Public Benefit Reporting Assistance

December 13, 2016

Public Benefit Entities (PBE’s) have had to prepare financial statements in accordance with the new reporting requirements as issued by the Accounting External Reporting Board (XRB) for periods beginning on or after 1 April 2015. A PBE is defined as a reporting entity whose primary objective is to provide goods or services for community or social benefit and where any equity has been provided with a view to supporting that primary objective rather than for a financial return to equity holders.

The XRB has made changes to the PBE Standards by creating a ‘tier’ system of reporting. The tier a PBE fits into being determined by whether the entity has public accountability as well as its size in terms of the value of its operating expenses; as shown in the table below:   

 

Tier

Public Accountability

Size

Reporting Framework

Tier 1

Yes

Over $30m annual operating expenditure

Full PBE standards (Not for Profit)

Tier 2

No

Between $2m and $30m annual operating expenditure

PBE Standards Reduced Disclosure Regime (RDR) (Not for Profit)

Tier 3

No

Under $2m annual operating expenditure

PBE Simple Format Reporting – Accrual (Not for Profit)

Tier 4

No

Under $125,000 annual operating expenditure

PBE Simple Format Reporting – Cash (Not for Profit)

Each ‘tier’ has its own level of reporting requirements with the most significant disclosures being contained in the highest ‘tier’ (i.e. ‘tier’ 1). Entities can elect to report at a higher standard than the ‘tier’ they meet but they cannot elect to report at a lower ‘tier’. ‘Tier’ 1 and ‘tier’ 2 PBEs will apply PBE Standards based on International Public Sector Accounting Standards (IPSAS). ‘Tier’ 3 and ‘tier’ 4 PBE’s will apply PBE Simple Format Reporting – Accrual or Tier 4 PBE Simple Format Reporting - Cash accounting standards as appropriate. There are templates for ‘tier’ 3 and 4 on the XRB website.

The reporting requirements have had a significant effect on many of our clients and in particular registered charities. The transition has not been simple at all and the new reporting requirements have been very onerous for organisations. 

Our firm has assisted a number of clients with the transition and to ensure that the financial statements are in accordance with the XRB requirements. This includes assisting the entity with the Statement of Service Performance, Statement of Cash Flows, the new format of reporting, re-classifying opening balances, etc.

If you have any concerns and would like to discuss the new reporting requirements further please do not hesitate to contact:

Andrew Hastie                                                                                                         Jane Jackman
Principal                                                                                                                    Director

ahastie@nexiachch.co.nz                                                                               jjackman@nexiachch.co.nz

Article Author:

Andrew Hastie

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