Sector-Neutral Accounting Standards : A Ten-year Experiment

In 1992, New Zealand adopted a sector neutral approach to standard setting - where the difference in accounting treatment is driven by differences in the nature of transactions and not by ownership or the objectives of the reporting entity. In the process of adopting International Financial Reporting Standards, New Zealand standard setters are currently struggling to maintain sector neutrality in financial reporting because international standards are primarily developed for profit oriented entities. With the possible loss of sector neutral financial reporting, it is appropriate to review the outcome of ten-year experiment. In particular, we focus on the impact that transactions that are common to a number of public benefit entities have on accounting standards that apply to profit orientated entities. The results of this review may be useful to future standard setters and to the joint FASB/IASB convergence project