Click on any of the topics below to find answers about financial reporting. If you can’t find the answers you are looking for, please contact us.
Do I have to comply?
How do I determine if I am an FMC reporting entity?
The concept of 'FMC reporting entity' is broader than 'issuer'. It is defined in section 451 of the FMC Act, however, you can find an overview of who is an FMC reporting entity on our 'Who needs to comply' page.
What has changed from the requirements in the Financial Reporting Act 1993?
See our 'Your obligations' page for a summary of the changes.
How do the financial reporting requirements for FMC reporting entities relate to the reporting requirements in other Acts?
If you are required to produce financial statements under the FMC Act, then these requirements will take precedence over any other NZ law. For example, the Companies Act specifically says it's financial reporting requirements do not apply to companies that have to comply with the FMC Act's requirements.
What is 'higher public accountability' and how does it affect me?
All FMC reporting entities have a designated level of public accountability. This influences which tier of the External Reporting Board Accounting Standards Framework you are in and whether you will have to use full accounting standards (eg, NZ IFRS) or reduced disclosure accounting standards (eg, NZ RDR) when preparing your financial statements.
The FMC Act identifies FMC reporting entities deemed to have ‘higher public accountability’. All other types of FMC reporting entities therefore have lower public accountability. These are default designations - under the FMC Act we can vary designations for either individual FMC reporting entities, or classes of FMC reporting entities. Our exemptions page includes a summary of the designations by class of reporting entity.
Can I prepare my financial statements using the disclosure concessions of the reduced disclosure regime?
Most FMC reporting entities with lower public accountability can report using a reduced disclosure regime (eg, NZ IFRS RDR or PBE Standards with disclosure concession). FMC reporting entities with higher public accountability must comply with full NZ IFRS or PBE accounting standards.
Can I apply the differential reporting framework?
No. The differential reporting framework cannot be used by FMC Act reporting entities. Differential reporting has been replaced by the reduced disclosure regimes of the External Reporting Board - only FMC reporting entities with lower public accountability can apply the disclosure concessions allowed by the reduced disclosure regime.
Can I use financial statements prepared in accordance with overseas financial reporting standards?
You can only use overseas financial reporting standards for ongoing reporting if we have granted you an exemption to do so. See here for details of financial reporting exemptions.
Am I still a FMC reporting entity if I haven't issued anything to the public?
What are my financial reporting obligations if I offer financial products under the trans-Tasman mutual recognition scheme?
Issuers of regulated products are ‘FMC reporting entities’.However, if you are an Australian business and your offer is a ‘recognised offer’, then you are exempt from many of the provisions of the FMC Act, including the disclosure and financial reporting requirements for offers of financial products.
However, you may be an FMC reporting entity for another reason, for example, if you are also listed on the NZX, the financial reporting obligations of the FMC Act will apply.
Can we use special purpose financial reporting for our one-person superannuation scheme?
Yes. You can prepare special purpose financial statements where scheme members are able to obtain special purpose information that meets their needs.
These schemes are required to prepare financial statements that comply with generally accepted accounting practice and send a copy of these to the FMA. To comply with this, we believe NZ IAS 26 still applies including paragraph 1.5. Accordingly, we accept special purpose financial statements. The exact content of the special purpose financial statement is not prescribed and therefore is at the discretion of the trustees. We suggest special purpose financial statements include; a profit and loss balance sheet and a cash flow statement, as well as appropriate accounting policies and notes that reflect the investments of the scheme.
If appropriate, we can exempt you from your financial reporting obligations. Please refer to our exemptions section for more information on qualifying for an exemption and how to apply.
Who can audit my financial statements?
Generally, only licensed auditors or registered audit firms can audit financial statements of FMC reporting entities. However, the Auditor General can audit FMC reporting entities that are public entities.
Where appropriate, we can grant an exemption to enable you to use another auditor. Please refer to our policies for granting exemptions.
The register of licensed auditors and registered audit firms is maintained by the Ministry of Business, Innovation and Employment.
Not all qualified audit reports indicate that you have breached your financial reporting obligations. However, if your auditor's report indicates that you have breached your obligations, your auditor must notify us, and we will take appropriate action.
