian Marcia Hebling, kindly recommended
that we try the jamón ibérico de bellota (ham), from
which the restaurant gains its name.
At first I was slightly worried: I had come to a
restaurant named after ham, when I didn’t even
eat the meat – unless it is free range, and I wasn’t
expecting that. So imagine my surprise when Marcia
said that it was indeed.
Bellota isn’t just like any other ham; this meat is an
expensive delicacy. The Iberian pigs used to live all
over Spain, Portugal and the Mediterranean until
their natural habitats, the oak forests, were slowly
devastated. On the front of the menu there is an
entertaining story about a farmer who thought his
pigs were being stolen until one evening he caught
them rolling over the cattle stop and wandering off.
The ham is now quite pricey, but oh, so worth it and
Bellota is freely willing to admit this. It comes with
slices of warm bread and my date couldn’t figure out
what the extra flavour in the bread was until I told
him… it was fresh.
Bellota has strived to give you an authentic Spanish
experience, but in my view, it’s achieved more. They’ve
taken the best parts of Spain and Spanish culture,
38
MARCH 2013
02
and mixed it with some good ol’ Kiwi flavour so even
the less culturally adventurous can enjoy themselves
over some perfectly cooked New Zealand scallops.
The highlight of my night had to be the crème
catalana, which was very similar to crème brulee. It
was the perfect balance of creaminess without too
much sweetness, and the caramelised top had a
slight smoky flavour that reminded me of a perfectly
toasted marshmallow. Wash it down with a brandyladen Spanish coffee and you’ll have yourself a
buenos noches.
03
01 - A touch of
Barcelona in the
heart of Auckland
02 and 03Bellotta has taken
the best parts of
Spain and Spanish
culture, and mixed
it with some good
ol’ Kiwi flavour.
MARCH 2013
39
Unforgettable
adventure
Antarctica is one of the great modern travel destinations, a place few people
will see in their lifetime – and those who do never forget it.
A visit is not just a holiday, it is a once-in-a-lifetime experience.
Until the mid-1950s, the vast ice continent was inaccessible to all but the hardiest
adventurers and scientists. Since then small-scale tourism expeditions have been taking
the intrepid to the southernmost reaches of the planet for an experience like no other.
What draws people?
Antarctica covers 14 million square kilometres (around twice the size of Australia) and
holds an estimated 90% of the world’s ice.
It is a continent of extremes: the coldest, driest, windiest and emptiest place on the globe.
It is home to penguins, blue whales, fur seals, snow petrels, and giant squid – and a
fluctuating number of 1,000–5,000 scientists.
And it has a history of adventure and exploration from the early voyages of Captain Cook,
to the race for the South Pole and infamous tragedy of Robert Falcon Scott and party.
It is also the ideal place to look at the stars. Low moisture content in the air, and the
absence of light pollution, means the night sky will never look as clear from anywhere
else.
Antarctica is one of the exciting destinations offered by Francis Travel Marketing through
its connections with international travel operators.
Francis Travel Marketing has connections
with many of the world’s major cruise
operators, a strong relationship with the
Tourism Authority of Thailand, and access
to unique opportunities in Antarctica
through Quark Expeditions.
Most tours take place in the Antarctic
spring/summer (November–March) when
migratory seabird numbers peak and
temperatures tend to be above freezing –
akin to a cold winter’s day in Dunedin.
Trips can be as short as eight days or as
long as a month, depending on how much
of the natural beauty of the continent you
want to see.
Francis Travel Marketing is based in Auckland
but has representatives throughout New
Zealand. See francistravelmarketing.co.nz
for more details.
Get up close
and personal
Polar Voyages to the
Arctic & Antarctica
$
from
7229*
CONTACT YOUR TRAVEL AGENT FOR FURTHER INFORMATION
Price is per person, in NZ Dollars, share twin, based on 4/1/13 Antarctic Explorer: Discovering
the 7th Continent sailing. Price includes port taxes & government fees (correct as at 13/02/2013)
and all applicable discounts. All fares are subject to change without notice up until full payment
is received. Airfares & gratuities are additional. Price for cash and cheque payments only. Valid
for new bookings only. Special conditions, currency fluctuations and availability restrictions
apply. Sales until sold
40
MARCH 2013
New Zealand Representative: Francis Travel Marketing
Travel Agents only: 0800 422 784 | 09 444 2298
francistravelmarketing.co.nz
choose a space...
Unwind in our eclectic spaces and let our friendly staff take care of you, whether it’s a lively lunch, an early evening starting point,
or a late night haven. From the iconic art deco styled Housebar; the slightly rugged internal courtyard; the soaring atrium to
the fireside couch. Enjoy casual gourmet cuisine in DeBrett’s Kitchen or head downstairs to the street level Cornerbar, and watch
the world go by with a nz craft beer.
Open for breakfast, lunch, dinner & cocktails/drinks from 6:30am until late, 7 days a week
2 High St Auckland
hoteldebrett.com 41
MARCH 2013
enjoy
earn, spend,
At Air New Zealand Holidays Stores
Spend $5
ÙÜ×ÙÜÏÓØ̋ÝÞÙ 00
ÜÏ
͔͑ÚÜÓÖ͓͔͑͒× ÌÏÐÙÜÏ
ÏØÞÓÙØÞÒÓÝ
ÙʥÏÜʶÜÏÍÏÓà
Ï
50 Bonus Airp
oints
3
Dollars
Plus,
use your
ars
Airpoints Doll
to pay for
ls
selected hot2e
& cruises
The choice is yours at Air New Zealand Holidays:
˾ËÜØÖãßãÝÚÙÓØÞÝÙÜÓÜÚÙÓØÞÝÙÖÖËÜÝ
˾ËÜØÓÜÚÙÓØÞÝÙÖÖËÜÝáÒÏØãÙßÚËãáÓÞÒãÙßÜÓÜÚÙÓØÞÝ̼ÎÓÜÏÍÞÏËÜØÍÜÏÎÓÞÍËÜÎÙÜØÏ×ËÜÞÍÍÙßØÞ1
˾ËÜØÓÜÚÙÓØÞÝÙÖÖËÜÝÙØÏÖÓÑÓÌÖÏʮÓÑÒÞÝ
1
ÖÓÑÓÌÓÖÓÞãÍÜÓÞÏÜÓËËÚÚÖã˛ËØÕÙÐÏáÏËÖËØÎ̙̚ÓÝÞÒÏÓÝÝßÏÜÙÐÞÒÏØÏ×ËÜÞÍÍÙßØÞ˛˪ÝËÍÍÙßØÞÙÚÏØÓØÑÍÜÓÞÏÜÓËËÚÚÖã˛ØÏ×ËÜÞÍÍÙßØÞÏÜ×ÝËØÎÙØÎÓÞÓÙØݘËØÎÐÏÏÝËÚÚÖã˜ÝÏÏËÓÜØä˛ÍÙ˛Øä˹ÙØÏÝ×ËÜÞ˪Ý
ÍßÜÜÏØÞÓÝÍÖÙÝßÜÏÞËÞÏ×ÏØÞËØÎßËÖÓÐãÓØÑÓØËØÍÓËÖØÞÓÞãÓÝÍÖÙÝßÜÏÞËÞÏ×ÏØÞ×ËãÌÏÙÌÞËÓØÏÎÐÜÙ×ËØãÝÞÙÜÏÙÜàÓÏáÏÎËÞÌØä˛ÍÙ˛ØäÒÓÝÙʥÏÜÙÐÝÏÍßÜÓÞÓÏÝÓÝÙØÖãËØÙʥÏÜÞÙÚÏÜÝÙØÝÓØÏáÏËÖËØÎËØÎÓÝØÙÞ
ËàËÓÖËÌÖÏÐÙÜÝßÌÝÍÜÓÚÞÓÙØÌãËØãÚÏÜÝÙØÙßÞÝÓÎÏÏáÏËÖËØβ2 ÏÏÓØ̋ÝÞÙÜÏÙÜÑÙÙØÖÓØÏÐÙÜ×ÙÜÏÎÏÞËÓÖݲÓÜÏáÏËÖËØÎÓÜÚÙÓØÞÝÜÙÑÜË××ÏÏÜ×ÝËØÎÙØÎÓÞÓÙØÝËÚÚÖãÝÏÏËÓÜÚÙÓØÞݲÍÙ˛Øä˛ÖãßãÝÏÜ×ÝËØÎÙØÎÓÞÓÙØÝ
ËÚÚÖãÝÏÏʮãÌßãݲÍÙ˛Øä˛ÖãßãÝÙÓØÞÝËÜÏØÙÞËáËÜÎÏÎÐÙÜÚËã×ÏØÞÝ×ËÎÏÌãÓÜÚÙÓØÞÝÙÖÖËÜݲ3 ͖͑ÙØßÝÚÙÓØÞÝËÖÖÙÍËÞÏÎÚÏÜÌÙÙÕÓØÑÐÙÜØÏáÌÙÙÕÓØÑÝÙØÖãáÒÏØãÙß×ÏØÞÓÙØÞÒÓÝÙʥÏÜÓØ̋ÝÞÙÜÏ˛ʥÏÜÏØÎÝ͔͑ÚÜÓÖ͓͔͑͒˛
42
MARCH 2013
0800 737 767
airnz.co.nz/holidays-stores
BUSINESS
What’s your tax plan?
With a few weeks left until 31 March 2013,
tax planning for clients should be a priority.
BY SHARON COHEN CA AND DANIEL HUNT CA
C
lients are generally unaware of the range of options
available and should be advised on how to arrange their
tax affairs so as to minimise tax and be compliant with
tax laws. It is recommended that professional advisers
plan for each client individually.
BE THE TAX ADVISER
Each year Inland Revenue (IR) publishes its Compliance Focus
document which presents risk areas that they will focus on during the
ensuing year.
Be the tax adviser. Be wary of the focus areas and if any clients may
be “exposed”, provide them with tax advice and recommendations for
a course of action.
In December 2012 IR released the draft Interpretation Statement
INS0117 Income Tax – Residence1. This statement is an updated set of
guidelines on certain residency issues and will replace outdated Public
Information Bulletins and Tax Information Bulletins.2
Be the tax adviser. If you provide advice to inbound and/or outbound
migrants, or have clients that are transitional residents, become familiar
with the commentary contained in this document.
Tax legislation is dynamic – it changes regularly.
Be the tax adviser. Keep up to date with changes in the “tax world”.
A recent change to the tax legislation allows a deduction for expenses
incurred on unsuccessful software development projects in the year
that the development of the software is abandoned.3
BE THE CLIENT MANAGER
Before 31 March 2013, advise clients on deductions that they may be
entitled to.
• Donations – remind clients who own companies about entitlement to a
deduction for donations made to approved charitable organisations.4
• Employee deductions – remind clients about entitlement to a
deduction for amounts owed to employees paid out within 63 days
of balance date.
Manage imputation credits. There is a transitional period which
allows companies to attach 30% imputation credits up until 31 March
2013. Dividends paid with 30% imputation credits attached require a
top-up of 3% withholding tax.
Shareholder and loss continuity reviews are necessary throughout the
year. Remind clients that a minimum of 66% shareholder continuity
must be maintained at all times in order to maintain imputation
credits. A minimum of 49% continuity must be maintained for any
losses incurred to be carried forward to future taxable periods.
Review client lists. Does your firm act for
any transitional residents? Are there any
clients whose temporary exemption periods
have lapsed during the year, or will lapse
in the ensuing income year? Prepare tax
planning advice for these clients.
Remind clients who will receive income
from self-employment or salaries that do not
have PAYE deducted of their ACC obligations
which will arise after the assessment of the
2013 tax returns.
Remind clients of their eligibility for the
annual KiwiSaver member tax credit of
$521.43. To be eligible, the member must
have contributed $1,042.86 during the
year. Clients should top up their KiwiSaver
accounts before 30 June 2013.5
BE THE PROACTIVE TAX PLANNER
There are currently three officials’ issues
papers for which IR’s Policy Advice Division
is seeking feedback on proposed reforms.6
There are likely to be many more that
will evolve during the 2013 year. Although
it is not possible to predict the changes that
will be enacted in 2013, it is possible to be
proactive in tax planning.
The recommendations contained in this
article are non-exhaustive. Be the proactive
tax planner and start preparing tax strategies
for your clients based on what you know
today.
1 The deadline for comment was 31
January 2013.
2 The PIBs and TIBs that will be replaced
are on page 2 in INS0117 Income Tax –
Residence.
3 Section DB 40B Expenditure in
unsuccessful development of software
(Income Tax Act 2007), effective from
1 April 2008, inserted on 2 November
2012.
4 Deductions are limited to net income,
calculated before taking the donation
amount into account.
5 The KiwiSaver year runs from 1 July to
30 June.
6 Submissions will close in February 2013
and March 2013.
Sharon Cohen CA and Daniel Hunt CA provide
specialist tax advice and tax training.
dhatax.co.nz
MARCH 2013
43
BUSINESS
Succession/
exiting
the family
business
The current age profile of
New Zealand is alarming
with a million people over
the age of 60.
