KEY POINTS:
Auditor General Kevin Brady today reiterated frustration at the difficulties public sector entities face with complex financial reporting standards.
A New Zealand equivalent of International Financial Reporting Standards (IFRS) was introduced in 2002 by the Accounting Standards Review Board (ASRB) and enacted in 2007.
Mr Brady said its introduction had increased the complexity of financial reporting and auditing.
The Office of the Controller and Auditor-General outlined the concerns in its last annual report, and Mr Brady reiterated them at a parliamentary finance and expenditure select committee hearing today.
"The heart of it is that they (IFRS) are designed for major corporates, which we don't have a lot of in New Zealand. They are not designed for the public sector," he said.
The more complex standards were costly and time-consuming, particularly when applied to the likes of schools, where more simple reporting would suffice.
Mr Brady said in the education sector last year, auditing the IFRS component of schools' accounts cost hundreds of thousands of dollars more than it would have been under previous standards.
It wasn't only the auditors outside the IFRS who were affected, but accountants who had to get outside help to prepare the accounts.
"Also a lot of people on the Government's boards - including some of our larger crown entities...don't understand the accounts side of it, and that's not good.
"The whole purpose of accounting is to produce simple information for people to make decisions, and I think we've lost that."
He suggested the best option would be to have IFRS for the major corporates and different accounting standards for the public sector.
The office has traditionally had voluntary representatives on the Financial Reporting Standards Board (FRSB) - a committee of the NZ Chartered Accountants Institute which has to get approval for its proposals from the ASRB - but the office had been unable to gain traction in terms of getting its concerns dealt with.
"We are so disappointed with the way they (FRSB) are going about it that we have withdrawn our staff from that committee - which is a real tragedy."
The voluntary committee members, numbers of which have varied between one and three, were pulled this year when the office decided it was a waste of resources to keep them there.
- NZPA