Who should the audit report specify as having responsibility for preparing the financial statements?
Audit reports should state that “the directors’ are responsible on behalf of the entity for the preparation of the financial statements and fair presentation of these financial statements in accordance with New Zealand Equivalents to International Financial Reporting Standards and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.”
Although FMC reporting entities, rather than their directors, have the primary responsibility for preparation, audit and lodgment of financial statements, the directors are also treated as being liable for contraventions of any financial reporting obligations. Directors are responsible for the governance of the FMC reporting entity, including preparation of compliant financial statements.
When do I have to lodge my financial statements?
You have 4 months after your balance date to lodge your financial statements with the Companies Office.
How do I lodge my financial statements?
Please lodge your financial statements using the Companies Office online services.
Do I have to lodge my financial statements with the FMA?
Generally, no. Exceptions include:
What happens if I am late lodging?
If you think you will be late filing, you should contact us, outlining the reasons:
What enforcement powers does the FMA have for financial reporting?
Under the FMC Act, we may issue infringement notices for failure to:
keep accounting records in English (infringement fee: $7,500)
allow directors, supervisors, ourselves or any other person permitted by an enactment to inspect of accounting records (infringement fee: $12,500)
If you cease to be a FMC reporting entity during an accounting period (for example when you repay outstanding financial products or your license expires), you will still need to prepare and lodge financial statements for the period up until your next balance date. For example, if you are an issuer with a 31 March balance date and you repay all outstanding debt products on 1 January 2017, you will still need to comply for the period ending 31 March 2017.
I am considering applying for a market service licence. Do I need to provide audited financial statements by an FMA approved auditor in my licence application?
No. Essentially, there are no specific requirements to have previously used or engaged an NZ licensed auditor or registered audit firm prior to holding a licence.
However, if you are granted a license, to meet the conditions of that licence you will need to engage a NZ licensed/qualified auditor. In the licensing process, we look for evidence that you have engaged, or in the process of engaging a NZ licensed or qualified auditor so we know you will be able to comply with your conditions.
I manage a DIMS book of less than $250 million. Do I still need to provide audited financial statements and lodge these with the Registrar?
I am a fund manager and have a different balance date to my schemes. Do I really have to prepare my scheme’s financial statements within 4 months of my balance date?
Managers of registered schemes must prepare financial statements for those schemes within 4 months of their balance date. Where a manager’s balance date is different to its scheme’s balance date this make compliance difficult or impossible to comply. Because of this, we’ve granted an exemption that allows managers to prepare financial statements within 4 months of the balance date of their schemes – see our exemption notice that permits this.
My managed investment scheme has subsidiaries. Do I need to prepare both parent and group financial statements for my scheme?
Under section 461A of the Act managers are required to prepare financial statements for their schemes that comply with GAAP. In practice many schemes will meet the definition of an investment entity under NZ IFRS 10: Consolidated Financial Statements are required not to consolidate its subsidiaries. However, if your scheme doesn’t meet that definition we do not expect you to produce both parent and group financial statements. We consider that GAAP for the purpose of section 461A means group financial statements.
Will the new accounting standards impact your business?
The effective dates of new accounting standards - NZ IFRS 9 Financial Instruments, NZ IFRS 15 Revenue from Contracts with Customers and NZ IFRS 16 Leases - are fast approaching.
The new standards are expected to significantly affect the financial statements of many FMC reporting entities given the breadth of their application and extensiveness of the transactions within their scope.
Timely assessment of the possible impact of these standards on accounting, disclosure, processes, controls and systems is crucial.
In December 2016, the International Organisation of Securities Commissions (IOSCO) published a Statement on Implementation of New Accounting Standards. They highlighted the importance of the implementation process and the full, accurate and timely disclosures of the possible impact of adopting the next standards.
The FMA is a member of IOSCO and represented on their Issuer, Accounting, Audit and Disclosure Committee.
We encourage affected businesses to consider the messages noted in IOSCO’s statement and what they might need to do to address the impact of the new standards, including early engagement with auditors.
If you have any questions please do not hesitate to contact us at email@example.com