BY DEANE PURDUE CA
T
he most recent figures available from Statistics New Zealand
show we have a total population of 4,435,000, of which
611,400 are over the age of 65.
No wonder our clients are seeking succession/exit advice.
The great majority of business owners approach their
accountant for advice first and, if not satisfied, then their
lawyer and/or banker. More recently they have another option and that
is accounting firms who have set up “family business” specialty services
(and, of course, succession specialists).
The ageing phenomenon has also had an effect on our client’s
professional advisors.
SUCCESSION/EXIT – FUTURE PROOFING
The words “succession” and “exit” do not adequately describe, or do
justice, to the range of services requested by our clients. Every family,
business and assignment is very different although some fundamental
principles apply.
Often in articles, speeches, consultancies and workshops we use the
term “future proofing”. This overarching term involves clients articulating
in documents their goals, wishes, desired outcomes, visualisation, values,
expectations, strategies, plans, budgets, forecasts, risk identification and
management.
The “succession/exit” advice we offer our clients can be:
• future proofing – the business and family
• succession
• exit planning and execution
• governance advice
• business/personal structure diagnostic/advice
• the “safety net” – risk identification and management
• viability and profitability including budgeting and forecasting
• the “human dimension issues” of the family business
• meeting facilitation and communication with client’s professionals and
family
• special issues, eg vetting business purchase offers.
44
MARCH 2013
There is a succession/exit process which will
be examined in the forthcoming workshops and
included in the Tool Kit.
CLIENT STORIES
Three clients we are working with this year are
in the 60-65 age bracket.
Family one is unhappy that their husband/
father has had no wealth transfer recognition
for his efficient and loyal input to the family
farm for 25 years. His parents are in their mid80s. He was paid poor wages and relied on a
clause in his parents wills to give him a bigger
“slice of the inheritance cake”.
The lessons to be learnt with this case and
many cases similar are:
• wills are not a contract
• a family succession contract is far more
effective in these circumstances
• farm ownership by an inter vivos trust would
have been a better alternative.
Family two owns a tourist business with
mum and dad struggling to keep the business
viable. They are weary and now, thanks to using
our Children’s Expectation Questionnaire, they
know their three children will not be successors.
Unfortunately, the accountant has not
offered significant business advice. They are
beneficiaries of mum’s father’s trust and they use
their own trust reasonably effectively.
One issue was the preparation of a statement
of personal assets/possessions/liabilities so these
questions could be answered:
• What are actually the components of “Residue” referred to in the wills?
• What of these assets could we sell/gift to the family trust/s?
• As mum and dad have different separate assets should we consider a
matrimonial agreement?
Family three is a couple who owns a dairy farm (fourth generation) and
another successful business. They have three daughters and one son with
whom they have a sharemilking agreement and they have sold the cows
to this company.
In response to pressure from a keen successor son, the parents are
concerned about how to keep the farm in the family whilst being fair to
their non-successor daughters and retain family harmony and provide an
income for themselves.
These issues are common to many of our clients.
• Sale of the business to successor/s – how it is done?
• Financing arrangements – the banks and them as financiers.
• Viability issues for their successor/s and their future cash needs.
• Structuring the debt owing by the successor including, interest,
repayment, security and gifting considerations.
The son has been requested to work with his professional team to
prepare a proposal for the parents including viability assurances through
a budget/cash flow.
Our standard practice is to send prospective clients a letter of
engagement, a checklist of steps in the process and details regarding our
fees etc. Then we have an initial face-to-face meet and greet.
Once we have received a completed Gathering Information
Questionnaire, which contains 27 questions and a request for a number of
documents – eg written goals, financial statements, wills, trust deeds, life
policies, family tree and budgets/cash flow – we prepare and submit a first
report document entitled Facts, Observations and Suggestions. This report
forms the basis of an agenda for our meeting.
Depending on the situation, we may send our Children Expectation
Questionnaire to the family either before or after this meeting. (This
questionnaire is strictly confidential to us and information can only be
shared with others if we have the children’s permission.)
We may then facilitate a further meeting with the successors,
professional advisors and siblings and prepare an Action, Implementation
and Monitoring report. We have developed a meeting agenda (this will be
featured in the workshop) which embodies the issues requiring collective
examination, action, priorities, responsibilities and deadline dates.
THE WIDER FAMILY AND THE HUMAN DIMENSION
It is very important to communicate with non-succeeding children and
keep them involved and informed and hopefully fully supportive.
A family agreement/contract is the ultimate in succession planning.
A reading of court cases will quickly confirm how family business and
succession plans have been wrecked by non-successor siblings who were
not involved in the succession/inheritance process or who were not
managed well.
THE SAFETY NET… RISK MANAGEMENT
Over the past decade we have been specialising in future proofing. We
have learned that before clients get too excited about their exit/succession
planning they need to “batten down the
hatches” by preparing a safety net which
includes at least:
• wills – that truly reflect clients wishes, estate
and family situation
• enduring powers of attorney
• memorandum of wishes
• guide to the living file – reviewed annually
• life assurance cover – appropriate ownership
and premiums
• business/personal structure – companies and
trusts – gifting
• agreements
–
family,
matrimonial,
partnership and shareholders
• taxation impact reports.
The three families mentioned all had some
of the above missing, totally out of date, and/
or inappropriate... bound to cause family
problems.
FINANCIALS
We automatically review all the financial
statements provided by our clients whether
they be companies, partnerships or trusts.
There is value in having someone completely
independent reviewing financial statements
occasionally. Often they are out of date, not
understood or utilised by the clients. It is
accepted that financial statements are historical
and that many clients treat them as meeting
their tax obligations to Inland Revenue only.
We study the latest budgets and cash flows
to assess not only viability for successors/
purchasers but also the retiring vendors.
Sometimes there are significant potential tax
issues and we ask for a tax impact report.
We also review gifting in light of the new gift
duty free environment.
Talking and planning only will not achieve
much – action will!
Too many clients suffer from that dreadful
disease called procrastination!
Deane Purdue CA, of Q&A Business Limited, is a
specialist in “future proofing” the family business
with succession, exit and protection planning.
Want to learn more?
Dean Purdue CA will present a course on
Succession/Exiting the Family Business at
North Island locations in April and May. The
course is worth four CPD hours.
See nzica.com/events.
MARCH 2013
45
FEATURE: Investment
This is the end
The reality is that a third of weddings will
be followed down the line by a divorce.
Knowing how to approach this traumatic
situation can help make the process easier.
BY TIM MACKAY
I
t is a joy to share in the celebrations when two people publicly
declare their eternal love and commitment. However, “eternal”
these days is not necessarily “forever”. Having advised clients
through the financial implications of relationship breakdowns, it
is not something I would wish for anyone.
Unfortunately, the sad reality is that a third of all marriages
will end in divorce after an average 12.2 years. The average age for men
is 44.1 and for women 41.5. What’s more, a recent US study showed
that divorce rates spike around Valentine’s Day as people compare their
own situation to their peers and to idealised notions in the press.
Once the emotional decision is made to end a relationship, depending
upon your circumstances, a divorce can be quite a lengthy legal process.
In working with our clients we focus on what this means financially.
“Divorce is a game played by lawyers” (Cary Grant)
Unless there is a binding financial agreement (BFA) (the old fashioned
“pre-nup”), then the financial split is often a series of negotiations.
Once lawyers are involved costs will likely skyrocket. So an amicable
asset split agreement is preferred to Kathleen Turner and Michael
Douglas’s approach in the 1989 movie War of the Roses.
BFAs can be entered into at any time and both parties must receive
independent legal advice. Like insurance policies, BFAs provide a good
46
MARCH 2013
Plan B – in the event things don’t work out, a
BFA sets out what you both agreed to be fair
and equitable.
The German composer Richard Wagner
shared wise advice – “Divorce is one of the
most financially traumatic things you can
go through. Money spent on getting mad or
getting even is money wasted”.
“Divorce is the one human tragedy that reduces
everything to cash” (Rita Mae Brown)
Start with an honest check of identifying
and valuing all the assets, debts, income and
expenses that you each hold individually and
as a couple. For more complicated finances,
this may involve assets held in a company
or other structures. Everything is up for
negotiation and your lawyer and financial
advisor will need this information to ensure
they can optimise your situation.
Don’t wait for the final settlement to be
agreed before reviewing and changing the
beneficiaries in your will, your insurance and
your superannuation.
FOCUS ON YOUR FUTURE
SEEK THE HOUSE OR SUPER?
A common question is: “Should I go for the
house or the super?”. To make this decision
you really need to have a vision of your life
after the settlement. Ability to access funds,
tax implications, your expenses and your
living situation are all key factors in this
decision. Determining your new financial
goals and strategies will enable you to make
smart financial decisions through the divorce
process.
SEEK FINANCIAL ADVICE EARLY
On more than one occasion clients have told
us they wish they’d sought the support and
guidance of financial advice earlier in the
divorce process. It’s important to have sound
legal advice but it’s crucial to decide what mix
of assets will best secure your financial future.
Getting financial advice early in the property
settlement negotiations is a smart move –
don’t wait until it is all nearly all signed and
sealed.
To successfully
rebuild your
financial life
after a divorce
you have to
go back to
basics with a
budget and a
comprehensive
financial plan
To successfully rebuild your financial life after
a divorce you have to go back to basics with
a budget and a comprehensive financial plan.
While your relationship with your lawyer
will probably end with the divorce, your
relationship with your financial planner will
last many years. So choose one that you can
comfortably share intimate information with,
one you trust and who helps you get your
finances back on track. They will assist you to
surround yourself with the financial resources
and assets that will help you and your family
move forward in a positive direction and help
you create and support the life you deserve.
THE LAST WORD
“I don’t understand why Cupid was chosen
to represent Valentine’s Day. When I think
about romance, the last thing on my mind is
a short, chubby toddler coming at me with a
weapon” (anon).
This article has been published with permission
of Charter, the magazine for Australian Chartered
Accountants.
MARCH 2013
47
FEATURE: Investment
Risk vs return
Ensuring a comfortable financial future is a
key goal for all of us. We look at ten options
for maximising your nest egg.
1. LOW RISK, HIGH RETURN
6. CUT OUT THE DEADWOOD
Pay off debt. Be it a mortgage, a credit card or a hire purchase agreement,
there is no surer way to improve your financial position than eliminating
the interest payments.
Paying off a debt is the equivalent of earning a no-risk return on
investment to the tune of the interest you would otherwise be charged. For
example 6% no risk return on a mortgage, or up to 20% no risk return on
a credit card (after tax, and with no fees). Businesses are no different from
individuals in this respect. While bank loans can be vital when you need
cash flow, repaying those loans quickly is a prudent investment strategy.
If part of your portfolio doesn’t perform,
dump it.
7. MANY BASKETS, MANY EGGS
2. LOW RISK, GUARANTEED RETURN
A good way to minimise the risk of exposure
to a collapse in one part of the investment
market is to spread your investments across a
range of opportunities. Many managed funds
offer highly diversified investment plans
(usually at a lower likely return than “high
risk” funds).
Bank it. Take the interest. Not a high-earning strategy but at least you
know where you stand.
8. DON’T BE A FASHION VICTIM
3. SHARES VS PROPERTY
Returns on shares tend to be higher than the returns on investing in
property (in most countries over most periods) according to the Reserve
Bank of New Zealand’s Upside, Downside investment guide. But with the
higher return comes higher risk. While the average return on shares is
higher, the risk that stock prices will fall is historically greater than the
risk that property prices will fall – which increases your risk of being out
of pocket.
There are many great stories of people
who made fabulous investments in
telecommunications, technology or software.
But there are even more lesser-told stories
about those who lost out when the bubble
burst. While it can be very rewarding to get
in at the start of a trend, it can prove to be a
high-risk strategy.
9. INVESTMENTS DON’T STOP WHEN YOU
4. TAKE A LONG VIEW
RETIRE
If you want to take your profit tomorrow, you may be asking too much.
Managed funds, for example, tend to deliver better returns than bank
deposits over the medium or long term – rather than the short term.
But the differences over a long period can be considerable. For example,
$100,000 invested at 8% (in shares, say) would return just over $1
million. At 6% growth (in bonds, for example) it would return near
$600,000. Just remember, projected income from stocks, mutual funds
or dividends is just that – projected. Less risky investments provide a
more reliable income.
When planning your investment strategy,
don’t draw a line at retirement. You should
aim to be living off your investments at that
point, not selling them down and reducing
your net worth in order to live in the manner
to which you are accustomed.
5. STAY INTERESTED
Investments must be monitored to ensure that what looked like a good
deal yesterday is still a good deal in today’s market conditions. Don’t
just set it and forget it. Even low interest investments (in a company, for
example) can be risky if market conditions go against them.
48
MARCH 2013
10. REDUCE YOUR EXPOSURE TO TAX
Chartered accountants know better than
anyone how taxes can whittle down a nest
egg. Make sure your clients understand the
ins and outs of their investment decisions and
know how to keep their tax decisions on the
right side of Inland Revenue. Tax avoidance –
not evasion – is good business.
