Generally, GAAP is a word that is widely used in the field of accounting. In summary, the term GAAP refers to an established set of guidelines, principles and practices that are used universally in the accounting field mainly to prepare and homogenize any set of financial statements that are meant to be used and viewed externally (Arline, 2015). These established set of principles assist the stakeholders, the financiers and the creditors to have a clear understanding of the operations of a company and also for comparison purposes. Therefore, firms are required to adhere to these established accounting standards particularly when reporting on their financial information (Arline, 2015).

In New Zealand, the field of accounting has with no doubt undergone thru significant modifications in its presentation of financial information especially in the last 20 years (Stinchcombe, 2015). Largely, the modifications have really impacted the following key areas in the accounting field:

  • Which type of bodies are needed to present their financial statements following the generally accepted accounting practice (GAAP) (Stinchcombe, 2015).
  • What system of GAAP is compulsory and permitted for every category of body or entity.
  • Which type of entities are required to undergo an audit.
  • Who may or may not conduct a financial audit on financial statements of the bodies obligated by law to be evaluated or audited (Stinchcombe, 2015).

However, despite the changes the users of financial statements in New Zealand can be assured of statements that present information that is beneficial to stakeholders, creditors, or other parties are responsible in providing or may possibly offer resources to a firm or nonprofit bodies. Additionally, in line with the XRB (External Reporting Board) of New Zealand, financial statements shall also include the non- GAAP financial measures such as, EBITDA prior to G&A, EBIT before non-trading, Non-trading items, EBIT after non-trading items, Total NPAT exclusive of non-trading and capital expenditure comprising intangibles (Class Doc week 53).


Arline, K. (2015), GAAP: Standards & Rules for Accountants. Retrieved on 12th March 2016 from

Class Doc week 53 (2016), Non-GAAP financial measures.

Stinchcombe, J. (2015), Accounting legislation change – mind the GAAP. Retrieved on 12th March 2016 from



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