Does your Tier 4 charity control other organisations?

If your Tier 4 charity controls another organisation, you may need to include that organisation in your financial reporting.

Control, for financial reporting, means your charity can influence the other organisation and benefits from being involved with it. If this applies, you might need to prepare a consolidated performance report that combines financial information from both organisations.

When there's a control relationship, you must combine the operating payments of your charity and the organisation(s) it controls. This could push your total spending into a higher reporting tier. However, you don’t need to include transactions between the organisations in the combined total.

Example:

• Your charity spends $120,000 a year (Tier 4).
• The organisation you control spends $70,000.
• Payments between the two are $30,000.
• Your combined operating payments would be $160,000. This may mean you need to report under Tier 3, depending on your combined spending over the past two financial years.

If your combined operating payments are less than $140,000, you can continue reporting separately under Tier 4.

If your charity controls another organisation and needs to report under Tier 3, you must follow the consolidation rules in PBE IPSAS 35: Consolidated Financial Statements.