Jones Lang LaSalle Licensed Real Estate Agency REAA 2008
Are your property investment clients:
Ƒ
Ƒ
Ƒ
Ƒ
Ƒ
Ƒ
Are they maximising income from their tenant base?
Meeting their obligations with the Building Act?
Meeting obligations as principal in regards to the Heath & Safety Legislation?
Property Maintenance Requirements?
Do they need someone to respond to their tenants requests 24/7?
Are they getting the best possible pricing from their service contract providers?
For a free property health check report covering all these items call
Jones Lang LaSalle Property Management Regan Simpson +64 9 914 9766
www.joneslanglasalle.co.nz I +64 9 366 1666 I +64 4 499 1666 I +64 3 341 8210
&RQVXOWLQJƒ)LQDQFHƒ/HDVLQJƒ0DQDJHPHQWƒ2XWVRXUFLQJƒ6DOHVƒ9DOXDWLRQV
MARCH 2013
49
COLUMNISTS
“This then increases the speculative
nature of forecasting about conditions and
events beyond the next year…a very difficult
task and… a formidable task in this wildly
fluctuating business era.”
AUDITOR’S DILEMMA
ASHLEY BURROWES FCA, JOHN KARAYAN
AND ROBERT JINKENS IN THE US
Concern
about going
concern
An auditor plays a vital role
in deciding whether an
entity can remain viable
and continue in business as
a going concern.
I
n an effort to help the convergence of one US Financial Accounting
Standard with its corresponding IASB standard, this article
describes the expansion of the finite time horizon debate. This has
been going on from when the US Financial Accounting Standard
Board (FASB) Exposure Draft entitled Proposed Statement of
Financial Accounting Standards: Going Concern (No. 1650-100)
was issued October 9, 2008 until the ultimate standard revision in on
November 7, 20121. (Although a new “Standard” was adopted, the
FASB has yet to determine: (1) applicability to nonpublic entities, (2)
further analysis of the nature of disclosures and its interaction with
Management Discussion and Analysis (MD&A) for public companies,
(3) guidance on how management’s plans should be distinguished and
considered, and (4) effective date and transition.)2 The objective of the
change was not only international convergence but also an attempt to
allegedly remove investor confusion. Neither seems likely unless there
is a clearer location of responsibility between parties internal, and those
external, to the reporting organisation.
DOUBLING DOWN FOR CONVERGENCE
For years, US GAAP has required management to peer into a crystal ball
beyond one year after the date of the financial statements in order to
judge an entity’s ability to continue in business. Auditors have been held
to the same standard. Now the crystal balling has been extended by the
FASB prescribing … “as not to exceed a period of 24 months from the
period end date”3 for management assertions in the financial statements.
The FASB has effectively doubled the subsequent events period for
management to consider in preparing assertions for inclusion in the
annual financial statements. This is a challenge even in normal times,
which is explicitly acknowledged by the FASB, eg:
50
MARCH 2013
This also highlights the source of a quandary
US auditors face – double talk from different
sides of the profession. This is a financial
accounting standard, so auditors may still
be able to rely on Auditing Section 341 (AU
341). This standard still requires the auditor
to look only one year beyond the balance
sheet date. The FASB explicitly recognised
that its new going concern standard directly
conflicts with AU 3414. (However, taking the
position that Auditing Standard 341 controls
this position likely would bring joy to those
US attorneys who make a living suing
accountants.)
For decades the relevant US Auditing
Standard No 59 (AU Section 341) The
Auditor’s Consideration of an Entity’s Ability
to Continue as a Going Concern provided
the following demarcation line for reporting
subsequent events: for a reasonable period of
time not to exceed one year beyond the date
of the financial statements being audited.
In its commentary on the exposure draft,
Ernst & Young identifies that AU 341
provided a bright line5 as the time horizon
was set at “not beyond one year”.
In its commentary, Deloitte’s research
revealed that the Accounting Standards
Board – a pre-1972 predecessor to the FASB
– in arriving at the one year period was
concerned about:
• auditors being able to predict future events
• significantly more speculation being
required on conditions and events that may
occur after 12 months
• the availability of reliable information
beyond a 12-month period and that few go
beyond the 12-month period.6
The FASB’s Exposure Draft has not received
the acclaim of the auditing profession in the
USA. Among other things, auditor groups
have overwhelmingly urged that it should
be the responsibility of the management of
the issuer of financial statements to prepare
and defend financial statement assertions like
“going concern”. This approach narrows
the auditor’s responsibility down to attesting
such assertions. For example, The New York
CPA Society is on record as contending that:
“… it is hard to distinguish a temporary
decline in financial position from an ongoing
negative trend [in the economy] that is
expected to extend beyond one year from the
balance sheet date.7”
for a disclaimer about going concern status.
We contend that the unprecedented and
ongoing economic problems that have
emerged over the past five years…”make it
much more challenging for an [auditor] to
assess a client’s circumstances and ability to
continue as a going concern”9 without this
moving of the goalposts out one more year.
We further maintain that US investors
should rely on the more prudent time
period of one year as espoused in AU 341
notwithstanding the FASB’s efforts to extend
the period to two years. The attempt at
clarification is therefore a failure. Investors
will likely be more confused than ever.
GROWING CONCERN OVER GOING CONCERNS
For some years in the USA some have believed
auditors may be liable for either declining or
not commenting on going concern issues in
their audit report. The accounting profession
time extension to not exceed a period of 24
months from the period end date could lead
to increased claims on deepening insolvency
grounds.
DEEPENING INSOLVENCY
The premise in this ambiguous term
“deepening insolvency” is that a bankrupt
client or related third party can recover
damages from an auditor. So far the courts
have been predisposed to favour the auditors
if there is no evidence of “… specifics
regarding the deficiency in the accounting
and valuation work…”8
NEW ZEALAND
The recent collapse of Mainzeal in New
Zealand has given cause for concern about
the plight of subcontractors and their rights
regarding payments for work done and
retentions, as well as the return of their tools
of trade, plant and machinery. Mainzeal, not
being a listed company did not have accessible
financial statement data for external parties
to assess going concerns or otherwise. This
may be an example of how difficult it is to
forecast in these times of turmoil.
CONCLUSION
We feel that the auditing profession in the
USA, by falling in line with the convergence
mania of the FASB, has compromised itself
and potentially admitted to extending the
potentially litigious playing field.
It offers little consolation to know that
not issuing a statement about going concern
status could be more damaging to interested
parties than issuing a caveat about going
concern in the audit report, especially as the
auditor has to provide substantive reasons
The recent
collapse of
Mainzeal in
New Zealand
has given
cause for
concern about
the plight of
subcontractors
and their
rights
1 For an excellent history of the
development of the new Standard, see
fasb.org
Note that the result was an amendment
to the Accounting Standards Codification
Section 205-30-05, et seq., rather than a
distinct Standard.
2 fasb.org
3 FASB decision, page 4 Project Update
“Going Concern” at : fasb.org
4 “Originally, the [FASB] Board undertook
this project to incorporate AICPA
Statement on Auditing Standards No. 1,
Codification of Auditing Standards and
Procedures, Section 341, “The Auditor’s
Consideration of an Entity’s Ability to
Continue as a Going Concern,” (AU
Section 341) into GAAP.” fasb.org
5 Op cit.
6 Deloitte letter dated December 8, 2008
to Technical Director of FASB. FASB
comment letter No. 21.
7 NYSSCPA letter dated December 5th
2008, to Technical Director of FASB.
FASB comment letter No. 9.
8 Trenwick America Litigation Trust v.
Ernst & Young LLP, 906 A.2d 168,204
(Del.Ch. 2006).
9 Iverson, M.J. (2009) “The Accountant’s
Going Concern Evaluation” For the
Defense, May, p. 31.
John Karayan and Robert Jinkens are at
Woodbury University’s School of Business
in Los Angeles. Ashley Burrowes FCA is a
visiting professor at Te Whare Wānanga o
Awanuiārangi, Whakatane and a member of
Ngā Kaitatau Māori o Aotearoa.
MARCH 2013
51
COLUMNISTS
Helping your clients
to a happy new year
The end of the financial year is the perfect
time to build a closer relationship with your
clients.
I
OPPORTUNITY TO ADD SUSTAINED VALUE
t is a hectic time for the industry, with
a deluge of client information and a
range of new compliance information
to work with, but the end of the
financial year is also an opportunity
to provide your clients with valuable
advice that sets them up for success in the
year ahead.
This year has seen little in the way of
significant compliance changes (see “Changes
to observe”). While none of the compliance
changes are in themselves significant, they
highlight what an important time of the year
it is to be focusing your clients’ attention on
management of their accounts.
For many, this is entirely straightforward.
These are the business owners who spend
much time focused on their operation, and
use the accounting and reporting tools
available to keep up with their compliance
requirements.
However, despite the complexity involved
in business accounting, many businesses
are still operating with pen and paper or
in spreadsheets of often-dubious integrity.
You’ll know them well. They’re the ones
who provide their “accounts” late and
incomplete, in a bulging folder, on a wellused disk, or even via shoebox.
This end of financial year could be your
best opportunity to move those clients into a
new, and ultimately more empowering, way
of working by taking advantage of the many
accounting tools available.
As you would know, over the past two
years there’s been something of a quiet
revolution in business accounting, with the
release of several new cloud accounting
products.
These systems, like the browser-based
MYOB LiveAccounts, are designed for
52
convenience,
simplicity,
and
highly
manageable cost – eliminating many of the
barriers to business adoption.
By enabling you to work in real-time
with clients and their data, and automatic
bankfeeds eliminating many of the common
coding errors, moving businesses onto a
cloud-based system will ensure an easier
end to the financial year and a far more
collaborative relationship.
MARCH 2013
Businesses
are
increasingly
seeing
opportunity
in the
economic
recovery,
which
comes after
a recession
that took far
longer, and
cut much
deeper,
than most
expected
The financial adviser’s role in the coming
year is vital, as MYOB highlighted in the
recent seminar series, Lessons Learned
from the GFC, held in conjunction with
NZICA and the New Zealand Institute of
Economic Research (NZIER).
Businesses are increasingly seeing
opportunity in the economic recovery,
which comes after a recession that took
far longer, and cut much deeper, than
most expected. This has compounded the
common pressures businesses face, with
perennial problems like cash flow, fuel
prices and the competitive environment
putting stress on local businesses.
As NZIER’s study of three years of the
MYOB Business Monitor highlighted, the
opportunities for business in 2013 stem
from a combination of sound business
practices and prudent investment in people
and systems – particularly in websites,
online marketing and cloud computing.
Your support for businesses as they
navigate the recovery is going to be vital.
And, as the reporting season is the one
point when you can guarantee they will be
in touch, it represents a solid opportunity
to provide the advice that can add real and
sustained value for your clients.
One key area where business owners have
a real weakness is in understanding how
their business is performing relative to their
peers. By providing access to benchmarking
data you can help them make vital decisions
about their performance and potential.
At the same time, working with them
on the development of a comprehensive
competitive analysis can provide crucial
insight into one of the significant areas
where business owners feel exposed –
setting prices and managing margins.
While the economic recovery continues
to be slow, many businesses face ongoing
peaks and troughs in activity, placing
further pressure on cash flow. Helping them
understand the trends in their business could
be an important part of the process you
work through with them while reporting.
Meanwhile, reinforcing that a solid
set of books is the information financial
institutions rely on when making overdrafts
and other funding available can also help
focus operators on good financial reporting.
HELP WHEN YOU NEED IT
The end of financial year is always going
to be a period of intense activity for your
business clients and your practice. For
many, it can be a period that fills them with
apprehension.
By using the time to focus not only on
sound business practices but also on the
potential of their operation, your clients are
far more likely to embrace the opportunity
a new financial year brings and appreciate
the tremendous value you offer.
Your clients and your practice are not
alone when it comes to navigating the
complexities of the year’s end. MYOB
invests considerable time and resources
into providing more support from both
our business and accounting experts over
the period. We are standing by to help in
whatever way we can.
James Scollay is MYOB New Zealand executive
general manager.
CHANGES TO OBSERVE
The annual end of financial year development program – a key
element of MYOB’s partnership with the accountant community for
more than 20 years – forms a core part of what we aim to achieve
for accountants in practice.
Every year, our development team works with Inland Revenue
(IR) on compliance updates to the MYOB Accountants Office and
Accountants Enterprise suites. The process takes up to three
months and, depending on complexity of the changes, can involve
substantial development resources from our local team.
During the update period, our product experts comb line-by-line
through the changing forms and fields, ensuring every element of
the year’s legislative and reporting changes are captured in the
system. They also run through a range of hypothetical test cases
with IR before finally submitting the product for approval.
This year, accountants shouldn’t expect too many changes in their
Office or Enterprise products.
There’s a new layout to the IR 10 form, the first time this has
been changed by IR in around one decade, and we’ve been able to
introduce the IR 215 form (Adjusting Your Income for Working for
Families Tax Credits) into Accountants Office.
We haven’t seen the raft of legislative changes in 2013 that we saw
in past years. However, for clients managing payroll, the minimum
contribution rate increase for KiwiSaver is something to be aware
of. Other minor changes to this year’s payroll calculations that
come into effect from 1 April include the ML and ML SL tax codes
phase out and a change to the student loan repayment rate.
