Fundraising – how to gain more sponsorships using marketing
In our previous articles we have established that now is the time to take stock and adapt to ways of...
It is hard to believe it has been five years since the Tier 3 and 4 Not-For-Profit standards were introduced. Five years of coming to grips with preparing statements of service performance celebrating the goods and services we have delivered, and the progress charities have made toward their charitable goals.
It would be fair to say that the introduction of these standards was a big learning curve for all involved. Despite this, many charities rose to the challenge, preparing some fantastic Performance Reports using the standards; which is both a credit to the sector and invaluable encouragement to those reading these reports. The annual CA ANZ Charity Reporting Awards have recognised some of these great reports. Some of you may be preparing reports that rival these but have not been confident enough to submit your nomination. If so, we encourage you to enter this year – there are financial prizes to be won as well as positive recognition for your charity.
With most things, there is likely room for improvement. While the External Reporting Board, with the input of Charities Services and Chartered Accountants Australia and New Zealand, worked hard on developing the standards to be as user friendly as possible while achieving some worthy goals (which included improving the quality and comparability reporting), five years on is a great time to review the standards and think about how they could be improved.
The New Zealand Accounting Standards Board (NZASB) has begun a post-implementation review of the Tier 3 and 4 standards and is really keen to hear your feedback, both good and bad, on how the standards are working. Are they hitting the mark and achieving the goals that they set out to achieve?
The NZASB has released a short and sweet Request for Information asking for feedback on the standards overall as well as feedback on specific issues you may have encountered.
Without wanting to lead feedback in a particular direction, the NZASB is aware that some entities would like the standards to cover a broader range of transactions and allow more options. Based on areas that have come to our attention, some questions you may want to think about are:
The NZASB are mindful of the fact that a large number of charities are manned by volunteers and have also prepared an online survey for you to provide feedback quickly and painlessly.
More information of the NZASB’s Request for Information and the online survey can be found here. Help the NZASB to refine and improve these standards so that they can best meet the information needs of users and keep improving the overall quality of performance reporting across the charitable sector.
The current reporting standards were introduced in April 2015 and the Charities Act now requires all registered charities to use these standards. Implementing standards to improve accountability in the sector had been discussed for nearly two decades. Part of the reason why is that for-profit standards never fitted the not-for-profit sector and they required a degree of financial literacy that most small charities didn't possess. Accordingly, standards were introduced and New Zealand now has the first cash standard in the world designed especially for the very small organisations who report at Tier 4. The not-for-profit financial reporting standards represented a significant change in the way that charities do their financial reporting. Recognising that charities are vastly different in size, the standards were arranged into tiers to match the amount of reporting to a charity’s size. There are four reporting tiers and this review focusses on the standards used by the smaller charities in Tier 3 and Tier 4.
Tier 4 charities are those that have under $125,000 annual operating expenses and use cash accounting.
Tier 3 charities have under $2 million dollars’ worth of annual operating expenses and use the accrual system of accounting.
The NZASB’s review does not include consideration of the above thresholds for each tier. The threshold between Tier 2 and Tier 3 is not being considered as it has been reviewed previously. The Tier 4 threshold is not being considered as this is enshrined in legislation.
 Section 46 of the Financial Reporting Act 2013
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