Rule changes to save time, money

LAURA WALTERS
Last updated 05:00 05/03/2014

Relevant offers

Small Business

Anger simmers over Cantina comments New lease of life for iconic hotel New pub to take down 'inappropriate' sign 'Best water in the world' made in Nelson Wellpack workers' jobs to go Diners get up high in Up Town Dunedin's CloudCannon gets $500,000 in funding Plans to reopen zoo as animal sanctuary Kylie Bartlett: From homeless to millionaire 'Can do' spirit wins through

Small businesses will save time and money when new accounting standards come into effect.

From next month businesses with less than $30 million in turnover or less than $60m in assets will not have to produce annual accounts that follow the new External Reporting Board (XRB) standards, also known as Generally Accepted Accounting Practice.

However, under the new legislation, most small-to-medium sized businesses will still have to produce accounts for governance purposes, for the Inland Revenue Department and their bank.

XRB chairman Graeme Mitchell said the new accounting requirements would affect 95 per cent of small businesses. The changes would mean SMEs' annual accounts could be simpler and more relevant to the running of their business.

It was difficult to quantify the amount of time and money different SMEs would save as a result of the new standards but there would be savings, he said.

"The Government has been trying to reduce compliance costs for the SME sector for a number of years and this is one of the clear demonstrations of an attempt to do that."

Full reporting standards were essential for larger organisations with high revenues, or for those that issued shares or borrowed, but could be seen as "arduous" and "overly complicated" for SMEs, he said. "The new standards recognise that businesses have different needs."

The feedback from companies that were aware of the changes was that it was a "sensible thing", Mitchell said. However, XRB found 64 per cent of 500 SMEs surveyed were not aware of the changes and 83 per cent did not know what the changes would mean for them.

It was natural that businesses would be unaware of the changes, Mitchell said.

"They typically only focus on reporting when they need to, but it is time for them to get professional advice to understand how the changes will impact them."

XRB, Inland Revenue and the Institute of Chartered Accountants have been educating businesses on what was changing and how it would affect them, he said. There was always a chance things could slip through the cracks if companies started paying less attention to their accounts, Mitchell said.

The change gave SMEs options and if they wanted to continue to produce full annual accounts they could do so, Mitchell said. He suspected the change to the new standard would be a "gradual process" as SMEs understood how the changes would affect them and what their options were.

Ad Feedback

- BusinessDay

Special offers
Opinion poll

Do you feel better off than at this time last year?

Yes

No

In some areas yes, others no

Vote Result

Featured Promotions

Sponsored Content