- The New Zealand Accounting Standards Board (NZASB) of the External Reporting Board (XRB) is conducting a post-implementation review of the Simple Format Reporting Standards applied by Tier 3 and Tier 4 NFP and public sector public benefit entities (PBEs)
- The NZASB are interested in hearing views on any issues or other matters that should be considered as part of this review
- CA ANZ will contribute to the consultation process and seeks member input in preparing the submission
Objectives and scope of the review
The NZASB is conducting a post-implementation review of the simple format reporting standard to assess whether the current standards are working as intended and achieving their objectives or if any changes are needed.
Over the past five years, NZASB has received feedback from constituents regarding the implementation of the standards. Some constituents have raised specific issues while others, particularly Tier 4 entities, have voiced more general concerns about the ability of volunteers to apply the requirements in the standards.
Some of the initial implementation issues have been largely resolved as people become more familiar with the requirements in the standards and the information they need to collect. Guidance issued by Charities Services and the XRB have been helpful in dealing with these initial implementation issues.
After the consultation period ends the NZASB will consider all comments and the appropriate courses of action. This could include proposing amendments to the Simple Format Reporting Standards, changing guidance and templates or providing additional support. The NZASB would seek feedback on any proposals to amend the standards.
Why it matters to comment on this PIR?
As per the Charities Services 2019/20 annual review there are 27,800 registered charities in Aotearoa employing more than 140,000 people work full time in the charitable sector which equal to 5% of the New Zealand workforce. Furthermore, this sector saw more than 235,000 volunteers contributing approximately 1.6 million hours every week.
Of these registered charities, approximately 93% use either Tier 3 or Tier 4 reporting tiers to prepare their financial reports. These stats suggest the importance of the NFP sector in New Zealand and therefore it is vital for you to contribute and take part in this post implementation review.
Other reviews and developments
The financial reporting landscape continues to evolve, and some other developments or reviews could change the number or type of entities required to apply the standards. Incorporated Societies Act 1908, is currently under review. A draft Bill to replace the Incorporated Societies Act 1908 has not yet been signed off by Cabinet for introduction to Parliament due to competing legislative priorities, especially those relating to the COVID-19 pandemic. The review aims to make societies more robust, help societies govern themselves and provide societies and their members with more constructive options when things go wrong.
Under the current 1908 Act, incorporated societies must lodge annual financial statements with the Registrar in their annual returns. There are no accounting standards to govern this reporting. Hence, it is largely left to each society to decide when and how to recognise transactions, how to measure them, and what to disclose. The proposals are aimed at promoting higher quality and more consistent reporting by requiring all societies to prepare financial statements in accordance with accounting standards issued by the XRB. There will also be a requirement to lodge them with the Registrar within six months of the end of the society's financial year. This means that incorporated societies will have the same preparation obligations as registered charities.
When is the deadline and what happens next?
There's still plenty of time for you to get in touch with us as the PIR closes on 31 March 2021. Your feedback will help NZASB decide what the Board need to do. This could include amending the standards (and guidance and templates), increasing education or developing more guidance.
CA ANZ will be contributing to this process and seeks member input in preparing the submission. Please provide your valuable input by emailing - firstname.lastname@example.org.
Further information on how to comment, question for respondents and access to the full request for information paper is available on the XRB website.Read more
Charities Services made available a webinar recording, covering: · Annual reporting obligations for Tier 4 registered charities · The performance report and how to use yours to benefit your charity · How to improve your reporting · Resources available to help you prepare to report · Q&A session with Charities Services’ staff. The aim of the webinar is to provide an understanding of what information Tier 4 charities must provide to Charities Services every year and why this is so important. WATCH RECORDING
Charities Services made available a webinar recording
- Annual reporting obligations for Tier 4 registered charities
- The performance report and how to use yours to benefit your charity
- How to improve your reporting
- Resources available to help you prepare to report
- Q&A session with Charities Services’ staff.
The aim of the webinar is to provide an understanding of what information Tier 4 charities must provide to Charities Services every year and why this is so important.Watch recording