Financial Reporting & Regulatory Framework in New Zealand - Report

This report provides an analysis of the conceptual and regulatory frameworks for financial reporting in New Zealand. It examines the historical development and purpose of the conceptual framework, highlighting its key components such as the objective of financial reporting, the quality of useful information, elements of financial statements, and recognition and measurement. Furthermore, the report investigates the regulatory framework in New Zealand, discussing its purpose, key components, and the need for such a framework to address national circumstances and ensure accountability, fairness, and equality. The report references the External Reporting Board (XRB) standards and identifies challenges such as pests, human diseases and radiation problems, recommending a more advanced framework to address these issues and ensure bias-free financial information.

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Running Head: FINANCE
Financial Reporting and Regulatory Framework
Student’s Name
Affiliate Institution
ID Number
Submission Date

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Contents
Executive summary.......................................................................................................................3
Introduction................................................................................................................................3
Conceptual framework.....................................................................................................................4
Introduction..................................................................................................................................4
Historical development of the conceptual framework and financial reporting...................4
Purpose of Conceptual Framework for Financial Reporting................................................5
Critical components of Conceptual Framework for Financial Reporting............................5
Regulatory Framework in New Zealand.................................................................................7
Purpose of Regulatory Framework..........................................................................................7
Key components of Regulatory Framework............................................................................7
Need for a regulatory framework in New Zeeland.................................................................7
References.......................................................................................................................................9

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Executive summary
The objective of this report is to identify and examine the conceptual framework (CF) for
financial reporting. Moreover, the scope of this reports is evaluating the historical background of
financial reporting in New Zealand. Further the report aims at assessing the regulatory
framework in New Zealand, examining the purpose of the context, identifying the primary
purpose of financial reporting in the regulatory framework, determining the key components that
are found in the regulatory framework of financial reporting in New Zealand and finally to
evaluate the need for regulatory framework for financial reporting in New Zealand. This report
will apply quantitative data collection and analysis method. The data gathering method will
include the use of electronic sources such as the (XLB) and the KMPG financial reporting
publication of 2018.

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Introduction
The purpose of this report is to analyze the conceptual framework (CF) of financial
reporting in New Zealand. Secondly, the report also aims at investigating the regulatory financial
reporting framework (FRF) which is applicable in New Zealand. This report will have an
executive summary that contains the objectives, scope, and data gathering methods, review of
findings and the conclusion of the entire story. Further, the report will have an introductory part
with the purpose and the structure of the whole paper, thirdly the body of the report will have
two main components which will be; the conceptual framework of reporting on finance and
finally the regulatory framework of financial reporting as it is applicable in New Zealand. After
the body, the report will have a summary that will be followed by references and finally the
appendix.
Conceptual framework (CF)
Introduction
Conceptual framework (CF) is a set of ideas or a system full of plans and objectives
which through application of profession knowledge leads to the formation of consistent standards
and set of rules. Most specifically in the field of accounting the set of rules and standards creates
and sets the limits, nature, and functions of financial statement and also financial accounting.
The KMPG publication and the PWC report also provides a clear guideline on the requirement of
a clear and error free financial reporting framework (KMPG, 2018). Professionals such as Isaiah
Berlin used metaphors to bring out the precise meaning of the conceptual framework. Berlin
metaphor described foxes as those who those who employ multiple choices and ideas and views
the world in more than one dimension, on the other hand, the philosophers referred to the
hedgehogs as the ones that only apply the single concept to view the word in one aspect or
perspective (Berlin, 2013). A conceptual framework is more of an analytical tool which contains
some variations and contexts. Conceptual framework is a concept that is employed in all field

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that requires decision making. For example, economists make use of the idea of demand and
supply to understand and differentiate the incentive and behaviors of customers and firms.
Historical development of the conceptual framework and financial reporting
Conceptual framework has its origin from Plato’s conceptual model. For the past decades
of the growth of accounting the model was applicable in almost every state. An example is the
United Kingdom which applied the model for the first time in 1991, although the
recommendation on the same had been released in the 1940s (Cañibano, 2018). During the initial
stages, the conceptual framework was applicable in foot sorting and also as a purpose to develop
terminology for some states. As academic cognition evolved, more knowledge was gained
through conceptual models (Cañibano, 2018). As compared to 1929 when there was nobody or
group which was set to be responsible for accounting standards, after the stock crash in 1929
there was a revolution where an act was passed, the Stock Exchange Act of 1934 was caught in
the United States security and commission of exchange with the aim of overseeing public
companies security exchanges. With these development the responsibility of supervision of
public companies was mandated to financial accounting standard board FASB. FASB is a non-
profit making organization which aims at improving the financial accounting and reporting
standards. With the creation of FASB committee on accounting procedure and accounting
principal board were replaced by FASB. Since 1978 to 2010, FASB had been able to make eight
concept statements which were crucial (Glover, 2014).
Purpose of Conceptual Framework (CF)
Conceptual framework is crucially recognized concept in every organization, the idea has
several purposes and application in organizations as follows; the primary goal of the design is to
assist the international accounting board in the coming up, and development of the future global
financial reporting standards and also support the commission to review the current financial
reporting standards. Secondly, the conceptual framework assists professionals in the preparation
of financial records and statements in accounting policies that are developing for the event s and
transactions which might not be covered by the current applicable standards. Finally, the
conceptual framework has a purpose of explaining the basis of conclusion in case a conflict arise
within the concepts of the context (Lin, 2016).

