IIEffective Insolvency and Creditor Rights Systems
After conducting a review of the insolvency legislation then on the books, the Ministry of Economic Development (MED) issued a report in early 2006 that recommended swift passage of new insolvency laws. The MED recommended that any new laws provide greater incentives to consider restructuring rather than liquidation, and move the New Zealand legislative framework into greater harmony with the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency. The new laws were finally passed in 2006, thus introducing significant changes to New Zealand's insolvency regime. The MED's website indicates that the Insolvency (Cross-Border Act) Act 2006, which came into effect on July 24, 2008, implements the UNCITRAL Model Law thus supporting a predictable process for initiating cross-border insolvency proceedings. In a March 2009 press release by the Government of New Zealand, the Minister of Commerce, Simon Power and Australian Senator Nick Sherry announced their intention for Australia and New Zealand to begin working together on improving cross-border insolvency procedures and aligning insolvency laws. Further, the Companies Amendment Act No. 056, 2006 came into force on November 1, 2007 introducing a voluntary administration regime. In addition, an Insolvency Amendment Bill introducing greater reforms was proposed on March 9, 2009, but as of April 2009, had not yet been enacted. Despite all of these legislative reforms, there is insufficient publicly available information regarding New Zealand's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank.
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ENInternational Financial Reporting Standards
In December 2002, in order to achieve international convergence and harmonization of financial reporting standards, the Accounting Standards Review Board (ASRB) announced that New Zealand entities would be required to apply International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) for periods commencing on or after January 1, 2007. As detailed in a 2009 Proposed Release issued by the ASRB, the Board consequently approved the New Zealand equivalents to International Financial Reporting Standards or NZ IFRSs in 2005. Certain small and medium sized enterprises (SMEs), however, were permitted to continue application of the existing national standards, the New Zealand Financial Reporting Standards (FRSs), until further review by the government. Since the FRSs are sector-neutral, the Board therefore, argued that because the IFRSs had been developed for profit-oriented entities, in order to make the same set of accounting standards applicable to public benefit entities (which comprise central government, local government, and not-for-profit entities) in New Zealand certain modifications or additions would be required. The Release adds that any additional requirements in New Zealand standards would be clearly identified. As for profit-oriented entities, the 2009 ASRB Release asserts that financial statements that comply with New Zealand IFRSs, will simultaneously comply with the international standards. The Board also follows a policy of revising and updating New Zealand standards in accordance with the IASB revisions and amendments to IFRSs. Therefore, in line with the IASB's Annual Improvements Project, New Zealand launched a similar project called "Improvements to New Zealand Equivalents to International Financial Reporting Standards" in May 2009. Due to the improvements made to IFRSs, NZ IFRSs were also updated under the "Omnibus Amendments" project in May the same year.
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ENPrinciples of Corporate Governance
In 2004, the Corporate Governance Best Practice Code and amendments incorporating corporate governance regulation into the New Zealand Exchange Listing Rules entered into force, on a "comply or explain" basis. Also in 2004, the New Zealand Securities Commission (SC) published "Corporate Governance in New Zealand: Principles and Guidelines," consisting of nine principles and guidelines for maintaining a high standard of corporate governance. Since then, the SC's 2005 through 2008 Annual Reports indicate that it has worked to improve and monitor companies' reporting of their corporate governance principles. The U.S. Department of Commerce's 2009 Country Commercial Guide states that New Zealand's legal, regulatory, and accounting systems are transparent. Registered companies and issuers of securities are required to adopt Financial Accounting Standards issued by the New Zealand Accounting Standards Review Board, based largely on international accounting standards. The Chairman of SC, in a 2008 speech stated that new laws, which came into force in February 2008, require increased disclosure and tighten insider trading rules. Meanwhile, the Commission has also been given new powers to enforce the law. However, the absence of a comprehensive assessment of enforcement of the corporate governance principles prevents New Zealand from achieving a possibly higher level of compliance with the Organization for Economic Cooperation and Development's Principles of Corporate Governance.
