New financial reporting standards for public benefit entities

Charities: items to consider

With the new financial reporting standard changes coming into effect for public benefit entities with balance dates commencing 1 April 2015, we’ve listed a few things your governing board and financial statement preparer should consider:

  • Who is the reporting entity? Is there just one entity, or do branches or subsidiaries need to be consolidated with your financial statements?
  • What tier will you report under?  Refer to the table below.


Non-financial information – for tiers 3 and 4

  • Decide on how you will disclose the charity’s information – a page that describes:
    • The legal name of the charity and the legal basis and type of entity and its registration number
    • The purpose or mission
    • The structure and governance of the charity
    • The main sources of the charity’s cash and resources
    • The main methods used by the charity to raise funds
    • The charity’s reliance on volunteers and donated goods or services
    • Contact details
    • Any other information on the charity that you wish to disclose to readers.
  • Collate information for your statement of service performance:
    • Description of the entity’s outcomes (optional for tier 4): – what your entity is seeking to achieve in terms of its impact on society
    • Define your outputs, quantify to the extent practicable. Outputs being goods or services delivered during the year. A charity should put in place systems to record actual outputs delivered.


Financial information

Those preparing your financial reports should consider the following in relation to the presentation of financial information:

  • Look at the minimum disclosures required in the financial reporting standards and consider whether your accounting system records this adequately
  • How you identify and track grants with conditions
  • How you identify and record related party transactions
  • How to appropriately record and present goods or services received “in kind”
  • For tiers 1 to 3, whether the schedule of property, plant and equipment is adequate for readers needs.


The financial reporting standards can be found on the XRB’s website here.

Tier 3 and 4 Public Benefit Entities: New accounting approaches and disclosures

Public Benefit Entities Tier 3 and 4 NZ


Here’s a closer look at some of the new items that not-for-profit entities will need to prepare:

Statement of Service Performance

A statement of service performance is a narration that explains what the entity was seeking to achieve (outcomes) and what it did (outputs). It is compulsory for all Tier 3 and 4 entities and is required to be audited. It is important that information included within the statement of service performance is consistent with financial information included elsewhere in the performance report.

Statement of Cash Flows

“The purpose of the statement of cash flows is to provide information about the cash flows of the entity, which can have a different timing to the accruals that are reported in the statement of financial performance. Cash flow information allows users to determine how the entity

has received cash, and how the cash was used during the year. An understanding of the timing and certainty of cash flows is helpful to users in making decisions about the sustainability of the entity and whether resources have been allocated effectively.” (source: PBE SFR-A, published by XRB).

Accounting treatments

The new standards provide comprehensive guidance on when and how to record certain transactions. We recommend that your governing body and accounting team read the standard to get an understanding of any changes that need to be made in current treatments.

One change is that you are no longer allowed to off-set income and expenses or off-set liabilities and assets in the financial statements. Each have to be shown as separate ledger accounts.

Serious about your success?