For employers, MYOB has created a new micro-site at myob.co.nz
containing a range of resources you can use to help guide such
clients through compliance requirements. There’s also a broad
spectrum of other helpful information, covering everything from
recruitment and training to successful management.
ing
Upcom
s
Feature
Showcase your
products and services
to 28,000 decision makers
and business leaders.
Be part of these upcoming features.
April issue
Fleet management
The true cost of running a fleet and how to get the best value from your
vehicles.
Debt management
Tips for reducing your exposure to late payers.
May issue
Office expenses
Running an office needn’t be one overhead too many. Smart ideas for
reducing your costs.
Call Rosie Payne to talk about your best options: p: 09 917 5931 m: 027 491 3570 e: [email protected]
MARCH 2013
53
COLUMNISTS
GRAHAM HAMBLY IN THE UK
Audit just
not sexy
There is a growing worry
that audit is just not sexy
enough for today’s partqualified accountants.
T
he latest International Accounting Bulletin global survey
discovered that firms have no trouble recruiting staff, but
what they can’t do is make them stay and want to be
audit partners.
Baker Tilly International CEO Geoff Barnes just didn’t
know how to “stoke” young people’s ambition to become
audit partners. He felt, despite the healthy remuneration, too few
audit managers want to take the next step into partnership.
The audit process is becoming more mechanical with the rise of
international software, which in turn provides less chance for people
to form their own opinions. This automation of audit is being forced
by companies trying to reduce their costs but exacerbates the problem,
providing little stimulation for younger staff.
Regulators isolating the audit function has become another
problem. Barnes believes the solution is to allow firms to offer audit
and general business advice together. “I think that would be an
attraction for young people,” said Barnes.
Another senior member of the profession agreed that there are
retention issues for the audit function. Keston International’s John
Lisby felt there was a threat to global audit quality because people
prefer to work in more exciting areas.
NO LEGAL PRIVILEGE FOR ACCOUNTANTS
By a vote of 5-2 the UK Supreme Court has ruled that accountants
giving tax advice cannot claim protection from disclosure under the
guise of legal professional privilege.
The ancient principle of confidentiality still applies only to qualified
54
MARCH 2013
lawyers – that’s both barristers and solicitors.
ICAEW CEO Michael Izza believes this
current position is both unprincipled and
anti-competitive as businesses “should be
able to seek the best professional advice
upon the same terms whether from lawyers,
accountants or indeed other appropriately
qualified professionals”.
The ruling was made in relation to a
dispute between HMRC and Prudential.
Prudential had argued that accountants’
communications and advice should remain
confidential when advising clients on tax law.
BIG 4 TAKE IT ON THE CHIN
“What really depresses me is you [Big 4
firms] could contribute so much to society
and the public good and you all choose to
focus on working in an area which reduces
the available resources for us to build
schools, hospitals, infrastructure.”
This is what the Public Accounts Committee
(PAC) chairman Margaret Hodge told the
heads of tax from PwC, KPMG, Deloitte and
Ernst & Young recently.
Hodge felt that the firms’ tax divisions
have become a £20bn business, which simply
makes avoiding tax a new way of making
profits.
Worryingly she called for the Big 4 to be
barred from working for the government
while they still help companies “avoid paying
their fair share” of the UK tax take.
She said: “I don’t think people who give
advice to cut the tax payable should be
getting government business. Quite simple.”
Ernst & Young’s John Dixon admitted
that international standards were outdated
and needed urgent reform because they allow
online firms to pay much lower corporation
tax than their rivals. His firm audits Google,
Amazon and Facebook.
PwC’s Kevin Nicholson said tax rules are
just too complex and politicians need to
make changes.
E&Y CLEARED OVER LEHMAN
The UK’s Financial Reporting Council
(FRC) has decided that no action should
be taken against E&Y or any individuals
in connection with their conduct as auditor
of Lehman Brothers International, Europe
(LBIE).
The executive counsel’s summary explains
that LBIE was authorised and regulated by
the Financial Services Authority. LBIE was
permitted to handle client money and was
obliged to comply with the FSA’s Client Assets
Sourcebook (CASS) when doing so. LBIE
went into administration on 15 September
2008. PwC were appointed administrators
of LBIE.
The administration identified a significant
shortfall in the pool of money held on
trust for clients, which should have been
segregated and safeguarded in accordance
with the rules set out in CASS.
At the start of the investigation it appeared
that LBIE failed to comply with the CASS
rules in a number of respects; however,
E&Y signed off their accountant’s report to
the effect that LBIE was in compliance with
CASS rules.
One of the main areas of concern was
whether the treatment of money LBIE
received from affiliates, post MiFID,
complied with CASS rules. Another
important issue was whether money relating
to LBIE Prime Brokerage clients required
segregation.
The FRC investigation reviewed E&Y’s
audit files and hard copy documentation.
The team also interviewed the E&Y audit
team staff. The matter was then referred
to an expert. Following this, executive
counsel has decided that there is no realistic
prospect that a tribunal would make an
adverse finding against E&Y in the UK, or
members within that firm. The FRC said the
investigation will therefore be closed and no
further action taken.
YOU NEED BROAD SHOULDERS
I don’t think
people who
give advice
to cut the
tax payable
should be
getting
government
business.
Quite simple
~ Margaret Hodge
PAC Chair
Tomorrow’s CFOs will need to have broad
knowledge across all areas of the finance
value chain, from strategy to performance
measurement, reporting, risk, assurance and
compliance. A new report from the ACCA
stresses finance leaders of the future will
need these skills in order to be able to ask
the right questions and ensure the businesses
they work for are on the right track.
ACCA CEO Helen Brand explained the
research shows that recruiters are looking to
appoint the complete finance professional,
and seek out newly qualified accountants
who have both the breadth and depth of
skills.
She stressed that more than 80% of the
CFOs surveyed felt it was critical that their
accountants understand the finance value
chain and how it all fits together.
Brand went on: “The finance team has
to meet the challenges posed by a postcrisis global economy which is increasingly
volatile, complex and competitive. Given
the breadth of financial activities that
finance leaders are now engaged in, it is
hardly surprising that they are looking to
recruit employees with a broad range of
skills and understanding.”
Due to these demands we can expect the
future career path of CFOs to look quite
different. There will be more mandated
rotation through different parts of the
function from retained finance through to
shared services or global business services.
International secondments on the CV,
particularly in emerging markets, will
carry greater value, and staff will need to
be encouraged to take up roles outside the
finance function.
Graham Hambly is a British journalist and
editor of PQ magazine.
MARCH 2013
55
COLUMNISTS
NEIL MILLER ON POLITICS
Cabinet reshuffle
puts the heat on
Shearer
Will David Shearer follow John Key’s bold
approach to shuffling his nearest colleagues?
E
verybody knew that John Key had promised a Cabinet
reshuffle in early 2013. However, what no one outside his
innermost circle saw coming was the sheer breadth and
depth of the changes announced on 22 January.
Two experienced mid-ranking Cabinet Ministers were
simply gone. There were no plum overseas postings
or excuses about them wanting to spend more time with their
families. Hon Phil Heatley and Hon Kate Wilkinson were rather
unceremoniously dumped out of Cabinet, a move accompanied by a
$116,000 a year pay cut.
Agriculture Minister David Carter was very reluctantly moved to
the Speaker’s Chair to replace Lockwood Smith.
In their places, Minister outside Cabinet Simon Bridges got
a promotion to sit at the big table and Nick Smith returned after
some time in the dog box for an ethical lapse. The big winners were
Senior Whip Michael Woodhouse, who became a Minister outside of
Cabinet, and Auckland Central MP Nikki Kaye, who became a full
Cabinet Minister just weeks before her 33rd birthday.
Even normally well-connected Wellington insiders and experienced
political pundits were stunned by the sheer brutality of the changes.
The Prime Minister’s strategy appears to have been largely inspired by
two Labour leaders – Helen Clark and David Shearer.
Key witnessed first-hand the slow decline of the previous Labour
government in its third term. A major factor in its eventual demise
56
MARCH 2013
was a reluctance to rejuvenate the Cabinet
to any meaningful extent. A number of
ministers held on well past their use-by dates
and, consequently, almost an entire cohort
of promising younger MPs never got the
opportunity to build their profile and skills
in Cabinet. Key is keen not to repeat that
strategic mistake.
Of course, while people always like getting
promoted, those getting moved on or moved
down tend to naturally fight back. Part of
the reason that Clark was so conservative in
her reshuffles was that senior Ministers were
prepared to threaten revolt or even damaging
by-elections. In some instances, Ministers
were protected by powerful patrons or
factions within the party.
Key has chosen his sacrifices wisely.
Both Heatley and Wilkinson expressed
understandable disappointment about the
decision but have acted impeccably since.
There is no hint of grumbling, far less byelections. It is likely that both will leave
Parliament at the next election and stand
a fair chance of some prominent board
positions if National holds onto power.
Given the Prime Minister was looking to
jettison some of the older heads in Cabinet,
the loquacious Maurice Williamson would
have been near the top of the list if it was
based on merit. He was a Minister under
Bolger in the 1990s and rarely hits the
headlines these days – at least not for the
right reasons. However, Williamson has
consistently proved a thorn in the side of
National leaders such as English and Brash
so Key probably (rightly) assessed that
Williamson would not go quietly. In fact,
there is no record of Maurice ever doing
anything quietly…
Key appears to have one eye on the past
(Clark) and one eye on the future (Shearer).
Labour leader David Shearer got a lift in the
polls late last year after acting decisively by
demoting David Cunliffe for “disloyalty”.
This reshuffle is Key’s way of reminding the
electorate that he can be tough too. He is not
all “smile and wave”.
It’s also a clear signal to right-wing voters
who feel Key has been too moderate and
too nice for too long. With the likely demise
of the Act Party and no obvious successor
to it, Key wants to shore up support on his
right flank. He will need every seat to keep a
potential Labour-Greens-NZ First coalition
at bay.
This
reshuffle
is Key’s
way of
reminding
the
electorate
that he can
be tough
too
More importantly, Key is putting pressure
on Shearer to match or even trump his bold
personnel changes. Despite four years in
opposition, Labour has still not yet fully
emerged from under the shadow of the last
Clark government and there is considerable
grassroots and caucus pressure for new faces
on the front bench.
Shearer’s challenge is that strategist/hitman
Trevor Mallard is unlikely to take any
demotion nearly as stoically as Phil Heatley.
There is no way Education spokesperson
Nanaia Mahuta would go as quietly as Kate
Wilkinson. Key knows this full well and will
be aware that his move will heap pressure
back onto Shearer.
Ostensibly, Shearer has had a solid start
to the year. Labour’s affordable housing
policies have been popular and Shearer
won the mandatory Leadership poll at the
first caucus of the year. However, there are
growing doubts about the figures behind
the housing policies and persistent rumours
that up to ten Labour MPs abstained on the
leadership ballot – a significant dissatisfied
rump in a caucus of just 34.
Shearer’s promised reshuffle could prove a
decisive moment in his bid to become Prime
Minister in 2014.
Neil Miller is a Wellington writer and
contributor to National Radio’s The Panel.
Tax Audit Insurance that
actually works.
For you and your clients.
Since 2003 we have worked tirelessly to ensure Audit Shield is the very best
Tax Audit Insurance there is. Whether it’s the broad policy, the seamless
claims process or the assistance we provide to make it simple for you, we are
never satisfied until you are.
Call us today to find out why we’re No.1 in tax audit insurance.
Call us today on 0800 001 299
No.1 in Tax Audit Insurance
www.accountancyinsurance.co.nz
MARCH 2013
57
COLUMNISTS
JOHN HAYLOCK ON PUBLIC PRACTICE
You can’t
have it both
ways
Improve your business by a
focus on throughput rather
than chargeable hours.
M
y first Journal article was published exactly ten
years ago in March 2003.
That article summarised improvements made to
business systems at the New Plymouth practice I
used to work at – STRATAGEM (which has since
merged with the local PwC office).
These improvements were made as a result of running three client
advisory boards where clients were asked what they liked and didn’t
like about the practice. The article summarised several consistent client
frustrations:
• “We don’t like not knowing when our accounts are going to be
ready.”
• “We don’t like not knowing how big our bill is going to be.”
• “We don’t like being charged exorbitant amounts of money for a
simple phone call.”
• “Partners are never available when I call and then take ages to get
back to me.”
Back in 2003 I noted these frustrations showed clients wanted more
certainty – of price, delivery and availability (a theme explored in my
book Absolute Certainty).
As a result of identifying these issues, the key systems that were
introduced at STRATAGEM were:
• a four-week turnaround guarantee on annual accounts and a new
workflow management system to allow the practice to meet that
guarantee
• fixed-price agreements, including free phone calls
• categorising clients so that partners could dedicate more time to their
most important clients
• giving the team more responsibility and improving delegation
procedures. This freed up partners to grow the business.
