Other matters contained in letters to issuers included:

In Cycle 6, eight finance companies were reviewed. These are defined as financial institutions in NZ GAAP and are required, while under previous NZ GAAP, to comply with FRS-33.

The Commission findings indicate that such financial institutions should pay closer attention to FRS 33 requirements when preparing their financial statements.

FRS-33 prescribes the minimum standards of disclosure for financial institutions. The importance of these disclosures is commented on in the Introduction to this Standard:

"Financial institutions represent a significant and influential sector of economic activity. Most individuals and organisations make use of the financial institutions as depositors, borrows, investors or as users of payments services. Hence, besides shareholders and ordinary creditors, there is considerable interest among a wide range of other parties in the performance, financial position, and financial and investing activities of financial institutions, particularly their solvency and the relative degree of risk attaching to their different activities."

The following disclosure matters were raised with issuers:

One issuer failed to explain in its financial statements the reasons for the change in the comparative period's asset classification from impaired to past due. The issuer's financial statements show those assets as past due, the same amount is shown as impaired in the issuer's prior period financial statements. On enquiry the issuer clarified that the classification shown in the prior period financial statements (as impaired assets) was an error and the classification shown in its current financial statements (as past due assets) is the correct classification. The issuer should have explained the error and its effect and presented clearly the change in asset classification as a correction of a prior period error.

FRS-33 requires information about impaired assets to be disclosed in the financial statements, including the entity's accounting policies for impaired assets, criteria for classifying those assets, and policies for recognising and determining their carrying amounts in the statement of financial position. To enable users of financial statements to assess the quality of loans, financial institutions are required to disclose the movements from one reporting period to the next.

The accounting policies of one issuer did not provide a clear explanation of items recognised as loans and advances. FRS-33 (paragraph 5.2) requires a financial institution to "disclose the accounting policies for financial instruments with respect to the basis for recognising financial instruments in the financial reports".

FRS 1 (paragraph 5.1) states that "financial reports shall include clear and concise statements of all accounting policies adopted by an entity in the preparation of its financial reports, where such accounting policies are material to those financial reports". The Commission encourages issuers to provide clear and concise policies that accurately portray the practices of the issuer. For example, if an entity capitalises interest at the end of a contractual term when a new loan is advanced, the accounting policy should state this clearly.

Accounting policy disclosure is a fundamental disclosure in financial statements. Users need this information to understand and interpret the financial statements.

Issuers moving to NZ IFRS will find that accounting policy disclosures will need more consideration under NZ IFRS given that NZ IFRS contains some new requirements for certain types of transactions such as financial instruments.

One issuer failed to disclose the contractual repricing or maturity periods on term loan facilities as required by FRS-31: Disclosure of Information about Financial Instruments (paragraph 6.14(b)).

The Commission raised several matters relating to disclosures of substantial security holder information, director share dealings and non-compliance with NZX Listing Rules.