Updated not-for-profit accounting standards – what’s new in Tier 4

The External Reporting Board (XRB), the government agency responsible for setting accounting and auditing standards in New Zealand, has issued revamped standards for Tier 3 and Tier 4 entities, which are mandatory for many not-for-profits to follow.

The new standards come into effect from financial years ending 31 March 2024 at the latest.

The Tier 4 standard has been simplified to the point that the financial information takes a back seat in the ‘performance report’, and is now probably not useful for anything else but to discharge the reporting obligation to the Charities or Societies registers. It is modeled around a two-page template issued early in 2022, which does not seem to be recognised by most users as an actual financial report (see here for that template). The old template can no longer be used.

There is still a ‘Statement of Receipts and Payments’, with mandatory categories. Assets and Liabilities will be reported in a list format, not necessarily even with figures, and as a Note rather than a financial statement. The majority of the new Tier 4 ‘performance report’ is now taken up by ‘service performance’, entity information, and compulsory Notes.

For reporting to members, funders or other stakeholders, organisations may want to look at creating a somewhat more solid financial report that can enable some financial planning as well.

It is unlikely that CCA can accept review or audit engagements for those new Tier 4 reports, because of the rudimentary nature of the financial information, and we will have conversations with our clients about how your reporting and assurance needs can be best met.