New Reporting Standards for New Zealand Charities
After 1 April 2015, new reporting standards come into effect for registered charities. These new standards will provide greater consistency and transparency across the sector, bringing New Zealand’s Registered Charities in line with international standards. This information outlines these changes and how they will affect charities.
Once the changes take effect, Registered Charities will need to prepare financial statements in line with new standards set by the External Reporting Board (XRB), the independent Crown Entity responsible for developing and issuing accounting standards.
The standard that a charity uses will depend on that charity’s annual expenses or operating payments and whether the charity has public accountability, therefore four tiers of reporting requirements have been developed. This will allow smaller charities to prepare financial statements on a simplified basis, while larger charities will be required to use full accounting standards. We expect that most charities (around 95 percent) will report under Tier 3 and Tier 4.
When will charities have to prepare financial statements that comply with the new standards?
While the standards come into effect on 1 April 2015, they will only apply to a charity’s first full financial year that starts on or after 1 April 2015.
Your organisation may wish to use the standards before this time. This would give your charity the opportunity to become familiar with the new standards and prepare your charity before they become mandatory.
What support will charities get to help them use the new standards?
For smaller charities (those with expenses less than $2 million) the XRB have developed templates that show how the Tier 3 and Tier 4 standards can be applied in practice, with accompanying explanatory guides.
Charities Services will be supporting charities with education initiatives over the next two years. Watch the www.charities.govt.nz website for updates on when and where these initiatives will occur.