58
MARCH 2013
The core of these systems was focusing
workflow management on providing quick
turnaround or, put another way, on increasing
throughput. The other improvements would
have made little difference without first getting
workflow under control. Improving workflow
involved:
• scheduling all known jobs through the
year and allocating them to a specific team
member. All known jobs were planned and
matched with the capacity of a specific team
member
• estimating the volume of unknown work
(ie new clients and new jobs that will occur
during the year) and allowing for this
unknown work in the plan
• setting milestones for each job to help the
team meet the targeted turnaround time
• focusing day-to-day management on
identifying and removing bottlenecks and
on keeping the number of open jobs at a low
level (say no more than five open jobs per
team member).
These ideas are now widely accepted and
many practices have improved their job
turnaround. But not every practice achieves
results as good as we did at STRATAGEM.
Accountancy practices are traditionally
managed with a strong focus on maximising
chargeable hours. This is something I prefer
to call “busyness” rather than the more
commonly used and quite misleading term
“productivity”.
If busyness remains your focus you have little
chance of achieving a high level of throughput.
That’s because the inevitable result of focusing
on busyness is that a practice will have a large
volume of jobs underway. Team members
invariably find the easiest way to keep busy is
to start more jobs rather than chase up started
jobs that are held up somewhere. And the
larger the volume of jobs underway, the slower
the average throughput will be.
The same thing happens on roads. As you
put more cars on a city’s streets, the time for
each journey increases. Initially most streets
cope with increased car numbers reasonably
well but for any city there comes a point where
the situation gets worse quite quickly – we call
this rush hour and when there are enough cars
it leads to gridlock.
Accountancy practices managed for
busyness are in permanent rush hour and end
up similarly gridlocked with jobs. A lot of time
is wasted when this occurs.
If busyness
remains your
focus you
have little
chance of
achieving a
high level of
throughput
On the other hand, if you focus on
increasing throughput you will have to reduce
the volume of jobs underway to produce the
outcome you want. Fewer jobs mean each job
can be completed in less time and with more
certainty.
The two goals of increasing busyness and
increasing throughput are fundamentally
incompatible. Ten years on from first writing
about the benefits of increased throughput I
am delighted by how many accountants have
got the message. But I am equally frustrated
by how many have also retained their
counterproductive focus on busyness and
have not got the results they could have.
Ten years on, this is my message to the
profession: You can’t have it both ways. Drop
the focus on chargeable hours and instead
focus solely on throughput. Provided you
plan well and put good systems in place you
will produce great results for you, your team
and your clients.
John Haylock is Practice Performance Manager
at BankLink. [email protected]
We make Internet payroll
processing a breeze in
New Zealand and Australia
Perfect for any small to medium sized business,
our internet payroll service streamlines the
payroll process
Unique Benefits
• Simple 4 step payroll process
• Employee payslip kiosk with leave requests
FULLY SECURE, TOTALLY CONFIDENTIAL
Standard, Fully Outsourced and Professional
Service for Accountants options available
For further information or to set up a FREE trial please contact us
in New Zealand [email protected], www.ipayroll.co.nz,
or in Australia [email protected], www.cloudpayroll.com.au
NEW ZEALAND
AUSTRALIA
WELLINGTON +64 4 472 2997 • AUCKLAND +64 9 377 1517 • HAMILTON +64 7 839 7730 • CHRISTCHURCH +64 3 372 9468 • MELBOURNE +61 3 9670-0422
MARCH 2013
59
COLUMNISTS
PETER ISAAC ON BANKING
Peer-to-peer
lending
Technology could spell the end of the “mono
banking culture”.
T
here is a surge of interest in the prospect of unstructured
peer-to-peer lenders taking over the intermediary role of
the gigantic trading banks in the matter of the transfer of
money from those who have it to those who need it.
The notion of the elimination of the trading banks, in
matching up lenders and borrowers, is something of a
funding revolution. And it could eventuate.
The Bank of England’s director of financial stability, Andrew
Haldane, believes that the “mono banking culture”, as he describes
it, is drawing to a close and that a technology-powered regime will
supplant the role of the monolithic trading banks.
(Chartered accountants know that there is a temptation to
overvalue and generally exaggerate the short-to-medium-term effects
of a cultural and technology change. This is matched by a similar
failing to appreciate the long-term impact of it.)
There is a practical and imminent issue here. If the Bank of England
believes that there is a strong chance of the major high street banks
becoming disintermediated, taken out of the lending picture, then
what form will the direct, technology driven, replacement model take?
And what role will chartered accountants play in this new world
that even now is nibbling around the outer edges of banking?
For some answers here we can feel our way back through recent
history. The mono banking culture can be traced to the 1970s when,
in New Zealand especially, we saw the Australian banks start the
process of assimilating the community lenders (building societies and
savings banks).
This was the time when the banks were comfortably into their
computerisation era. As volume transfer traders they were easing
themselves into the full cost-benefit resulting from their pioneering
role as large-scale network IT early adopters.
It is now that we discover a most curious thing. IT changed every
other industry it touched for both the industry concerned and its
customers. But banking remained unchanged.
Indeed throughout this epoch of intense automation there has,
60
MARCH 2013
instead, been a constant need for the banks to
maintain and even increase, their charges, in
spite of massively and consistently improving
their own economies of scale.
In the 1970s, while the banks were tooling
up with their shared clearing networks, the
world of general office and professional
administration was changing too.
The first sector into automated
administration was that of law. Legal offices
were early adopters of word processing, as
it was then known. Because of this it was
widely believed, especially in the profession
of law itself, that legal offices would
dominate the sphere of IT consulting.
Chartered accountancy held back. In
time, word processing was subsumed by
IT and chartered accountancy assumed the
role of bedrock consultants in this eventual
merged technology.
Using that broad timeframe as a
benchmark, we could find crowd financing
and direct peer-to-peer lending with a solid
foothold in financing by 2020.
Looking into the crystal ball we can
perceive the outline of this new world of
disintermediated finance. It is a future for
individuals and smaller companies – the
ones most affected by the mono banking
culture’s power of scale, but not benefitting
from the economies of it.
It is in the zone of small loans and
borrowings that the chartered accountant
seems likely to play a part. Again, we can
look once again at our recent history.
Until the deregulation era of the mid1980s much of the nation’s funding business
had nothing to do with the banks. It was run
by lawyers with funds held in trust and then
allocated in the form of mortgages between
willing lenders and willing borrowers.
Any seminar on anything at all to do with
management cannot be considered complete
until someone reminds the assembled
throng that the only certain thing in their
future was change.
So what is it that makes us so ardently
want to believe that the high street banks
and their lending practices are immune from
it? The signs of change are now becoming
visible.
Peter Isaac is a financial author and
commentator.
NZICA PROFESSIONAL DEVELOPMENT
CONFERENCES
Running throughout the year, NZICAs conferences provide you
SAVE THE DATE
with access to in-depth knowledge, insight, and the chance to
CEO CFO CONFERENCE
19 & 20 June, Auckland
network with your peers.
THE
ACCOUNTANTS’
ONE DAY
BUSINESS UPDATE
8.5
CPD
HOURS
14 MARCH
Viaduct Events
Auckland
TAX CONFERENCE
8 & 9 November, Auckland
PUBLIC SECTOR
CONFERENCE
WOM<N IE
BUSINESS FORUM
9.5
7
CPD
HOURS
21 & 22 MARCH
Amora Hotel
Wellington
PUBLIC SECTOR
CPD
HOURS
ALL
Early bird offer ends 11 March
4 APRIL – Stamford
Plaza, Auckland
18 APRIL – Mercure
Wellington, Willis
Street
ALL
8:30AM
Calling all...
New
Practitioners
DOING BUSINESS
IN AUSTRALIA
7.25
CPD
HOURS
ALL
12 APRIL
Heritage
Auckland
COURSE FOR NEW
PRACTITIONERS
7
CPD
HOURS
22 April
InterContinental
Wellington
MARLBOROUGH-NELSON
PRIMARY SECTOR
CONFERENCE
9
CPD
HOURS
PUBLIC PRACTICE
Early bird offer ends 17 March
12 & 13 April
Rutherford Hotel
Nelson
CORPORATE
Early bird offer ends 14 March
Find out more or book your place today at nzica.com/conferences
MARCH 2013
61
NZICA PROFESSIONAL DEVELOPMENT
ROADSHOWS
TRUSTS AND
FINANCIAL
ADVICE – ARE
YOU EXPOSED?
3
CPD
HOURS
SAVE $50pp
When you register
three + people.
ALL
SUCCESSION/
EXIT THE FAMILY
BUSINESS
4
CPD
HOURS
ALL
SAVE $45pp
When you register
2 + people with
Early Bird offer.
Expires 22 March
TECHNICAL
UPDATE
3
CPD
HOURS
PUBLIC SECTOR
SAVE $30pp
When you register
2 + people with
Early Bird offer
CORPORATE
Auckland – CBD .................... 5 March
Auckland – CBD ........ 17 April
Auckland – CBD.......................2 May
Auckland – Mt Wgtn ........... 5 March
Auckland – Nth Shore 16 April
Auckland – Ellerslie............29 April
Auckland – Nth Shore ......... 6 March
Christchurch ............... 15 May
Auckland – Nth Shore..........3 May
Blenheim ............................... 27 March
Christchurch ........................ 19 March
Dunedin ................................. 20 March
Gisborne ................................ 12 March
Hastings ................................ 13 March
Dunedin ........................ 14 May
Greymouth .................. 16 May
Wellington.............................30 April
Hamilton ...................... 11 April
Invercargill.................... 22 May
Napier ............................ 22 April
Nelson ........................... 3 April
Invercargill ............................ 21 March
New Plymouth ........... 4 April
Lower Hutt ........................... 26 March
Palmerston Nth ......... 9 April
Nelson .................................... 27 March
Tauranga....................... 18 April
Timaru .................................... 19 March
Wellington.................... 5 April
Wellington ............................ 26 March
Whangarei.................... 6 May
Whangarei ...............................7 March
nzica.com/gtsa001 0800 4 NZICA
Christchurch............................1 May
nzica.com/gbpa001 0800 4 NZICA
GET UPDATED
on emerging trends in
management accounting,
financial accounting, ethics
and more...
nzica.com/gtsa002 0800 4 NZICA
NZICA’s roadshows enable you to gain RELEVANT and accessible TECHNICAL KNOWLEDGE in your region.
Takeaway PRACTICAL LEARNING OUTCOMES, slides and technical course paper for future reference.
For a full list of courses, events and webinars visit nzica.com/events
PROFESSIONAL
ETHICS 2013
3
CPD
HOURS
ALL
SAVE $15pp
Register and
pay by 12 April
SAVE A FURTHER $40pp
When you register
2 + people.
LAW UPDATE:
LEGAL ISSUES
ACCOUNTANTS
WILL ENCOUNTER
3
CPD
HOURS
SAVE $15pp
Register and pay
by 22 March
SAVE A FURTHER $30pp
When you register
2 + people.
Ashburton ................................. 23 May
Nelson ......................................... 22 May
Auckland CBD .......................... 15 May
New Plymouth ........................... 9 May
Auckland CBD – Repeat........ 27 May
Oamaru ........................................ 4 June
Auckland – Ellersile ............... 10 May
Palmerston Nth ......................... 8 May
Auckland – Nth Shore .......... 15 May
Queenstown .............................. 7 June
Bay of Islands – Kerikeri ........13 May
Rotorua ..........................................1 May
Blenheim ................................... 21 May
Silverstream ................................ 7 May
Christchurch .............................23 May
Taupo ............................................. 2 May
Dunedin ....................................... 5 June
Tauranga ................................... 30 April
Hamilton.................................. 15 May
Gisborne .................................... 28 May
Timaru .......................................... 4 June
Invercargill ................................. 3 May
Greymouth ................................24 May
Wellington ................................ 31 May
Lower Hutt ............................. 23 April
Hamilton ................................... 29 April
Whakatane .............................. 30 April
Napier ....................................... 17 April
Invercargill ...................................6 June
Whanganui ................................. 8 May
Masterton ................................. 30 May
Whangarei ................................ 14 May
Napier ......................................... 29 May
ALL
Auckland – CBD .................... 10 April
Auckland – Ellerslie ................ 7 May
Auckland – Nth Shore ........ 10 April
Christchurch ..............................1 May
Dunedin ...................................... 2 May
Nelson ...................................... 24 April
New Plymouth .........................9 April
Palmerston Nth .................... 16 April
Tauranga ..................................14 May
Wellington ..............................19 April
Whangarei .............................. 11 April
nzica.com/evaa001 0800 4 NZICA
nzica.com/gbpa002 0800 4 NZICA
IMAGE MATTERS
PEOPLE JUDGE OUR PROFESSIONALISM BY THE WAY WE LOOK
TRACEY MURPHY has worked
ALISON BREWER is a
of hairdressing experience,
first training then working in
Tokyo and Yokohama, then
spending the past seven
years working on the Gold
Coast and in Auckland.