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Critical components of Conceptual Framework (CF)
A conceptual framework has four major components which include;
1) The objective of financial reporting.
FASB first accounting concept statement in 1978 aimed at identifying the objectives of
the board on financial reporting. Among the primary laid intentions was that conceptual
framework should provide useful information to the existing and the potential investors, creditors
and other expected users in making their decisions. Furthermore, the board developed more
objectives which included; financial reporting to be represented in a manner that could enable the
users to predict cash flows in the future. Moreover, the company’s obligations and resource
information to be used in making such predictions (Tessier & Otley, 2012).
2) The quality of useful information
Financial reporting information is expected to have decision making if the data has to be
useful in critical decision making. According to FASB SFAC2 information is to be regarded
helpful if the report proves to be relevant, comparable and reliable. More so, the data is
considered useful if it can make more than one decision. According to the board, information has
superior quality if it can help in predicting the future while evaluating both the past and the
present and is receivable at the right time. Financial report information should also be free from
bias and errors (Tessier & Otley, 2012).
3) Elements of financial statements
The conceptual framework should have precise details of financial statements. Definition
of information categories in the report is among the crucial part. The ingredients in a financial
statement according to FASB are; definition of elements which are most important such as
equity, reliability, revenues, gains, expenses, assets and losses (Tessier & Otley, 2012).
4) Recognition and measurement
This includes the recognition of things as stated in the financial data sheets. According to
the board, things should be recognized when they are definable, measurable, relevance and

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reliable. Moreover, the committee states that a full set of financial statements should indicate
financial position, period’s earnings, and income for the period, cash flows and investments
(Tessier & Otley, 2012).
(Villamagna, Angermeier & Bennett, 2013).
Regulatory Framework (RF) in New Zealand
The first framework applied in the government of New Zealand, was the original registration for
records and information in particular, the public sector is the 2005 Act of public records. There
are more relevant legislative and framework which affects the information in new Zealand
including; 2002 Electronic Transaction Act, 2002 Local Government Act, moreover, The Local
Government Official Data And Meetings Act which was enacted in 1987, the 1982 Official
Information Act and the 1993 Privacy Act. All the New Zealand frameworks are also applicable
and establish for the records and information management. For example the leading framework
of ICT.govt.nz. The regulatory framework applicable in the nation is the reporting framework
which has two divisions, the statutory and accounting standard reporting (NZ Accounting
Standards Board, 2010). The files are mostly for particular organizations areas of activities and

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sectors where there exist other influences. New Zealand has a deployed structure for public
sectors which is mainly used to make decisions whether firms and organizations are covered
(Zaman & Vasile, 2014). New Zealand has several challenges including pests, human disease
and radiation problems which makes it urge to have a well developed and managed regulatory
framework. Among the key components will include communication and public awareness.
Some of the XRB standards in New Zealand are that the country has adopted the compatible
IRFs NZ-IRFS not as the one provided by ISAB. Foreign companies operating in the country
are required to follow the NZ-IRFS not unless there exist exemptions (Houqe, Monem & van
Zijl, 2016).
Purpose of Regulatory Framework (RF)
The purpose of the regulatory framework (RF) are; enabling the New Zealand
government to track and record accountable records of information and decent book and record
keeping. The regulatory framework is reliable in enhancing the confidentiality of the public to
the integrity of both local authority records and public sector information records. Finally, the
regulatory framework enables the accessibility and the availability of the information reports and
documents to the nation’s culture and historical heritage (Degrassat-Théas, Bocquet, Sinègre,
Peigné & Paubel, 2015).
Key components of Regulatory Framework
The significant elements of the regulatory framework in New Zealand includes the
following; active and an independent supervisory board, the societal awareness, compliance with
both the international and the local legislation through good practices, the enhancement of proper
communication with the public, cooperating and abiding by international agreements and finally
the New Zealand government cooperation and commitment (Deaconu, Buiga & Strouhal, 2012).
Need for a regulatory framework in New Zealand
New Zealand government requires a regulatory framework for; national circumstances.
The government needs to establish suitable concepts of the organizational context to address the
social, political and economic factors in the public sector. Moreover, to create awareness,

