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“It feels like sales are falling off a cliff” - or words to that effect – are an all-too-common occurrence in a business community battling high costs as households continue to tighten the purse strings. If you’re experiencing stagnant or declining sales, there are some practical steps you can take to help your business stay the course during tough economic times. The following tips will not only help you navigate a downturn, they’re also part of good hygiene practices you should revisit on a regular basis to improve your business’s performance and build resilience throughout your organisation.

It’s been a tough year for local food and beverage manufacturers. Shoppers have cut their retail spending to cope with a rising cost of living and higher interest rates. Per capita retail spending has been falling since January, in tandem with a weakening labour market and rising unemployment.

It is year end and you’re probably feeling very organised, right? You’re already talking to your accountant and auditor regularly about the information you need to supply. You’re thinking about changes within your business that need to be incorporated into your reporting. You’ve agreed a timeline to make sure everyone is on the same page. Fantastic. Your business will be audited on time, your bank loan covenants will be met, stakeholders will be reassured, and your company’s reputation will be upheld. Wait, does that not sound familiar? Unfortunately, not all businesses are as organised as we might like them to be. In practice, companies collect up all the information they think is necessary and pass it onto their accountant hoping it will be sufficient. Partly this is because businesses are so caught up with other work that understandably seems more urgent. It can also be tricky to know what your accountant and auditor need to know – and the list can be long. What does your accountant need to know? Some of the major considerations are as follows. • If there were any findings, recommendations or inefficiencies identified by your accountant or auditor last year, take steps to address them and implement any necessary improvements. • Ensure you’re applying the right reporting standards and tier and you’re meeting deadlines like bank covenants and parent reporting requirements. • Set a timeline to ensure everyone is on the same page, and so that you or your team is available to address any questions or concerns promptly. • Estimates and judgements require careful consideration and review by management. These can include impaired inventory, changes in asset valuations or a change in asset useful life, and impairments. • Changes like new leases, amended lease terms, or adjustments affecting revenue recognition timing should be assessed. Evaluate how fluctuations in interest rates may impact your reporting accruals and provisions should also be considered. • Changes in rules could impact your accounting, such as depreciation on commercial property, or new accounting standards either internationally or locally. • There may be events you need to disclose and consider, like major transactions, or contingent assets and liabilities. • If you’ve changed your goods and services terms or offerings, this can affect how you account for income recognition. If this isn’t clearly understood, a large amount of analysis and rework may need to be completed in a short timeframe. • Have you closed an acquisition deal and immediately moved to the celebrations without thinking about how to account for it, or what the disclosure requirements and tax implications are? If so, you could be facing delays and unforeseen costs. These are just some of the possible considerations – the list goes on. Ideally you should maintain an ongoing dialogue with your accountants throughout the year to avoid unexpected issues at year-end. Incorrect or incomplete information can lead to inaccurate reporting. Getting it wrong can create big risks and serious costs Compliance failures can really snowball. Missing your internal timeframes including those of your Board, bank covenant reporting, allocated timeframes for audit, regulatory filings can all have major consequences. Worse still, if issues aren’t picked up until later, a restatement of your prior comparatives may be required. This would invariably result in increased costs, time delays, reputational damage, and potential increased scrutiny. These restatements are prominently noted in your financial statements for your readers to see. Failing to ensure robust planning for your financial statements process can also severely erode shareholder trust in the business, its governance, and its management teams. But all this can be avoided when a business is organised and clear channels of communication are maintained. As they say, a fail to plan, plan to fail.

During conversations we have with businesses about risk, it’s eye-opening to see how many aren’t really making it a priority.

Dan Lowe says uncertainty is the enemy of confidence and investment and that when it comes to property and construction, continuous tinkering with tax settings has made the sector an easy target.

We all know the population is aging and we all accept that our elderly population needs care. But aged care is drastically underfunded, the funding model is not fit for purpose, and we are rapidly in danger of running out of beds for the elderly.

As the country's primary healthcare crisis deepens, Pam Newlove looks at missed opportunities in Budget 2024 to support overbooked and underfunded GPs.

Did Budget 2024 give Kiwi business owners the certainty they need so they can plan for the future with confidence? Greg Thompson provides expert analysis.

A bold long term tax strategy is a key driver to solving New Zealand’s infrastructure woes. Murray Brewer analyses Budget 2024 to see if the Government delivered the fresh thinking needed to achieve future success instead short term cost savings.

Major public sector agencies have been instrumental in driving lasting benefit through strategic procurement and broader outcomes. Think hydro dams, railways and hospitals built by the previous generation. This approach has lifted the quality and resilience of public services, the capability of a range of suppliers and also set a precedent for addressing the burgeoning issue of infrastructure technical debt.

Grant Thornton New Zealand’s latest survey of over 200 business leaders and decision makers has revealed a significant uptick in optimism for the coming year despite many toughing it out in current economic conditions.

You know you can’t work forever – and you certainly aren’t immortal. But plenty of business owners are living as though they’re completely infallible.

It’s free, it’s easy, and it will immediately start saving you time. E-invoicing is a fantastic tool for any business. Plus, it could protect you from being scammed out of significant sums of money.