Tomo has achieved high recognition for his work,
winning the Amazing Fantasia Hair Show competition
in April 2012 in Queensland.
professional freelance
makeup artist with nearly
20 years experience in
the beauty industry. She
believes there are no real
rules to the art of makeup,
approaching each new face as a blank canvas. She
considers an individual’s specific concerns and needs
first, then “opens the door to the wonderful world of
cosmetic colour play”. www.alisonbrewer.co.nz
EMMA ATKINS, PROV CA,
Accountant, William Buck Christmas
Gouwland Limited, Auckland
Downtown, cut five centimetres off the length
and made long, low layers through to the ends
to give big volume and wave. A side fringe
softened the look of her hair around her face
and complemented her features.
He put in a full set of highlights, adding a
lowlight of Emma’s natural colour.
“The high and low lights were done with a finer
weave and section to keep them looking natural
and not stripy. We used a creamy colour to tone
with to complement her skin tone and keep her
skin looking bright.”
This was followed by a Fusio dose ritual from
Kerastase to provide concentrated strengthening
and moisture. Kerastase’s Bain de force Shampoo
and Ciment Anti Usure Conditioner were also
used to help reinforce, resurface and repair.
Before blow drying Emma’s hair Tomoaki applied
Redken’s Argan 6 oil to nourish and protect
the hair, then once dry he used Redken’s heat
protecting product Iron Shape to style Emma’s
hair into curls using GHDs.
The look has been finished with the stylish but
comfortable D.CO Peep Toe Wedge.
Tracey recommends Emma continues to bring
more vibrant, clear colours into her wardrobe
and choose well-cut, fitted pieces that show off
her great figure.
Emma contacted Image Matters despairing
about her tired looking work wardrobe, which
she admits is a bit too casual.
“Corporate clothing gets pretty expensive, so
I mainly wear pencil skirts with plain tops and
cardigans and flat shoes – a lot of black as it’s
easy to mix and match.”
com
The company
Emma works for recently
merged with another firm, so she
though that was a good opportunity
thought
crea a new, modern, professional
to create
look for herself.
“We are in a professional industry so
im
it’s important
to look the part as it
re ects on the industry and your
refl
firm. It’s especially important
when meeting with clients.”
Emma describes her daily
outfit choice as “a last minute
throw together in the morning
– whatever is clean and
ironed” and has a number of
items she mixes and matches.
She wears simple makeup
during the day, and either
straightens her long hair, time
permitting, or ties it back in
a bun.
She was looking forward to
learning time-saver hair and
m
makeup tips.
““It’s always a bit of a last minute
ru
rush in the morning.”
Hair
Emma wanted to keep her hair long,
but have an easy-to-maintain style and
colour. TTomoaki, from Rodney Wayne
64
TOMOAKI ABE has 15 years
for Robyn Mathieson for
seven years and manages
the Ponsonby store. She
prides herself on creating a
warm, welcoming, enjoyable
shopping experience for
customers. Robyn Mathieson supplies to boutiques
nationwide and is available online.
RObYNmathieson.co.nz
MARCH 2013
Clothing
Tracey says Emma has a great figure and was
willing to try lots of new ideas.
“Emma was initially attracted to subtle shades
that she would normally wear, but we had fun
exploring clearer, brighter colours. The turquoise,
green, coral and royal blue in the Kaleidoscope
print work so well on her.”
Tracey chose the flattering Maypole Dress to
show off Emma’s figure, with a gathered waist
highlighting her waistline.
This was teamed with the Indestructible Blazer
in Sapphire from Robyn Mathieson’s Autumn/
Winter ’13 Collection “Diamond in the Rough”.
“It’s tailored through the waist and is the ideal
jacket to wear over dresses because of its fitted
shape and cropped length. I love this piece as
you can take it from work to play.”
Makeup
Alison used Smashbox cosmetics to create a
sophisticated, daytime look for Emma, designed
to bring out her best features – her eyes and
her cheeks.
She began by applying primer to Emma’s eyelids.
“As Emma has concerns about dark circles
we also perked up her under eye area with
Smashbox’s Photo op under eye brightener, the
perfect pick me up to brighten and lighten.”
She says as Emma had a more pronounced
brow area with slightly down-turned outer eyes
she concentrated on enhancing her lash line,
blending darker eye shadow shades from her
lash line to her outer crease.
Smashbox have specific colour palette for eyes
and The Blue Eye shadow set offers a choice of
six shades.
“You can go from day and evening looks by
simply adding a shade or two more at the end
of the day.”
Alison says using a primer is a key step Emma
should include in her makeup routine, to ensure
her cosmetics last throughout a long work day.
“A primer assists in your make-up application
and ensures your foundation will go the
distance.”
She also lightly dusted Smashbox Halo perfecting
powder over Emma’s face and used it to contour
her cheeks ready for blush and bronzer.
She blended a warm, plum rose toned blusher
and a bronzer to enhance Emma’s cheek bones,
finishing the look with a warm, brown and pink
toned lipstick to complement her outfit.
Indestructible Blazer –
Sapphire $365
Maypole Dress –
Kaleidoscope $125
Need a makeover?
Nominate yourself, or a
worthy NZICA member, by
sending a full-length "before"
photo and reasons why
you need a makeover to:
[email protected]
D.CO Peep Toe Wedge –
Light Grey (now) $259
MARCH 2013
65
SHELF LIFE
What's new in the library
Business Information Librarian Kamala Bain takes a look at what’s new on
the library shelves.
Here is a selection of new items available from the library. To request, please contact Library and Information Services, email library@nzica.
com or phone 04 474 7882, citing the item’s identification number.
BUSINESS AND MANAGEMENT
The 80/20 principle: the
secret of achieving
more with less by
Richard Koch, 2nd ed,
Nicholas Brealey
Publishing, 2007
Highlights the 80/20
principle, ie the idea that
80% of results flow from
20% of causes. Discusses different ways
in which the principle can be applied in a
variety of business and personal contexts.
Library ID: CA005274
CAREERS AND HR
The brain-based boss:
adding serious value
through employee
engagement by Terry
Williams, Brookers, 2012
Applies five proven
principles of brain science
– self-awareness, mastery, autonomy,
purpose and influencing others – to the
task of effectively managing people in the
workplace. Outlines practical strategies for
each principle that can be used to motivate
people and contribute to your own success.
Library ID: CA005514
66
MARCH 2013
What color is your parachute?: A
practical manual for job-hunters and
career-changers, Ten Speed Press, 2013
Provides a practical workbook to help
you translate personal interests into
marketable job skills so you can find your
dream job. Discusses resumés, networking,
interviewing, salary negotiation and more.
Includes a transferable skills grid to help
you to discover which fields you’d most like
to work in.
Library ID: CA005522
COST ACCOUNTING
Cost accounting
fundamentals: essential
concepts and examples
by Steven M Bragg, 3rd ed,
2012
Describes the nature of
cost accounting and the
different methods used to
value inventory. Discusses the contribution
of cost accounting to product pricing and
canvasses cost analysis methods such as
direct costing, activity-based costing and
constraint analysis. Considers how to collect
cost-related information, the variability
of costs under various circumstances and
the cost of quality. Includes examples and
review questions and answers.
Library ID: CA005829
FRAUD AND FORENSICS
Fraud: the counter
fraud practitioner’s
handbook edited by
Alan Doig, Gower, 2012
Outlines fraud trends
and costs, why people
commit fraud and how
various sectors approach
fraud and financial crime. Analyses
how fraud is investigated in a variety of
contexts, including criminal and corporate,
benefit, procurement, charity, insurance
and employee fraud. Discusses specialist
types of fraud, such as corruption, and
the techniques used to investigate them.
Canvasses ways to prevent fraud and the
sanction options available, from disciplinary
routes to criminal prosecution.
Library ID: CA005823
Fraud smart by KH
Spencer Pickett, Wiley
2012
Argues that one of the
most effective ways to
mitigate the growing
threat of fraud is to make
all staff “fraud smart”
by providing them with comprehensive
fraud awareness training. Provides a fivestage fraud smart framework and includes
sections that focus on how to build a fraud
smart toolkit.
Library ID: CA005825
FEATURED BOOK
ACCOUNTING CLIENTS
What do accounting clients really want?
by James Evangelidis, Thomson Reuters, 2011
Presents a series of interviews with 20
CFOs and managing directors in Australia.
Canvasses issues such as what clients look
for in accountants, preferred pricing models,
INFORMATION TECHNOLOGY
Microsoft Excel 2010:
data analysis and
business modeling by
Wayne L Winston,
Microsoft Press, 2011
Presents a “hands-on,
scenario-focused” guide
to Excel 2010, designed to help you answer
business modelling and analysis questions.
Draws on information encountered by the
author in his consulting practice, or taught
by him in an Indiana University MBA course.
Includes practice problems at the end of
each chapter.
Library ID: CA005832
LEAN MANAGEMENT
Lean for dummies by
Natalie J Sayer and Bruce
Williams, 2nd ed, Wiley,
2012
Provides a practical lean
toolkit for organisations
wanting to apply the
philosophies and techniques of lean in
order to minimise waste and maximise the
effectiveness of resources. Includes advice
on how to manage a lean organisation and
demonstrates how to apply lean principles
in different industries.
Library ID: CA005276
examples of good and bad service and
whether services such as audit and tax are
seen as commodities or value-adds. Includes
a short “view from the other side” at the
end of each chapter.
Library ID: CA005275
SPEED READING
Work smarter with speed reading by Tina
Konstant, Hodder Education, 2010
Provides a practical guide on how to
develop speed reading skills. Uses the
author’s unique five-step strategy which
aims to empower you to read any text
easily, “even when under pressure”.
Library ID: CA005513
A more comprehensive list of new items
can be found in The Informed Professional
– Latest Articles and Publications, which is
published monthly to the Library section of
NZICA’s website, nzica.com/library
RESEARCH METHODS
METHO
LAW AND LEGISLATION
Personal Property Securities Act a
conceptual approach by Linda Widdup, 3rd
ed, LexisNexis, 2013
Provides a handbook to the Personal
Property Securities Act 1999 (PPSA) for
practitioners. Aims to provide insight
into the PPSA that can be applied to real
world situations. Includes New Zealand
and Canadian case law, and references
equivalent Australian legislation for
comparative purposes.
Library ID: CA005230
Research methods in
accounting by Malcolm
Smith, 2nd ed, SAGE, 2011
Provides a practical
guide to conducting
research in accounting.
Discusses each step of
the research process,
from the development of a research idea
to getting research published. Canvasses
the core forms of accounting research –
experimental research, surveys, fieldwork
and archival research – and provides
examples of each. Considers ethics in
accounting research and the supervisorcandidate relationship.
Library ID: CA005824
MARCH 2013
67
SHELF LIFE
Latest readings –
financial accounting and reporting
Business Information Librarian Christine Busby highlights books and articles
on auditing and assurance.
To request any of these items or a specific subject search, contact Library and Information Services. Email: [email protected], or phone
04 474 7882, citing the item’s identification number or your topic of interest.
BOOKS
Financial accounting: a New Zealand
perspective by Murray Smart, Nazir Awan
and Richard Baxter, Pearson 2012
This book focuses on the practical aspects
of intermediate financial accounting
through the application of New Zealand
International Accounting Standards (NZ
IAS), complemented by a discussion of
the underlying theory. Includes topics
such as environmental and social
responsibility accounting, accounting for
business combinations, and accounting for
liquidations and receiverships. Intended
primarily for accountancy students in their
second year of study.
Library ID: CA005850
Accounting at work: in business,
government and society by Stewart
Lawrence, Howard Davey and Mary Low, 5th
ed, Pearson 2012
Introduces business, commerce and
management students to the way
accounting information is used to solve
problems and “to structure problems
so they can be solved”. Provides broad
coverage of financial and management
accounting, and discusses the use of
accounting by business owners, investors,
creditors, government employees and other
stakeholders.
Library ID: CA005851
Comparative international accounting
by Christopher Nobes and Robert Parker,
Pearson 2012
Provides an overview of comparative
international financial reporting and
68
MARCH 2013
considers the reasons for the major areas
of difference between countries. Examines
international differences between the
US, China, France, Germany and Japan.
Discusses the foundations of International
Financial Reporting Standards (IFRS) and
compares IFRS with generally accepted
accounting principles (GAAP). Examines key
issues such as harmonisation and political
lobbying. Considers the special accounting
problems of multinational companies.
Includes chapter summaries, questions and
answers.
Library ID: CA005341
CFO fundamentals: your quick guide to
internal controls, financial reporting,
IFRS, Web 2.0, cloud computing, and
more by Jae K Shim, Joel G Siegel and Allison
I Shim, John Wiley & Sons, 2012.
A practical working guide for CFOs that
covers the major areas of corporate
financial management and accounting.
Presents guidelines for evaluating
proposals and for analysing and measuring
operations, and provides tips for preparing
necessary reports. Contains approaches
and techniques for understanding and
solving problems in areas such as financial
reporting, cost management and IT systems,
financial planning and budgeting, risk
management and continuity planning,
taxation, and mergers and acquisitions.
Library ID: CA005715
i Also available as an Ebook
Financial accounting for dummies by
Maire Loughran, Wiley Publishing, Inc, 2011
Examines the basic concepts, terminology,
and methods of accounting and explains
the coursework, certifications, and career
options available for certified public
accountants.