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agreement and finally acceptance by the citizens. State legal systems; the regulatory framework
will fit the standard, statutory and civil law in the nation (External Reporting Board, 2012). The
structure will be a significant pillar in decision making and the making of the country laws. State
programs; this will address the strategies and government plans, nuclear programs and
application of radiation applications plans. And finally availability of financial and technical
resources and human resources (Cordery, & Simpkins, 2016). Moreover, New Zealand requires a
regulatory framework to enable all the different type of people to make critical decision. The
regulatory framework is responsible in separation ownership from the management, the
economic significance of the business and also offering accountability fairness and equality.
Summary of the findings
This report through a thorough research identified that conceptual framework (CF) is an
essential tool in every organization. The report further found out that New Zealand applies the
reporting framework which has two divisions, the statutory and accounting standard reporting.
PWC report and the KMPG financial reporting publication of 2018 also provided crucial
information on the element and the uses of the conceptual framework (Bradbury, & van Zijl,
2016). Having identified the problems that New Zealand as a nation is going through, the report
recommended that the nation should apply a more advanced conceptual framework to address
the issues. Issues such as diseases, pest, pollution and radiation were among the identified issues
in New Zealand. The report more so, recognized the variation in understanding and the use of
financial information by different personality and hence recommended for a bias free conceptual
(CF) and regulatory framework (RF).

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References
Berlin, I. (2013). The hedgehog and the fox: An essay on Tolstoy’s view of history. Princeton
University Press.
Bradbury, M., & van Zijl, T. (2016). Due process and the adoption of IFRS in New Zealand.
Australian Accounting Review, 16(39), 86-94.
Cañibano, L. (2018). Accounting and intangibles. Revista de Contabilidad-Spanish Accounting
Review, 21(1), 1-6.
Cordery, C. J., & Simpkins, K. (2016). Financial reporting standards for the public sector: New
Zealand's 21st-century experience. Public Money & Management, 36(3), 209-218.
Deaconu, A., Buiga, A., & Strouhal, J. (2012). SMEs FINANCIAL REPORTING: ATTITUDES
TOWARDS IFRS FOR SMEs. Studia Universitatis Babes-Bolyai, Oeconomica, 57(1).
Degrassat-Théas, A., Bocquet, F., Sinègre, M., Peigné, J., & Paubel, P. (2015). The “Temporary
Recommendations for Use”: A dual-purpose regulatory framework for off-label drug use
in France. Health Policy, 119(11), 1399-1405.
External Reporting Board (2012). Proposals for the New Zealand Accounting Standards
Framework. March 2012. Retrieved from https://www.xrb.govt.nz/dmsdocument/1802
Glover, J. (2014). Have academic accountants and financial accounting standard setters traded
places? Accounting, Economics and Law Account. Econ. Law, 4(1), 17-26.
Houqe, M. N., Monem, R. M., & van Zijl, T. (2016). The economic consequences of IFRS
adoption: Evidence from New Zealand. Journal of International Accounting, Auditing
and Taxation, 27, 40-48.
Houqe, M. N., Monem, R. M., & van Zijl, T. (2016). The economic consequences of IFRS
adoption: Evidence from New Zealand. Journal of International Accounting, Auditing
and Taxation, 27, 40-48.
KMPG, O. (2018). NZ/Reporting News - Issue 4, 2018 a regular summary of publications
on reporting matters from KPMG,. KMPG International Corporation.
Lin, Y. P. (2016). The purpose and value of higher education: An economic perspective.
International Journal of Economics and Accounting, 7(1), 66-73.

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NZ Accounting Standards Board. (2010), New Zealand Equivalent to the IASB conceptual
Framework for Financial Reporting 2010 (NZ Framework).
PWC, j. (2018). NZ/Financial reporting developments for June 2018 reporters – New
Zealand, 8(4), 1-5.
Tessier, S., & Otley, D. (2012). A conceptual development of Simons’ Levers of Control
framework. Management Accounting Research, 23(3), 171-185.
Villamagna, A. M., Angermeier, P. L., & Bennett, E. M. (2013). Capacity, pressure, demand,
and flow: a conceptual framework for analyzing ecosystem service provision and
delivery. Ecological Complexity, 15, 114-121.
Zaman, G., & Vasile, V. (2014). Conceptual framework of economic resilience and vulnerability
at national and regional levels. Romanian Journal of Economics, 39(2), 48.

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Appendix
1) Fig 10.5 US’s FASB Conceptual Framework …………………………………….pg 7