The Financial Markets Authority - Te Mana Tātai Hokohoko (FMA) is urging directors, preparers and auditors to maintain focus on the quality, accuracy and timeliness of financial reporting, as global volatility creates ongoing uncertainty for businesses and investors.
The call comes as the FMA releases its Financial Statements Monitoring Insights 2022-2025 report which summarises findings from reviews of 60 sets of audited financial statements as well as the reporting timeliness of all FMC-reporting entities over the past three years.
Jacco Moison, Head of Audit, Financial Reporting & Climate Related Disclosures, says high‑quality financial reporting is critical for investor trust during periods of heightened risk.
"Investors need to be able to understand how relevant market conditions were considered at the time the financial statements were prepared. This becomes even more important when economic instability, global tensions and rapid market shifts are creating greater uncertainty.
"High quality reporting enables investors to assess resilience, understand emerging risks and make well informed decisions with confidence," he says.
"We found that while many entities are meeting expectations, weaknesses in disclosures and delays in reporting can undermine trust in the market. Now is the time for directors and management to reinforce robust governance, strengthen financial reporting processes and ensure transparency in areas requiring significant judgement."
While overall standards are high, several recurring themes continue to affect the quality and clarity of financial reporting. These include disclosures that lack sufficient transparency around key judgements, assumptions and risks; inconsistencies or gaps in explaining how significant balances are measured; and areas where entities could better communicate the basis for complex estimates.
The review also noted ongoing challenges in newer or more judgement‑heavy standards, as well as inconsistencies between financial and climate‑related reporting that may undermine user confidence.
A positive indicator of stronger processes and awareness of reporting obligations was that late filings declined over the period reviewed. Delays in filing may signal deeper governance concerns and can deprive investors of critical information.
The review also outlines the regulatory responses taken by the FMA over the review period, which ranged from feedback letters to infringement notices, licence cancellation and civil proceedings for significant or repeated non‑compliance.
The FMA emphasises that directors are ultimately responsible for ensuring the accuracy and completeness of financial statements.
"High‑quality financial reporting is a fundamental accountability to investors," says Mr Moison. "We encourage all reporting entities to reflect on these insights, strengthen their internal controls, and maintain the transparency needed to support confidence in New Zealand's financial markets."
Find the full report on our website here
