Date posted: 19/09/2022

Larger New Zealand charities - are you ready to report service performance information?

We are in transition now!

In brief

  • Tier 1 and Tier 2 charities will be required to report service performance information
  • Full comparatives are required, even in the first year of application
  • Service performance information will need to be captured from 1 January 2021 for some charities

PBE FRS 48 Service Performance Reporting was issued in New Zealand in November 2017 and introduced requirements for Tier 1 and Tier 2 charities to report service performance information alongside their financial statements. This brings them into line with Tier 3 and 4 charities who have had to present a Statement of Service Performance since 31 March 2016 balance dates. It presents an opportunity for charities to tell their story through more than just financial information, as often the more important activities are shared through non-financial information.

When does it start?

Last year the NZASB deferred the effective date of PBE FRS 48 in acknowledgement that the COVID-19 pandemic would have resulted in some charities unable to implement the standard by its original effective date.

PBE FRS 48 is now effective for annual financial reports covering periods beginning on or after 1 January 2022. However, the standard must be applied fully retrospectively as there are no transition exemptions. This means service performance information for the previous period is required, including in the first year of adoption. The start of the previous period – 1 January 2021 – is the date of transition from which the information needs to be captured. Depending on balances dates: it has either passed or is fast approaching.

What do I need to do?

PBE FRS 48 establishes principles and high-level requirements for the reporting of service performance information rather than specifying detailed reporting requirements. There are five key aspects to implementation:

Selection – Deciding what to report is a critical factor, and materiality is integral to this decision. A mixture of quantitative measures and qualitative measures and descriptions is encouraged. Not every measurement or outcome should be reported and there should be a balance between positive and negative outcomes.

Measurement – Ensuring you have appropriate systems, processes, and controls in place to monitor and collect service performance information and record the evidence for auditing.

Aggregation – Aggregating information to an appropriate level, again this will be based on materiality decisions.

Presentation – Determining how to report the information in the most appropriate and meaningful way is key.

Disclosure – Documenting judgements that have the most significant effect on the selection, measurement, aggregation, and presentation of service performance information, as these will need to be disclosed.

Audit considerations

Service performance information is an integral part of a general-purpose financial report. The audit of the service performance information should be performed concurrently with the audit of the financial statements. NZ AS 1 The Audit of Service Performance Information sets out the new requirements for auditors in relation to service performance information. The effective date of NZ AS 1 has been deferred to periods beginning on or after 1 January 2023, but early adoption is permitted.

In New Zealand, financial statements prepared under New Zealand generally accepted accounting practice include “corresponding figures” (not “comparative financial statements”). The auditor’s opinion refers to “financial statements for the current period” and generally does not refer to the “corresponding figures" (except in certain circumstances). Where the previous period's service performance information has not been audited, the inclusion of an Other Matter paragraph is used to highlight this fact.  

Such a statement does not, however, relieve the auditor of the requirement to obtain sufficient appropriate audit evidence that the opening balances do not contain misstatements that materially affect the current period’s service performance information. But, opening balances are unlikely to be a factor even with quantitative measures because it is about what an organisation has achieved during the reporting period. However, if a material misstatement comes to light in the previous period’s service performance information the auditor should request that it be corrected.

Unlike the Statement of Service Performance for Tier 3 and Tier 4 charities, a separate statement is not required. Therefore, distinguishing between service performance information and "other information" could be challenging if they are not clearly differentiated.

Reporting standard

PBE FRS 48 Service Performance Reporting.

Download the Standard

XRB Factsheet

Answers some frequently asked questions.

Download the XRB factsheet

Explanatory Guide (XRB EG A10)

A more detailed ‘how to’ guide.

Download the Guide

Auditing standard 

NZ AS 1 The Audit of Service Performance Information.

Download the Standard

FAQs – The deferral of NZ AS 1

Answers some frequently asked questions about the deferral of NZ AS 1.