Library ID: CA005830
Winning CFOs: implementing and
applying better practices by David
Parmenter, John Wiley & Sons, Inc 2011
Presents ideas for CFOs, controllers and
corporate accountants who are looking to
improve the performance of the finance
team. Discusses rolling forecasts, annual
reporting and how to manage accounts
receivable and payable. Includes a number
of templates and checklists. NOTE: Available
as an Ebook. Go to nzica.com/library and
click on “Search and view ebooks” to
access.
Library ID: CA004782
Advanced financial accounting: an
international approach by Jagdish Kothari,
Elisabetta Barone, Prentice Hall 2011
Aims to provide a consolidated and
simplified reference tool for the application
of International Financial Reporting
Standards.
Library ID: CA004473
Financial accounting: an international
introduction - 4th ed Essex, England:
Pearson Education 2010
Discusses financial accounting that is
non-country specific. Utilises International
Financial Reporting Standards (IFRS) as a
framework to explain key concepts and
practice. Intended for those with little or no
previous knowledge of financial accounting.
Library ID: CA005722
ARTICLES
A review of the role of financial
reporting in the Global Financial Crisis,
Australian Accounting Review 60(22), January
2012
Reviews the recent literature that examines
the performance of financial reporting
during the Global Financial Crisis.
Library ID: CA004949
Measurement in financial reporting by
Geoffrey Whittington, Abacus 46(1) March
2010
Report from the European Accounting
Association symposium on the foundations
of accounting measurement. Considers the
pros and cons for a single measurement
basis in accounting, arguing that markets
are imperfect and incomplete and that ideal
unique market prices are therefore not
always available.
Library ID: 33251
Ten years of IFRS: practitioners’
comments and suggestions for research
by Philip Brown And Ann Tarca Australian
Accounting Review 22(4) December 2012
Aims to link the findings of academic
research with comments from practitioners
about whether the anticipated benefits of
IFRS adoption are being realised. Includes
suggestions for future research.
Library ID: CA005257
0800 223 729
Ace Payroll
for New Zealand
employers.
A few words on statements, CA
Magazine 145(2) March 2012
Discusses what investors and other
stakeholders look for, like and ignore in
financial reports.
Library ID: CA004575
The rise of pro-forma reporting by
Sue Malthus, Liz Rainsbury and Carol Hart,
Chartered Accountants Journal 91(2) March
2012
Argues that New Zealand directors and
managers are commonly choosing to
provide extra reporting information by
reporting adjusted profit figures (proforma), because IFRS accounting standards
do not give an accurate representation
of company performance. Examines the
reporting of adjusted profit figures of 40
listed companies post IFRS adoption.
Library ID: CA005117
www.acepay.co.nz
Try it for free
Take control on pay day with easy low
cost software and great help desk support.
MARCH 2013
69
QUALITY ASSURANCE
Trusted
advice
There are a number of
things to consider to ensure
trusts are administered
well and litigation risks are
minimised.
BY ROBERT MANKTELOW CA
T
he Law Commission has published six papers in respect
to its review of the Law of Trusts, including most recently
the paper (IP31) Review of the Law of Trusts: Preferred
Approach. The Commission’s work is focused on reviewing
the Trustee Act 1956, Perpetuities Act 1964, Charitable
Trusts Act 1957, trust law generally, and trustee companies
legislation. Many of our members provide services to trusts and/or are
themselves trustees, settlors or beneficiaries of trusts.
Whatever amendments occur to the law surrounding trusts, good
administration and common sense risk management is never likely to
go amiss. To this end, I share with you another excellent article written
by Chris Worth CA.
GREAT EXPECTATIONS
There appears to be a high risk of litigation in future as a result of
poorly administered trusts. In this connection the topics below are
worthy of consideration. These points may be just as relevant when
discussing trusts with clients, advising client trustees, or for trusts where
you act as trustee.
INDEMNITIES AND ENGAGEMENT LETTERS
In respect to new appointments as a trustee you should ensure you
obtain a deed of indemnity from the settlor(s) which provides some
protection against any liability arising from the appointment. Most
legal firms have these documents available for professional trustees.
Some accounting firms now require their fellow trustees to provide
them with a letter of engagement which is intended to confirm that they
have read and understood the trust deed, that they will at all times act in
70
MARCH 2013
the best interests of the beneficiaries and that
they have no conflicts of interest. They are
also asked to confirm that they will provide
an indemnity for any liability which may be
incurred by the professional trustee and that
they will not make any important decisions
affecting the trust without the prior approval
of the professional trustee.
SECURITY OF ADVANCES BY TRUSTS
When trusts make advances to other (often
related) parties, trustees must consider securing
the lending, and this should be standard
procedure in all cases where partners of the
firm are trustees. This may include securing
overdrawn beneficiaries’ accounts.
This may not be appropriate in all
circumstances, but in that case a decision
not to require security should be formally
recorded, with reasons as to why this is deemed
to be in the interests of the beneficiaries or in
furtherance of the trust’s objectives, and why
security is considered unnecessary. Overdrawn
current accounts may be considered “secured”
by future distributions, for example, but
remembering the trust is likely to be a
discretionary trust.
If there is any element of commercial risk
loans should be secured, or an indemnity
for the independent trustees sought from the
family trustees. In extreme cases, a difference
of view could prompt the resignation of an
independent trustee.
Advances to companies should be secured by
way of registered security, giving the trustees
the power to appoint a receiver if necessary.
Advances to individuals, partnerships or other
trusts should be secured by security registered
on the Personal Property Securities Register
(PPSR).
If it is considered security is not necessary,
there should be a trustee minute approving the
loan, giving the reasons.
INVESTMENT STRATEGY
Minutes often include a resolution that the
trustees have reviewed the investments held
and consider them appropriate.
Trustees should document a periodic review
of the assets held by trusts and the reasons
for holding them in the context of each
trust administered. An investment strategy
document should be drawn up showing how
these assets meet the needs of the trustees, the
wishes of the settlor (if expressed) and the
interests of the beneficiaries.
This could be as simple as a one-line
consideration of assets held for asset
protection, or more complicated where
significant assets or other investments are
held. This is particularly so where the trust
holds assets that trade (family business) or the
trust trades in its own right.
The same document can be used to resolve
apparent conflicts of trustees’ duties, such as
the duty to earn an income (from the family
home). The provision of other benefits (shelter
and accommodation) to the beneficiaries
means the interests of the beneficiaries are
considered although no income is earned.
OTHER MINUTES
Major transactions should be minuted
when they occur. If this is an investment
transaction the minutes should be along the
lines indicated above, with the purchase or
sale being considered in light of the trust’s
overall investment strategy and how the
proposed transaction is in the interest of the
beneficiaries.
All distributions must be minuted.
Consideration should be given to documenting
YOUR QUESTIONS
Where
there is any
element of
commercial
risk loans
should be
secured, or
an indemnity
for the
independent
trustees
sought from
the family
trustees
After reading last month’s article “Fit
for purpose”, Bev Crawford ACA asked
for clarification about the Statement of
Accounting Policies. Robert Manktelow
replies:
“Where trusts are simple passive trusts
such as in the example in the query (a trust
holding the family home as the only asset)
then the special purpose financial reports
may be prepared for the use of the trustees
only.
“The simplest passive trust may not be
a taxable entity. Appropriate reporting
may in fact be single entry memorandum
accounts of the house introduced, and any
loan back to the settlor arising. Even when
gifting has taken place (but in this case the
trust should be registered for tax purposes
and filing nil tax returns) a memorandum
entry recording the reduction of the
liability by way of gift would suffice. This
would be a special purpose report prepared
solely for the trustees, using historical cost
to record the asset introduced.
“Equally, such a trust could prepare double
entry accounts. The general accounting
policy note would read similarly to that
above.
“One other point: if the beneficiaries
occupy the home and pay all the outgoings
as consideration, this fact should be
formally approved by the trustees by way
of minute.”
the rationale behind unequal distributions to
beneficiaries, if these occur, and how these
are of benefit to the beneficiaries concerned.
We appreciate that the terms of the trust
make distributions entirely at the discretion
of the trustees. Documentation relating the
distributions to the needs and requirements
of the beneficiaries may prove useful in the
event of a challenge mounted by a disgruntled
beneficiary sometime in the future.
RESIGNATION OF TRUSTEES
The retiring trustee must advise Inland Revenue
(IR). As IR is not a party to any limitation of
liability clauses in the Deed, and will not know
of changes of trustees unless advised, you
need to advise IR of any changes in trustees,
particularly the resignation of a professional,
independent trustee. Such notification is made
under the Tax Administration Act. There is a
case in which IR claimed unpaid GST from a
retired trustee (who had ceased to be a trustee
five years prior to the events taking place).
Trusts registered for GST are higher risk
than those that are not. IR can look to the
MARCH 2013
71
Win the new job and a holiday on us
With nearly 20% of 2013 behind us you may already
feel like you are treading water. But it is not too late to
make 2013 your year of change. NZICA SmartMove is
your recruitment tool designed specifically to help NZICA
members.
Right now when you register your CV with SmartMove
not only will you be the first to hear about exciting new
accounting roles in a myriad of industries, but if you’re
placed in a new role you’ll also have the chance to win
one of three Air New Zealand Mystery Breaks*.
Some of the roles available through SmartMove are
listed below. To apply simply email your CV to Marie
August or call me directly on 04 913 9088.
If you are considering options further afield, Contact
Singapore is running a free networking and information
session in Auckland on 30 April. Topics will include key
growth industries, jobs available, accommodation, work
visas and lifestyle. Registration is required and can be
done at contactsingapore.sg/welcome_session.
I am here to help so please get in touch if you have a role
to fill, or you need some advice on your next move.
Grant Thornton Manager – Privately Held Business
(Business Advisory), Christchurch
Competitive remuneration package for a team player
who is intellectually curious and motivated to contribute
to Grant Thornton’s business success.
WHK Associate Principal – Tax Consulting,
Hawkes Bay
Enjoy the excellent training, technology and amenities
this large international firm offers while savouring the
flexibility and fun culture of a medium sized practice – it
is the best of both worlds.
Senior MS Dynamics Consultant, Christchurch
Bring your skills as a solutions focused project manager
with a strong financial background and join a great
company with a lot to offer.
Staples Rodway Director/Associate Director –
Business Advisory, Auckland
Join this successful business that is based on innovative
thinking and get the opportunity for professional
growth, high-calibre people and access to worldwide
resources through the Baker Tilly International network.
Wakatu Financial Controller, Nelson
Gain great exposure to a diverse business portfolio
within primary industries, commercial/residential
property market and FMCG sectors.
Staples Rodway Audit Intermediate/Senior,
Auckland CBD
If you enjoy building and maintaining relationships, have
excellent communication and systems skills, this is the
role for you.
Grant Thornton Senior Accountant – Privately Held
Business (Business Advisory), Christchurch
This is a role where you can really make a difference to
the business, your team and the clients.
BDO BAS Senior Accountant, Takapuna
Progress your career in a company that will help you
achieve your goals and aspirations.
Greentree Financials Product Manager,
North Shore
This is a unique opportunity to be involved with a world
leading product on an exciting web development project.
NZ APS Database Controller, location flexible
Bring your energy, drive, strategic thinking and ability to
inspire others, and challenge the norm. You will oversee
the planning and implementation of any APS upgrades,
enhancements and developments.
Chartered Accountant, Timaru
Maximise your true potential and excel in this new and
vibrant accounting and advisory business.
BDO Audit Senior Accountant, Auckland CBD
Progress your career in a company that will help you
achieve your goals and aspirations.
BDO BAS Senior Accountant, East Tamaki
Auckland
This unique role will encompass a number of disciplines
including accounting, consulting and tax return work.
You will help to grow new clients and build your own
networks.
Check out nzica.com/smartmove to see all the current
roles available.
To apply call Marie August on 04 913 9088 or email your
CV to [email protected].
Marie August
Recruitment Manager, NZICA SmartMove
*Offer valid till 30 April 2013. Terms and conditions apply. See website for full details.
Make your next career move a SmartMove. Find more roles, apply or register your CV now at www.nzica.com/smartmove.
Candidates looking for a career change register now at www.nzica.com/smartmove.
Employers needing qualified accountants contact [email protected] or call 64 4 913 9088.
Why health insurance is important
One of the things we take for granted is continued good health, and the Kiwi “She’ll be right”
attitude is the only health plan many of us have in place. That’s where Accuro Health Insurance
can help.
With health insurance, you don’t need to take your chances on a public waiting list for elective treatment or
pay for the full cost of health care yourself. By choosing the protection of health insurance, you have faster
access to a wider range of treatment options.
Protecting you and your family has never been easier. After all, we’ve been
taking care of New Zealanders for over 40 years. Call us on 0800 222 876
or visit our website for a free quote at www.accuro.co.nz
ACC5579
CLASSIFIED ADVERTISING
We’re
experts
p
in tax.
We are an established practice
with a strong client base wishing
to appoint an Audit Partner.
This will suit an experienced
Senior Audit Manager or Partner
with access to equity capital to
purchase a partnership interest
&RQÀGHQWLDOUHSOLHVWR
B638
NZICA
P O Box 11-342
Wellington
daniel hunt
dha
AUDIT PARTNER
AUCKLAND
& associates
Submit
your tax
question
now!
