Transition to the New Zealand Equivalents to International Financial Reporting Standards

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Reason For Transition

The Accounting Standards Review Board announced in December 2002 that reporting entities must adopt the New Zealand International Financial Reporting Standards (NZ IFRS) for periods beginning after 1 January 2007. The Minister of Finance announced in 2003 that the Crown will first adopt the NZ IFRS for the financial year beginning 1 July 2007.

Impact On Department

The Department of Corrections has conducted a preliminary assessment of the impacts of the transition to the NZ IFRS. The areas of impact from adoption of the NZ IFRS may change as implementation progresses or standards are revised.

Under the IFRS, the Department of Corrections is classified as a Public Benefit Entity. This has affected the selection of accounting policies required or permitted under the NZ IFRS.

The Treasury will be gathering comparative information throughout the 2006/07 financial year in conjunction with existing reporting requirements.

The 2007/08 financial statements will require restatements so that the information presented is prepared on a consistent basis. The restatements will be the:

  • 2006/07 comparative figures, and
  • 1 July 2006 opening balance sheet.

Under the IFRS there will be a requirement to value sick leave which currently is not valued in the financial statements. Sick leave will be recorded and valued as a liability.