New Statement of Service Performance standard issued for Tier 1 and 2 PBEs

At the beginning of November 2017, the NZASB approved the new financial reporting standard, PBE FRS 48 “Service Performance Reporting”.

It applies to those Tier 1 and 2 Public Benefit Entities (PBEs – for example, not-for-profits and charities) with financial reporting periods beginning on or after 1 January 2021.

Here’s a summary of what the new standard requires of PBEs, they should:

  1. Present service performance information and financial statements in the same general purpose financial report
  2. Provide users with:

a.               Sufficient contextual information to understand why the entity exists, what it intends to achieve in broad terms over the medium to long term, and how it goes about this; and
b.               Provide users with information about what the entity has done during the reporting period in working towards its broader aims and objectives

3.      Disclose those judgements that have the most significant effect on the selection, measurement, aggregation, and presentation of service performance information reported in accordance with this standard that are relevant to an understanding of the entity’s service performance information

4.      Clearly identify the service performance information presented in accordance with the Standard

5.      Provide comparative information.

The standard says that in the SSP, a PBE shall provide users with an appropriate and meaningful mix of performance measures and/or descriptions for the reporting period. The performance measures and/or descriptions used by an entity to communicate its service performance may be:

(a)      Quantitative measures: For example:
the quantity of goods and services, the cost of goods and services, the time taken to provide goods and services, levels of satisfaction using a rating scale on a questionnaire or survey, and numerical measures for service performance objectives or goals

(b)      Qualitative measures: For example: descriptors such as compliance or non-compliance with a quality standard, ratings such as high, medium or low, or ratings assigned by experts; or

(c)      Qualitative descriptions: Examples of qualitative descriptions are those based on participant observations, open-ended questions on interviews and surveys and case studies. For example, how did an entity’s service performance activities change the well-being and circumstances of a client group?

There is no format and layout of the SSP specified in the standard, essentially it is up to each PBE to decide how it should look and how it will meet the needs of the users of the financial report. The standard does suggest, that an entity may find it helpful to present the required information as answers to questions such as:

  • Who are we?
  • Why do we exist?
  • What did we do?
  • How did we perform?

Over the next couple of years, Tier 1 and 2 PBEs should consider how their SSP should look like and what measures and descriptions they could use.  If you have any questions on the new financial reporting standard please get in touch with your Moore Stephens Markhams Audit Advisor.

Published summer 2017.

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