Visit dhatax.co.nz
be seen here
The Chartered Accountants Journal reaches around 25,000 business professionals in NZ and
4,000 worldwide
To book classified advertising space please contact
Rosie Payne
[email protected]
09-917 5931
International Membership
$Q,QWHUQDWLRQDODIÀOLDWLRQFRPSULVHGRIOHJDOO\
LQGHSHQGHQWÀUPVLVVHHNLQJSURIHVVLRQDO
ÀUPVLQ1HZ=HDODQGWRMRLQLWVH[SDQGLQJ
PHPEHUVKLS5DQNHGLQWKHWRSDFFRXQWLQJ
JURXSVZRUOGZLGHZHGHVLUHDÀUPWKDWRIIHUVIXOO
service capabilities. The aims of the organization
DUHWRPD[LPLVHRXUFOLHQWҋVEXVLQHVVDQGSURÀW
opportunities, to service clients world-wide,
and to broaden the scope of our professional
VHUYLFHV7KHPHPEHUÀUPV'LUHFWRUVZLOOKDYH
the opportunity to meet international accounting
ÀUPVWKHRSSRUWXQLW\WRVKDUHORFDOVNLOOVDQG
NQRZOHGJHGHYHORSFDUHHUSDWKVSURYLGH
H[SRVXUHWRWKHÀUPHQDEOH\RXUFOLHQWҋVQHHGV
WREHVHUYLFHGZLWKFRQÀGHQFHDQGWKHDELOLW\WR
mentor your directors, staff and clients.
$OOLQWHUHVWHGSDUWLHVVKRXOGHPDLOWKH$VLD3DFLÀF&R&RRUGLQDWRUDWLQWHUQDWLRQDOPHPEHUVKLS#JPDLOFRP
76
MARCH 2013
be seen here
The Chartered Accountants Journal reaches around 28,000 business
professionals in NZ and 4,000 worldwide
To book classified advertising space please contact
Rosie Payne
[email protected]
09-917 5931
WELLINGTON
Centrally located with a fantastic view over Wellington Harbour, the Wellington Conference Centre
features a variety of rooms available for hire. All rooms have natural lighting and have been
architecturally designed with a contemporary feel. Accommodating up to 110 people, the centre
is ideal for a variety of corporate events, from small meetings to all-day workshops, seminars and
after-work cocktail functions.
CONTACT:
The Conference Centre Manager
on 04 474 7896 or [email protected]
or complete a booking request online at
www.nzica.com/wellingtonconferencecentre
MARCH 2013
77
REAR VIEW
IR’s view
of your
satisfaction
Are our tax agents satisfied?
Results from Inland Revenue.
BY DR GAIL KELLY
R
esults from the NZICA Tax Management Inland Revenue
Satisfaction survey formed the basis of an article in last
month’s Journal. NZICA invited Inland Revenue (IR) to
comment in a complementary article.
This article outlines the results for tax agents from
IR’s Customer Satisfaction and Perceptions Survey,
findings from the Disputes Process Evaluation, and shares the types
of research that many of NZICA members willingly participate in.
IR’S PERSPECTIVE
IR measures satisfaction of services across all its customer groups,
including tax agents.
As well as services delivered via traditional channels (voice and
correspondence), measurement now also includes satisfaction with a
range of online services. The two measures differ as a good online
service has unique qualities.
We commission Colmar Brunton to conduct the survey on a
continuous basis with analysis of the data published quarterly1. Each
year we survey 4,000 “recent contact customers” and 1,500 from
the general public – in the 2012 calendar year this included 484 tax
agents.
A summary of some of the questions in the survey is presented in
the following section. The graphs show the results over the last seven
quarters (June 2011 to Dec 2012).
78
MARCH 2013
Figure 1 opposite shows the overall
satisfaction of tax agents with Inland
Revenue’s service for both voice and online
channels. IR has put considerable effort into
making access via online channels easier for
all our customer groups and it is pleasing to
see that satisfaction with our online services is
consistently higher than traditional channels.
Drivers of fluctuation in levels of tax agents’
satisfaction for the voice channel include
consistent advice, accurate information,
accessibility and being kept informed of
progress.
In contrast, online satisfaction is driven
by ease of access, and being able to find and
do things without having to ask. For online
services, one area of dissatisfaction is broken
links on the website.
IR also measures whether service meets
expectations (figure 2). The September 2012
quarter shows some of the lowest results
over the last two years, but it is good to see
the latest results (December 2012) show
considerable improvement.
Likely drivers of this are the significant
increases in the proportions of tax agents who
“strongly agree” that staff are personable
and knowledgeable, and that they were
happy with IR’s accessibility. As IR carries
out its transformation agenda, it will change
the way we deliver services.
A key reason why tax agents contact
us is to obtain information. In the article
“Inland Revenue service – are you satisfied?”
published in February, it was good to see in
the NZICA survey results an improvement in
getting information from IR’s website.
In the IR survey we measure perceptions of
the quality of information obtained through
online means, including the website (see
figure 3). Similar to the NZICA survey, we
also see an increase in satisfaction with the
quality of information accessed online.
IR also tries to ensure that the information
we provide is consistent across the different
channels – voice, correspondence and online.
This is a challenging task as multiple factors
impact on this consistency such as timing,
staff competency and technology.
The proportion of tax agents who say they
received consistent information and advice
has fluctuated between 64% and 80% over
the past seven quarters. Achieving greater
consistency will continue to be a focus for
IR.
Research has shown us that customers see
considerable benefits in being able to interact
with IR in a digital or online environment,
including convenience and speed. Continual
improvement of our online channel continues
to be a strategic focus for IR.
In our survey we test the statement “I was
satisfied with the amount of time it took to
find or do what I needed on IR’s website”
as one of the measures of how well we are
doing in this regard (see figure 4).
It is pleasing to see in the December 2012
results that tax agents’ satisfaction with time
taken to do things has returned to previous
levels. Transition periods or customers
getting used to change in this environment
can cause fluctuation in results.
An important component for a good
relationship between tax agents and the tax
administration is trust. As seen in figure 5,
our results show tax agents’ trust in IR is
relatively consistent over time.
The highest trust levels are in the
FIGURE 1: TAX AGENTS’ OVERALL SATISFACTION
– VOICE AND ONLINE CHANNELS
One of the
key points
to emerge
from the
evaluation
was the need
for early
engagement
between
taxpayers
and IR
FIGURE 2: MEETING EXPECTATIONS OF
SERVICE FOR TAX AGENTS – VOICE AND ONLINE
CHANNELS
confidential treatment of information (never
below 90%) and in IR keeping its promises
(between 86% and 95% over the past seven
quarters). The area where agents have lowest
trust relates to IR admitting responsibility
for mistakes (ranging from 66% to 73%).
That is an area we need to keep working on.
MARCH 2013
79
REAR VIEW
EVALUATING OUR DISPUTES PROCESS
FIGURE 3: TAX AGENTS’ PERCEPTIONS OF
One issue raised by the NZICA article (“Inland Revenue service –
are you satisfied?”, February Journal) was the disputes process. In
2012, IR commissioned an evaluation of the disputes process. The
purpose was to examine whether the changes introduced in 2010 had
encouraged the early resolution of disputes, reduced the proportion
of disputes going to courts, and whether IR had improved in meeting
the disputes process timeframes.
The evaluation involved:
• examining 241 disputes cases before and 175 cases after the
administrative changes were put in place to compare and review
the progress of these two groups through the different stages of the
process
• interviewing 20 taxpayers who had been in a dispute with IR since
April 2010, 15 tax professionals who had advised and represented
clients undergoing a dispute, and 10 IR staff involved in the process.
QUALITY OF INFORMATION – ONLINE
The findings indicated that the initial impact of the administrative
changes, at this early stage, has been mixed. We found that:
• the total number of disputes cases had decreased
• more cases had been resolved before reaching the conference stage
• there were some improvements in timeframes across the process
• we have improved the time it takes to make adjustments, but in
some cases their clarity and quality had not improved, as seen
in NOPAs (notices of proposed adjustments). The facilitated
conference was seen by taxpayers, tax professionals and IR staff as
the most significant positive change in the process, especially due to
the skills of the IR facilitators
• taxpayers had a wide range of experience and understanding of the
process, but most believed their issues could have been resolved in
free and open discussion with IR early in the process
• most taxpayers were involved in disputes because they wanted to
defend or clarify their tax position – the value of the dispute does
not appear to influence their perceptions and experience of the
process
• similar to the NZICA survey, disputes were found to be expensive,
time consuming and stressful for many taxpayers and this does
influence taxpayers’ decisions whether to proceed with a dispute.
One of the key points to emerge from the evaluation was the need
for early engagement between taxpayers and IR.
An emphasis on early engagement before the disputes process will
enhance taxpayers’ access to justice through clarifying understanding
and positions, and finding resolution before views get entrenched and
costs escalate for both taxpayers and IR. This will be a continuing
focus for IR.
RESPONDING TO THE RESULTS
We conduct research so that we can use the findings to help and
improve our decision making. In this regard it is worth mentioning
some of the changes that IR has invested in, both to service delivery
and to maintaining and enhancing our relationship with tax agents.
The tax agent web service (B2B) is live and IR is currently working
on the optimisation of this product. This requires technological
80
MARCH 2013
FIGURE 4: TAX AGENTS’ SATISFACTION WITH
FINDING AND DOING THINGS ONLINE
FIGURE 5: PERCEPTIONS OF TRUST IN IR –
TAX AGENTS
expertise and is a focus for our Software
Developers Unit and IT more generally.
IR has maintained investment in the
relationship with our tax agents over a long
period of time and we continue to receive
excellent feedback about the relationship
that agents have with their account managers
and community compliance officers.
In addition, IR supported the NZICA
roadshows throughout the country – we had
the right people available (investigations and
community compliance) to assist in updating
on topical issues for agents.
As mentioned, IR has made changes to the
disputes process. In particular, the facilitated
conference process, run by trained and
competent IR staff, is having a very positive
impact.
We know that in our peak seasons the
time taken in account review, to complete
correspondence, or provide refunds from
our review processes can slow down. This
is, however, counterbalanced by providing
focused service through the tax agents’ line
and through our account managers.
TAX AGENTS’ PARTICIPATION IN OTHER IR
RESEARCH
IR invests in research and evaluation
not only to underpin decisions related to
service delivery, but also to design effective
interventions to improve compliance
behaviour, and to better understand attitudes
of our customer groups.
The views and opinions of tax agents
are frequently sought and included in the
reporting of this work. The input of tax
agents is invaluable.
In addition, IR has recently completed 16
regional profiles of New Zealand, which
include sub-profiles of tax agent linkages
across entity types2 and tax types3. These
profiles are providing a very valuable picture
of the unique characteristics of different
regions within the country and we plan to
publicly release them in 2013.
Our research shows us that taxpayers who
are linked to a tax agent are generally more
compliant in meeting their tax obligations,
and IR values the role tax agents play in New
Zealand’s tax system.
Measuring levels of satisfaction in the way
we deliver services to tax agents and acting on
that feedback remains important. We would
also like to thank all those tax agents who
have willingly given their time to participate
in our research and sincerely hope you will
continue to do so in the future.
One of the
key points
to emerge
from the
evaluation
was the need
for early
engagement
between
taxpayers
and IR
1 We report on net satisfied which is 3-5,
very satisfied 4-5, and dissatisfied 1-2 on a
5-point likert scale.
2 Companies, partnerships, sole traders,
trusts etc
3 GST, PAYE, income tax etc
Dr Gail Kelly is IR’s National Manager Research
and Evaluation. [email protected]
Tax a
vailab
le
from
2008
ww
w.tax
fi
nanc
New Zealand’s
best value tax pool
since 2007
For a
c
on ho ompetitive
w the
q
chang uote or m
ore in
es co
forma
Call u
uld b
enefit
tion
s on
email
your
09 95
us at
clients
0
conta
3515
:
; or
ct@ta
xfina
nce.c
o.nz
e.co.
nz
MARCH 2013
81
Chained To Server Upgrades?
ǦStop carrying th
the dead weight of expensive
nsive se
servers.
ǦStop wasting resources on inefficient desktop software.
ǦStop the vicious cycle of crude, complicated upgrades with hidden costs.
Break free into the cloud with CCH iFirm the only integrated suite you need to run a
growing, profitable accounting firm.
It's the only complete online solution that is designed for
accountants, by accountants. Discover practice management
that is designed around jobs, workflow and resourcing.
iFirm users say:
"Invoicing used to take a week to
complete, now we invoice as
we go, it’s all streamlined.
Cashflow has improved too"
It’s unique and is producing better results for clients, staff
and partner profitability.
Be surprised and delighted at how we've combined content
and software, with automated capacity planning for you to
run a far more efficient firm.
Get CCH iFirm today.
The time is now. Make the call. 0508 746 759
82
www.CCHiFirm.com
[email protected]
MARCH 2013
Mention Promo code - iFirm-N0313 in your email or when you call to save up to $2000 off iFirm