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IDInternational Standards on Auditing
According to the Professional Standards Board (PSB), the national auditing standards-setter's website, New Zealand, has been following a policy of harmonizing the New Zealand Auditing Standards (ASs) with the International Standards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board (IAASB). In December 2005, the PSB decided to move from its "harmonization" policy to the full adoption of ISAs along with other pronouncements issued by the IAASB with a proposed effective date of 2008. However, the same year, the IAASB approved the Clarity Project in order to improve the clarity and structure of its international standards. Since all existing ISAs were to be re-exposed over an estimated period of two years, the PSB decided not to issue exposure drafts concurrently and instead to wait for the IAASB to expose ISAs in their final form. Therefore, the final adoption of ISAs by New Zealand, according to the PSB, was contingent upon the completion of the Clarity Project. Following the completion of the Clarity Project, the April 2009 PSB work program indicates that the adoption of ISAs in New Zealand is a work in progress and is expected to be completed by October 2009. The new standards are designated as the International Standards on Auditing (New Zealand) (ISAs NZ). ISAs (NZ) are drawn primarily from the corresponding international standards and the authority of ISAs (NZ) is set out in ISA (NZ) 200. Per the text of ISA (NZ) 200, compliance with national standards ensures compliance with ISAs issued by the IAASB.
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IDAnti-Money Laundering/Combating Terrorist Financing Standard
In its 2005 assessment, the IMF indicated that the legislative measures for Anti-Money Laundering (AML) and combating the financing of terrorism (CFT) in New Zealand were sound and that the overall preventive system in place was adequate. However, this assessment was based on the Financial Action Task Force (FATF) methodology of 2002, and there is insufficient information publicly available with regards to New Zealand's compliance with the 40 recommendations and nine special recommendations of the FATF's new 2004 methodology. A mutual evaluation for New Zealand is scheduled for April 2009 to evaluate New Zealand's compliance with the FATF's 40+9 recommendations, and the government has made clear that it will strengthen its AML regime and related legislative framework before the scheduled evaluation. Furthermore, the Ministry of Justice, in a 2006 Jurisdiction Report from the Annual Meeting of the Asia Pacific Group indicated that New Zealand intended to introduce the AML and CFT Bill in Parliament in 2007 and asserted that this would improve New Zealand's compliance with the FATF's 2004 recommendations. However, as of April 2009, the draft Anti-Money Laundering and Countering Financing of Terrorism Bill was reported to be languishing in the legislative process. In its 2007-2008 Annual Report the FATF names New Zealand as one of the jurisdictions that have undertaken to implement the FATF's 40+9 recommendations.
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CPCore Principles for Systemically Important Payment Systems
The Reserve Bank of New Zealand (RBNZ), in its May 2007 Financial Stability Report, notes that New Zealand has two systemically important settlement systems, namely, the Exchange Settlement Account System (ESAS) and the Austraclear New Zealand System (AustraclearNZ). ESAS is an inter-bank high-value payment system and AustraclearNZ is a high-value securities settlement system. Both are owned and operated by the RBNZ. The RBNZ's 2008 (November) Financial Stability Report adds that the Continuous Linked Settlement (CLS) system, owned by CLS Bank International, is also a systemically important payment system for settling foreign exchange transactions in New Zealand. The CLS system is regulated by the U.S. Federal Reserve Bank and according to a 2007 report by CLS Bank, the system observes all Core Principles for Systemically Important Payment Systems (CPSIPS) as put forth by the Committee on Payment and Settlement Systems (CPSS). According to a report by Stinson & Wolyncewicz published in the 2003 RBNZ Bulletin, the RBNZ conducted a self-assessment of ESAS and AustraclearNZ and concluded that both of these systems have a high level of compliance with the CPSIPS. The International Monetary Fund undertook a Financial Sector Assessment Program of New Zealand in 2004 and did not conduct an assessment of the country's payment systems, instead trusting the findings of the RBNZ's self-assessment, which did not indicate any major deficiencies in the systems. The RBNZ's 2008 (November) Financial Stability Report indicates that payment systems in New Zealand have performed "reasonably well" despite the current financial crisis. Statutory authority for oversight of the country's payment systems is bestowed on the RBNZ by the RBNZ Amendment Act of 2003. Furthermore, the RBNZ feels that its objectives and approach in supervising the payment systems correspond substantially with the CPSS' CPSIPS.
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