New financial reporting exemption provides certainty for overseas licensed insurers

Monday 27 July 2015

Authors: Glenn Joblin and Andrew Petersen

​Overseas insurers licensed in New Zealand will benefit from a new class exemption granted by the Financial Markets Authority.

Relief from NZ GAAP requirement

The Financial Markets Conduct (Overseas Registered Banks and Licensed Insurers) Exemption Notice 2015 will exempt overseas licensed insurers from the obligation to prepare entity or group financial statements in accordance with generally accepted accounting practice in New Zealand.

Instead, overseas licensed insurers must prepare financial statements that comply with generally accepted accounting practice in their home jurisdiction. Those financial statements must be prepared within four months after balance date.

Previously, overseas companies were required to satisfy the Registrar of Companies that the financial statements complied with accounting practice that was substantially the same as accounting practice in New Zealand. The new exemption will remove this uncertainty for overseas licensed insurers.

Overseas licensed insurers must continue to prepare financial statements for their New Zealand business in accordance with New Zealand generally accepted accounting practice.

Financial statements that are prepared in reliance on the new exemption must be filed with the New Zealand Registrar of Financial Services Providers within four months after balance date. Notification that the overseas licensed insurer is relying on the exemption must be provided at the same time.

In order to rely on the new exemption, a government body for securities regulation in the overseas licensed insurer’s home jurisdiction must be a full signatory to the International Organisation of Securities Commissions Multilateral Memorandum of Understanding Concerning Consultation and Co-operation and the Exchange of Information. This is to allow the New Zealand regulatory authority to seek the assistance of the equivalent authority in the home jurisdiction should enforcement issues arise. Current full signatories include Australia, the United Kingdom, the United States, Germany, France, China, Hong Kong, Singapore and Japan.

Relief from NZ auditor requirement

Overseas licensed insurers will also be exempted from the requirement to have their financial statements audited by a New Zealand licensed auditor or registered audit firm.

Instead, financial statements must be audited by an auditor that is qualified to assess whether they comply with the accounting practice in the entity’s home jurisdiction.

The new exemption also provides overseas licensed insurers with the option to have the financial statements for their New Zealand business audited by an overseas auditor instead of a New Zealand auditor.

Commencement date

The new exemption applies to all accounting periods that commenced on or after 29 May 2015 and  financial statements for the previous accounting period if they were required to be filed before that date.


Disclaimer

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • Glenn Joblin

    Partner Auckland
  • Andrew Petersen

    Partner Auckland
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