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REVIEW OF FINANCIAL REPORTING BY ISSUERS - CYCLE 2

FOLLOW-UP FROM CYCLE 1

72. The Commission continues to monitor the reports of two issuers reviewed in Cycle 1 that had serious problems.
73. Matters identified in Cycle 1 relating to two other issuers are still being investigated.

INTERNATIONAL FINANCIAL REPORTING STANDARDS

74. Issuers have three years within which they will be able to choose to make the switch to NZ IFRS.
75. As part of its surveillance programme the Commission will review NZ IFRS financial statements of a selection of issuers during this period. The first reviews will be of NZ IFRS financial statements relating to the reporting period ended 31 December 2005.
76. The aim of these early reviews is to provide feedback to the Commission on the early implementation of NZ IFRS and enable the Commission, where appropriate, to be able to provide feedback to later appliers of NZ IFRS. The Commission will seek to maintain an appropriate balance between education and enforcement during the initial adoption of NZ IFRS.
77. Disclosures about the impact of adopting NZ IFRS must be made by issuers prior to adopting NZ IFRS as required by FRS-41 Disclosing the Impact of Adopting New Zealand Equivalents to International Financial Reporting Standards. These disclosures will be reviewed as part of the programme.

ONGOING REVIEW AND ENFORCEMENT

78. The Commission will continue to review issuers' financial reporting as part of the Financial Reporting Surveillance Programme and to take any appropriate steps to encourage compliance with Financial Reporting Standards and other elements of GAAP.