There have recently been a few changes impacting charities and other NFP organisations in New Zealand. For the benefit of our readers involved in the sector, we summarise some of the key ones.
Free Seminars for Medium Sized Charities
The External Reporting Board (XRB) and DIA Charities Services are running a national roadshow of free seminars during October 2014 for charities that have less than $2m in annual operating expenses. These charities will have to apply the new accounting requirements that become mandatory in 2015. Hence the free, two-hour seminars are aimed at registered charities that will be able to report using Simple Format Reporting standards.
- The new legislative requirements for registered charities to follow XRB Accounting Standards from 1 April 2015
- An overview of the Simple Format Reporting Standards
- How the final standards differ from the proposed standards as a result of consultation with the sector during 2013 (which was the focus of the last seminar series)
- What charities need to do now to get ready to apply the Simple Format Reporting Standards next year, and
- Future opportunities to learn more about the standards and how to apply them.
Even if you are not a registered charity but are a not-for-profit organisation we suggest these seminars may also be of use to you as they explain the accounting standards that will become generally accepted accounting practice for NFP entities in NZ in future.
Visit the XRB website www.xrb.govt.nz for details, dates, and to book.
Final Suite of Accounting Standards Issued
The External Reporting Board (XRB) has now issued the final suite of accounting standards; this set relating to Public Benefit Entities for Not-For-Profit entities. This now essentially completes the issue of all new accounting standards required for the new Accounting Standards Framework in New Zealand which the XRB issued in April 2012.
This most recent release of standards will apply to public sector entities and not-for-profit entities that prepare financial statements that comply with Tier 1 or Tier 2 reporting requirements. i.e. those that are publically accountable or have annual operating expenses exceeding $2m. Standard XRB A1 specifies the tiers of reporting for all entities that are required to apply standards issued by the XRB.
The PBE Standards and PBE Framework are effective for reporting periods beginning on or after 1 April 2015. They can be applied earlier by not-for-profit entities as long as all the pronouncements are applied at the same time.
These PBE Standards and the Public Benefit Entities’ Framework (PBE Framework) incorporate enhancements for not-for-profit entities.
The enhancements include terminology changes and examples suitable for not-for-profit entities, as well as some guidance for not-for-profit entities. The enhancements should not affect the requirements for public sector entities.
The standards and the PBE Framework are available on the XRB website www.xrb.govt.nz.
We understand that the XRB is in the process of finalising explanatory guides to accompany the PBE Standards. These are expected to be issued during the fourth quarter of 2014.
New Accounting Standards – Should we adopt them early?
Now that all the new accounting standards for charities have been released, some entities are beginning to ask if they should adopt them early?
As a generalisation: entities required to adopt Tier 1 or Tier 2 accounting standards may find these more complex than what they are currently adopting. Conversely, entities moving to Tier 3 or Tier 4 are likely to find these accounting standards easier than what they are currently using.
The decision to adopt early will vary on a case by case basis. However our general advice is that for entities required to comply with:
- Tier 1 or Tier 2: for most, we suggest not adopting early as the cost to adopt early is likely to outweigh the benefits. Also these organisations will need to do some preparation work regarding comparative balances and an opening balance sheet which will take time to prepare.
- Tier 3 or Tier 4 – we suggest you consider adopting these early. In most cases the new standards will be easier and hence early adoption may be beneficial.
For more information refer to our earlier more detailed article on this topic: /home/news/news-items/2014/7/10/adopting-new-accounting-standards-for-charities.aspx?tag=1402