Audit and review requirements
If your charity has high operating costs, you may be legally required to have your performance report or financial report audited or reviewed by a qualified auditor.
When an audit or review is required
Your charity must meet audit or review requirements if your total operating expenditure for each of the previous two years was:
- Over $550,000 (medium) - you must have either a review or an audit by a qualified auditor.
- Over $1.1 million (large) - you must have an audit by a qualified auditor.
If your charity is required by law to have an audit or review, this will also cover your non‑financial information. This includes your Entity Information and Statement of Service Performance.
What's the difference between an audit and a review?
An audit and a review both provide independent assurance over your report. The main difference is the level of assurance and the work involved.
Audit | Review | |
Level of assurance | A reasonable or high level of assurance about whether the financial statements as a whole are free from material errors or fraud. Reasonable or high assurance is not absolute assurance. | Limited assurance about whether the financial statements as a whole are free from material errors or fraud. Limited assurance is less than reasonable assurance. |
Report provided | Independent Auditor's Report Opinion is expressed in a positive form, e.g. "The financial statements are free from material misstatement." | Independent Review Report Conclusion is expressed in a negative form, e.g. "Nothing has come to our attention that causes us to believe that the financial statements are not free from material misstatement." |
Nature of procedures | Procedures normally involve detailed tests of accounting records using techniques such as inspection, observation, confirmation, recalculation and re-performance, as well as inquiry and analytical review. | Procedures are primarily based on inquiry and analytical review. |
Assurance standards | Auditing Standards - All 36 ISAs (NZ) | Review Standards - Review Standards: ISRE (NZ) 2400 and NZ SRE 2410 |
What information is audited or reviewed?
If your charity meets the legal thresholds, the audit or review will cover:
- Financial information, including income, expenses, assets and liabilities.
- Non-financial information, including your Entity Information and Statement of Service Performance.
If your rules require an audit or review but you are below the threshold
If your charity’s operating expenditure is less than $550,000, you are not legally required to have an audit or review. However, you may still need one if:
- your trust deed, constitution or governing rules require an audit or review
- a funder or grant provider asks for one.
In these cases:
- you can choose who performs the audit or review (unless your rules require a qualified auditor)
- You can decide whether non‑financial information is included
- The auditor or reviewer must clearly state in their report what was and was not covered.
Should you include non-financial information if you are below the threshold?
Before deciding, consider the following:
- Check your rules
Review your governing documents to see what they require to be audited or reviewed. - Consider your stakeholders
Think about whether funders, banks or other users of your reports expect non‑financial information to be included. - Talk to your auditor early
Agree on the scope of the audit or review before the end of the financial year. This helps avoid misunderstandings later.
Who is a qualified auditor?
For statutory audits or reviews, a qualified auditor must meet the requirements under sections 35 and 36 of the Financial Reporting Act 2013.
You can find qualified auditors through:
More information
Download the External Reporting Board's booklet Small Charities’ Assurance Needs.
Updated November 2025