Does your Tier 4 charity control another or other organisations?

Control for financial reporting purposes is defined as when an entity controls another entity when the entity is exposed, or has rights, to variable benefits from its involvement with the other entity and has the ability to affect the nature or amount of those benefits through its power over the other entity. Tier 4 charities in this situation may need to include information about these organisations by providing a consolidated performance report.

Where there is a control relationship the operating payments of the charity are combined with the organisation/s they control. This could mean that the charity is required to report in a higher tier where consolidation is required. The combined expenditure does not include transactions between the organisations within the reporting entity.

For example, a charity’s annual operating payments are $100,000 (thereby qualifying for Tier 4), the annual operating payments of a separate organisation they control are $50,000, and they calculate payments between the two organisations were $20,000. The combined operating payments would be $130,000 and the charity would be required to report in Tier 3. Because Tier 3 requires consolidation the charity would need to prepare a consolidated performance report. If the combined operating payments total less than $125,000 each entity may continue to report separately under Tier 4.

If your charity determines that it controls organisations and needs to report in Tier 3, you must follow the processes for consolidation in the “Tier 2 Standard PBE IPSAS 6: Consolidated and Separate Financial Statements” (before 1 Jan 2019) or “PBE IPSAS 35: Consolidated Financial Statements”, even if you are still eligible to prepare your performance report in accordance with the Tier 3 standard. Refer to the External Reporting Board’s website ( to download these standards. For guidance on Tier 3 performance reports refer to the Tier 3 guide, or the resources on our website.