The new reporting standards are here and yes, they do affect your charity!
Posted on 20 June 2016
The new financial reporting standards are finally here – so what are they and how do they affect you?
Up until now, any form of financial reporting has been accepted from charities, but 1 April this year marked the introduction of the New Reporting Standards (NRS). NRS are a set of legal documents that set out the way all charities in New Zealand now need to present their financial information when it is submitted to Charities Services as part of their annual return. If this is all news to you then please take some time to read through the information on our website under the new reporting standards(external link) section before completing your annual return.
Here's a quick summary of changes:
- Instead of attaching financial statements, an annual report or any other form of financial information to your annual return, you now submit a “Performance Report”.
- The format and content of your Performance Report is prescribed in the standard for the Tier which is relevant for your charity. The smaller your charity is, the simpler the requirements are.
- The Performance Report contains financial and non-financial information, which is why it has been re-named.
- The annual return form has been re-written to reflect the changes as a result of the new reporting standards.
We understand this is a big change for charities, and we have staff available to answer your questions and help you through the process. We have also been reviewing as many annual returns as we can, and the main issues we’ve been seeing so far can be grouped into three categories:
Some charities are not yet aware of the changes:
These charities seem to be unaware that the way financial information should be presented has changed. It looks like they’ve just filed their financial report in the same format as last year. The format and content of the Performance Report required under the new reporting standards is quite specific. An optional template is available to help charities with the new requirements by ensuring they have included everything. The template, guidance notes and tutorials can be found on our website for Tier 3(external link) and Tier 4(external link).
Non-financial Information has been added to an old format set of financial statements:
These charities appear to be aware that there are new reporting requirements, but have used the same reporting format as last year, with some additional non-financial information. It’s great to see that charities are including non-financial information, but the format and content of the financial parts also needs updating. Having a look at the optional template may help those charities to identify where they need to update their reports to fully meet the requirements of the new standards.
Attempted to comply with the standard, but have room for improvement:
These charities have had a good go at creating a Performance Report, but a few things could be improved. In the first couple of years of this change, we will be focusing on making sure that as many charities as possible are adopting the new standards in the first instance, and then after that we will be focusing on improving the quality of the reporting. If you’ve made your best effort to comply with the standard, that’s great. As part of our compliance work, we will be checking a number of these reports in detail, and will give feedback wherever possible. We encourage you to revisit what you’ve done each year to see if there are any areas that could be improved upon.
Our website(external link) is the first place to look. We’ve created many resources to help you navigate through the process and encourage you to contact us if you have questions you would like answered. You can call our contact centre on 0508 CHARITIES or e-mail us at email@example.com.
Please also use your networks and discuss any issues with other charities, umbrella bodies or seek help from an accountant. The New Reporting Standards are here and they are compulsory for all registered charities so please don’t leave it until the last minute!