A desk-top review of each financial report is performed in the wider context of the annual report and any stock exchange announcement for the period. While these were not comprehensively reviewed, any obvious issue related to continuous disclosure, directors' and officers' relevant interests' disclosure or substantial security holder disclosure was followed up.

Matters raised in the review are referred to as "significant matters" or "other matters".

The Commission's approach is to write to issuers whose reporting raises matters of significance. A matter is considered "significant" if it is considered of regulatory importance and further clarification or information is needed. For example, the Commission is likely to write to issuers where a matter:

Other matters are matters the Commission believes warrant further follow-up with the issuer and include matters where the facts or treatment is unclear.

The Commission writes to issuers requesting additional information and in some cases asks issuers to revise or enhance disclosures in future financial statements.

When writing to an issuer in respect of significant matters, we also include other matters found in the review.

The Commission's policy is not to write to issuers whose reports raised only other matters, other than if the numbers of those matters are so numerous that it is useful to provide feedback to the issuer. This is also the case for early adopters of NZ IFRS, where only other matters have been raised the Commission believes it is useful to write to the issuer to provide feedback.

Financial reporting requires the exercise of professional judgement. The Commission takes this into account when reviewing the financial reports and determining which matters to follow up.

In each case where the Commission writes to an issuer, we have also sent a copy of the letter to the issuer's auditor. This practice acknowledges the role of auditors in helping to maintain and improve the standard of financial reporting in New Zealand. Auditors have an important role in encouraging companies to comply not only with the statutory requirements but also with best practice. The Commission encourages auditors to be vigilant in the audit of financial statements. High quality external auditing is critical to integrity in financial reporting and to the efficiency and integrity of the securities markets.

Where issues of a much more serious nature are identified that may have a significant market impact, the matter is removed from the Financial Reporting Surveillance Programme and considered separately as an enforcement matter.

Referrals are made to the relevant body where matters identified under the surveillance programme are likely to be considered a breach of the:

For referrals to NZICA, as a matter of policy, the Commission will refer the directors, chief executive officer, chief financial officer and auditor of the issuer where the individuals concerned are members of NZICA.