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Another thing to be happy about is that our larger charities, fondly known in the accounting world as “Tier 1 or 2 Not-For-Profits (NFPs)”, are now required to report service performance information, alongside their financial information.
This brings another layer of compliance for NFPs but also means that those of us who are interested in knowing how a charity has performed – say, our local foodbank or hospice – will be able to find this information easily. All charities are required to file their annual returns, including their financial statements, on the Charities Register. The register provides information on all registered charities, freely, to all interested parties.
So soon, along with finding out whether charities that you have contributed time or funds to, or are involved with in some capacity, have done well financially, you will also be able to find out whether they have been achieving their purpose and delivering valuable goods and services to the community.
The PBE FRS 48 Service Performance Reporting Standard governs this reporting and it was issued by the External Reporting Board (XRB) in November 2017. All good things take time and service performance reporting is no different. Adoption of this standard was delayed from 2021 until 2022 as a result of Covid impacting the work of charities and the XRB not wanting to place larger charities under additional pressure.
Service performance reporting for smaller charities, fondly known as Tier 3 and 4 NFPs, came into effect in 2016, so those charities have had a few years to fine-tune their performance reporting.
Chartered Accountants ANZ has been showcasing the best performance reporting within the charity sector since the Charity Reporting Awards were introduced in 2018. The Awards celebrate good practice among registered charities in adopting the performance reporting standards, which provide greater transparency and consistency across the sector.
If you want to see examples of what good service performance reporting looks like, the efforts of this year's Charity Reporting Awards recipients are a great starting point. Baker Tilly Staples Rodway was proud to sponsor the Tier 3 winners, Parent Aid North West. They do a fantastic job of providing at-home support for new parents, those with a growing family of little ones, or parents who need extra help – for example, after an accident.
The other great news is that the XRB has updated the Tier 3 and Tier 4 standards. One of the key changes was to ensure that the standards are written in “plain English” and avoid the complex language and terms normally reserved for accounting standards.
An example of this is the title of the Tier 3 standard, which has changed from “Public Benefit Entity Simple Format Reporting – Accrual (Not-for-profit)” to “Reporting Requirements for Tier 3 Not-for-Profit Entities”. This is a fantastic Kiwi innovation that we should be proud of, alongside Neil Finn and pavlova. As part of its review, the XRB took on board feedback from those who tried hard to navigate earlier iterations of these standards.
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