The approach used by the New Zealand Accounting Standards Board (NZASB) to develop the PBE Standards.
The NZASB (a sub-board of the External Reporting Board) used the following approach to develop the Public Sector PBE Standards and the PBE Standards Reduced Disclosure Regime (RDR).
- The suite of IPSASs issued by the International Public Sector Accounting Standards Board (IPSASB) was used as the starting point.
- Each IPSAS was considered for relevance in the New Zealand public sector PBE context. Two IPSASs were considered to be irrelevant in New Zealand because of existing legislation and were excluded from the suite of PBE Standards (IPSAS 18 Segment Reporting and IPSAS 24 Presentation of Budget Information in Financial Statements).
- All other IPSAS were then modified as appropriate for New Zealand circumstances. A relatively small number of substantive modifications were made to reflect the New Zealand context and regulatory environment.
- A number of IPSAS were already based on IFRS with similar requirements to those in the equivalent NZ IFRS.
- A number of non-substantive changes were made to the base IPSAS, generally to make the language applicable to both public sector and Not-for-Profit PBEs.
- Where the IPSAS suite did not include a standard on a topic covered by an IFRS, and that topic was considered important in the New Zealand context for PBEs (for example, insurance contracts), the relevant standard from NZ IFRS was included and modified as appropriate for the public sector PBE environment.
- Where the IPSAS suite did not incorporate an interpretation that formed part of NZ IFRS and the guidance in, or requirements of, that interpretation was considered important in the New Zealand context, the relevant guidance or requirements were incorporated in the PBE Standards (mostly as integral application guidance). In the case of service concession arrangements, the requirements in NZ IFRIC 12 Service Concession Arrangements and NZ SIC-29 Service Concession Arrangements: Disclosures were included in a new standard - see PBE FRS 45 Service Concession Arrangements: Operator.
- Relevant domestic standards (FRS 42 Prospective Financial Statements and FRS 43 Summary Financial Statements) were also included in PBE Standards – modified as appropriate for the public sector PBE context.
- Two transition standards were developed - see PBE FRS 46 First-time Adoption of PBE Standards by Entities Previously Applying NZ IFRSs and PBE FRS 47 First-time Adoption of PBE Standards by Entities Other Than Those Previously Applying NZ IFRSs.
The NZASB considered whether PBE equivalents of the NZ IFRS set out below should be developed. It concluded that it was unlikely that many public sector PBEs would need to apply these standards and that the development of PBE equivalents was therefore not warranted. The NZASB noted that an entity seeking guidance on how to account for such transactions and events would apply PBE IPSAS 3 Accounting Policies, Changes in Accounting Estimates and Errors and, in many cases, would be likely to consider the requirements of the relevant NZ IFRS. The standards in question were:
- NZ IFRS 2 Share-based Payment;
- NZ IFRS 6 Exploration for and Evaluation of Mineral Resources;
- NZ IFRS 8 Operating Segments;
- NZ IAS 26 Accounting and Reporting by Retirement Benefit Plans; and
- NZ IAS 33 Earnings per Share.
Nomenclature and Numbering
Each PBE Standard is prefixed with "PBE" followed by the source standard nomenclature and number, e.g. PBE IPSAS 1, PBE IFRS 5, PBE IAS 12 and PBE FRS 42. Because the base standards have been modified as appropriate, the PBE Standards may not be the same as the equivalent for-profit standard.
The structure and paragraph numbering of the underlying standard has been retained in the relevant PBE Standard. Where a paragraph was considered not relevant in the New Zealand context the paragraph number was retained and "[Not used.]" inserted. Where an additional New Zealand specific paragraph was added a sub-numbering system has been adopted (e.g. 90.1, 90.2 etc.).
The RDR disclosure concessions are included in the PBE Standards. This means that each standard includes both the Tier 1 PBE Standards requirements and the Tier 2 RDR concessions (where such concessions apply in that standard). The RDR concessions are indicated by an asterisk (*) next to the paragraph and a Tier 2 entity is not required to comply with these requirements. In some cases, a disclosure concession is accompanied by a mandatory RDR paragraph that applies if an entity elects to adopt the concession.