There’s new GST legislation in place for online marketplaces, which includes short-term accommodation platforms like Airbnb, ride-sharing platforms like Uber and delivery services like Uber Eats. These online platforms must now collect 15% GST and return it to Inland Revenue. This ‘app tax’ came into effect on 1 April 2024, and it’s already having an impact on the market.

The success of an acquisition largely hinges on the price paid relative to the value received. To ensure success, it’s crucial to gain a comprehensive view of not only the quality of earnings of a business but also the quality of the reporting itself. If you’re an investor performing due diligence, here are five key considerations about the quality of the target’s financial reporting.

There’s been a period of relative calm in the world of accounting standards in recent years, however they quietly continue to evolve and reflect the dynamic nature of business, and the need for transparency and accuracy in financial reporting. Recently, several important changes have been made to New Zealand equivalents to International Accounting Standards (NZ IAS) to make financial statements clearer, comparable and relevant. Key updates have been made to: 1. material accounting policies for year ends from 31 December 2023 onward 2. accounting for estimates for year ends from 31 December 2023 onward 3. the presentation of current and non-current liabilities for year ends from 31 December 2024 onward Understanding the implications and significance for your business Changes to NZ IAS 1: Disclosure of material accounting policies A shift from the significant to the material The amendment to NZ IAS 1 emphasises the disclosure of material accounting policies. It requires entities to make material accounting policies prominent and easily accessible within financial statements. Previously, businesses were only required to disclose their significant accounting policies. The move to releasing material accounting polices was made to reflect the fact that term and its application is described in detail in accounting standards, where the term significant is not. How will this benefit my organisation and its stakeholders? Transparent disclosure of accounting policies is crucial for stakeholders to comprehend how financial information is prepared and to assess the reliability of financial statements. By explicitly stating material accounting policies, companies provide clarity on significant judgments and assumptions applied in financial reporting, enhancing the overall transparency, trustworthiness and comparability of financial statements for different entities. Investors and other stakeholders can make more informed decisions when they have a clearer understanding of the underlying principles and methodologies used in financial reporting. It encourages companies to critically evaluate their accounting policies, ensuring they accurately reflect the economic substance of transactions and events. Businesses are encouraged to review the significant accounting polices previously disclosed to determine how they stack up against the new guidance to disclose material accounting policies. Changes to NZ IAS 8: Accounting for Estimates More consistency and reliability on the horizon The revision to NZ IAS 8 addresses the accounting for estimates, emphasising the need for consistency and reliability when estimating uncertain future outcomes. Over time, a change in accounting estimates has become confused with a change in accounting policy. The amendment replaces the definition for a change in accounting estimate with the definition for an accounting estimate as monetary amounts that are subject to measurement uncertainty. Enhance the usefulness of your financial statements … Estimates play a crucial role in financial reporting, particularly in areas such as fair value measurements, provisions, and impairment assessments. Ensuring the reliability and consistency of estimates turns your financial statements into a tool stakeholders can use to assess the potential impact of uncertainties on an entity's financial position and performance. … And mitigate risk The revised standard prompts companies to exercise greater diligence and transparency when making and disclosing estimates. By providing insight into significant judgments and uncertainties, you can mitigate the risk of misinterpretation and enhance stakeholder confidence in the reliability of your financial information. Additionally, it encourages robust internal controls and processes for estimating, monitoring, and disclosing uncertainties, all of which improves risk management practices. Changes to NZ IAS 1: Presentation of Current and Non-current Liabilities What is changing? The amendment to NZ IAS 1 focuses on the presentation of current and non-current liabilities, requiring a liability to be classified as current if, among others, the company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. The amendments to NZ IAS 1 clarify that the right to defer settlement must have substance, and it also discusses the impact of covenants on this assessment. Why is this important? Clearly presenting your current and non-current liabilities makes your liquidity and solvency position easier to understand. By segregating liabilities based on their maturity, financial statements provide valuable insights into an entity's short-term obligations and its ability to meet them, which helps stakeholders assess liquidity risk and financial health. The amendments state that at the reporting date, instead of considering covenants that will need to be complied with in the future, when considering the classification of the debt as current or non-current, the entity should disclose information about these covenants in the notes to the financial statements. The standard setter introduced these so investors can understand the risk that such debt could become repayable early and therefore improving the information being provided on the long-term debt. What is the impact on my business? The revised standard prompts entities to reassess their classification of liabilities, ensuring compliance with the new presentation requirements. By clearly delineating between current and non-current liabilities, businesses enhance the clarity and relevance of financial statements, enabling stakeholders to make more informed assessments of an entity's financial position and performance. It underscores the importance of effective liquidity management and strategic planning to meet short-term obligations and sustain long-term growth. What’s next? After a period of relative calm, we are expecting to see a minimum of two new accounting standards over the coming year. The first, IFRS 18, will impact the representation and disclosures of primary financial statements. Key changes include: • new required subtotals included in the statement of profit or loss such as operating profit, profit before financing and income taxes, • disclosures around management-defined performance measures (MPMs), and • enhanced requirements for aggregation and disaggregation (i.e., grouping of information). It is important to note that IFRS 18 is subject to consultation before the standard is adopted in New Zealand. We are also anticipating a new standard outlining disclosure requirements for subsidiary, and potentially other entities, who do not have obligations to produce financial statements. When and how this standard might be applied in New Zealand will be subject to XRB consultation.