Define financial accounting.
● A process involving collecting and processing financial information to meet
the decision-making needs of external parties.
● Financial accounting is different from management accounting.
○ While financial accounting focuses on providing information for decision-
making by external users, Management accounting focuses on parties
within the organisation (that is, for internal as opposed to external users).
○ Financial accounting, by contrast, is subject to many regulations however
Management accounting is largely unregulated.
Explain general-purpose financial reports.
General Purpose Financial Reports (GPFR)
● General purpose financial report - a report that complies with the New Zealand
Framework and accounting standards and meets the needs of external users.
● On the other hand, Special purpose financial reports are reports designed to
meet the needs of a specific group or to satisfy a specific purpose.
Explain to users of general-purpose financial reports
Users of general-purpose financial reports
Primary Users Other Users
Present and potential investors Employees
Lenders Customers
Suppliers and other trade creditors Government and its agencies
The public etc
● Users lack the power to demand specific information to meet their needs
1
, Discuss the sources of regulation relating to New
Zealand's external financial reporting
● Legislation and
● External Reporting Board (XRB)
Sources of external financial reporting regulation
● In NZ, external financial reporting is regulated by:
○ Legislation
○ External Reporting Board (XRB)
○ New Zealand Exchange (“NZX”) Listing rules
Legislation
● Comprise Acts of Parliament, Regulations and Orders in Coucil
● Highest law of the land
● Non-compliance can result, on summary conviction, in penalties from fines to
prison sentences
● Examples:
○ Companies Act 1993
○ Financial Reporting Act 2013
○ Financial Markets Conduct Act 2013
Financial Reporting Act Companies Act 1993 Financial Markets
2013 (FRA 2013) Conduct Act 2019 (FMC
2013)
Applies to all reporting Directors’ responsibilities - FMC reporting entities
entities maintenance of accounting include: Issuers of debt
records (S194) and equity; Banks;
Licensed insurers; Credit
union; Building society etc
(S451)
The purpose of this Act is Financial statements FMC reporting entities
to: should follow the Generally must keep proper
● Continue the Accepted Accounting accounting records (S455)
External Reporting Principles (GAAP) (S203) and for a period of at least
Board and define its 7 years (S458)
functions and
powers, and
● Provide for the issue
of financial reporting
2
● A process involving collecting and processing financial information to meet
the decision-making needs of external parties.
● Financial accounting is different from management accounting.
○ While financial accounting focuses on providing information for decision-
making by external users, Management accounting focuses on parties
within the organisation (that is, for internal as opposed to external users).
○ Financial accounting, by contrast, is subject to many regulations however
Management accounting is largely unregulated.
Explain general-purpose financial reports.
General Purpose Financial Reports (GPFR)
● General purpose financial report - a report that complies with the New Zealand
Framework and accounting standards and meets the needs of external users.
● On the other hand, Special purpose financial reports are reports designed to
meet the needs of a specific group or to satisfy a specific purpose.
Explain to users of general-purpose financial reports
Users of general-purpose financial reports
Primary Users Other Users
Present and potential investors Employees
Lenders Customers
Suppliers and other trade creditors Government and its agencies
The public etc
● Users lack the power to demand specific information to meet their needs
1
, Discuss the sources of regulation relating to New
Zealand's external financial reporting
● Legislation and
● External Reporting Board (XRB)
Sources of external financial reporting regulation
● In NZ, external financial reporting is regulated by:
○ Legislation
○ External Reporting Board (XRB)
○ New Zealand Exchange (“NZX”) Listing rules
Legislation
● Comprise Acts of Parliament, Regulations and Orders in Coucil
● Highest law of the land
● Non-compliance can result, on summary conviction, in penalties from fines to
prison sentences
● Examples:
○ Companies Act 1993
○ Financial Reporting Act 2013
○ Financial Markets Conduct Act 2013
Financial Reporting Act Companies Act 1993 Financial Markets
2013 (FRA 2013) Conduct Act 2019 (FMC
2013)
Applies to all reporting Directors’ responsibilities - FMC reporting entities
entities maintenance of accounting include: Issuers of debt
records (S194) and equity; Banks;
Licensed insurers; Credit
union; Building society etc
(S451)
The purpose of this Act is Financial statements FMC reporting entities
to: should follow the Generally must keep proper
● Continue the Accepted Accounting accounting records (S455)
External Reporting Principles (GAAP) (S203) and for a period of at least
Board and define its 7 years (S458)
functions and
powers, and
● Provide for the issue
of financial reporting
2
