Securities Commission issues its Financial Reporting - Cycle 3 report

Cycle 3 of the Securities Commission's ongoing financial reporting surveillance programme has been completed. The focus was on issuers' disclosures over their transition to NZ IFRS.

The Commission reviewed 45 financial reports with balance dates from 31 March 2005 to 30 September 2005. Nineteen issuers had matters that needed to be addressed and three matters relating to continuous disclosure notices have been referred to the NZX for consideration.

For the first time, the Commission looked into disclosures required for the transition to New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS). More than half of the reports either did not include information about the transition or only partially complied with the requirements.

"These disclosures are very important for issuers to signal to the market the likely impact of adopting NZ IFRS," Chief Accountant Alastair Boult said. "A great deal of effort is going into NZ IFRS transition but the Commission is disappointed with the level of response to these disclosures in the financial statements examined in Cycle 3."

The Commission is continuing its Financial Reporting Surveillance Programme and is currently reviewing financial reports of early adopters of NZ IFRS with a 31 December 2005 balance date.

The stated aim of the reviews is to encourage issuers to improve the quality of their financial reports and in doing so help contribute to the integrity of New Zealand's securities markets.

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