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Answers to some frequently asked questions about the reporting requirements.
Financial reporting standards were introduced in 2015 to provide consistent, transparent information to the donating and taxpaying public. The reporting standards are based on a tier structure that reflects the size and complexity of the charity. Previously, there were a number of ways that you could present your financial statements.
The tier that you report under is determined by your annual expenses or operating payments for the previous two financial years. Go to Which tier will I use? for more information.
Yes. You still have to complete an annual return and attach financial statements, but now these financial statements must be completed in line with the reporting standards.
No. You will continue to report to Charities Services each year but the financial statements submitted along with the annual return need to meet the standards set by the External Reporting Board.
You let us know of your reporting tier in the relevant section of the annual return. The online annual return populates according to the information required by your particular tier. It is up to you to decide which tier you are eligible to use and best fits your circumstances.
Your organisation’s governing body may want to pass a separate formal resolution that confirms which reporting tier will be used. This helps with continuity if there is a change of treasurer or accountant and to formally record the decision. An example minute could read, "The Committee will report to Charities Services as a Tier 4 charity because our operating payments are below $140,000 and we use cash accounting".
This is the name for the information Tier 3 and Tier 4 charities file as well as their annual return. It is called a “performance report” rather than “financial statement” as it also includes non-financial information in the form of a 'Statement of Service Performance'. A performance report is a set of statements that collectively tells a charity’s story over the past financial year.
Currently, Tier 1 and Tier 2 charities do not have to provide non-financial information. However, the External Reporting Board has issued a standard which will require these charities to also provide this information. The requirement comes into effect from 1 January 2021. Go to Service Performance Reporting for more information.
A registered charity is a reporting entity. Some charities set up different entities to carry out their different activities (for example, a second hand shop, or a trust to manage properties). For the purposes of financial reporting, these things are considered part of the ‘reporting entity’ and you need to include information about them in your performance report. You should carefully consider whether any entities associated with your charity are under your control and should therefore be included.
We spoke with representatives of the charitable sector when we developed the new annual return form. We wanted to make sure that the new form was as easy as possible to understand and use, and that it collects information that supports transparency and accountability in the sector.
For all financial years ending on or after 31 December 2019 (due with Charities Services from 30 June 2020), Tier 3 and Tier 4 performance reports will need to include:
There is no requirement to physically sign the report and you may use a digital signature if you prefer. A digital signature can be as simple typing your name into the space in the template, but you can also paste in a full digital signature image if you prefer.
It is required under the Tier 3 and Tier 4 financial reporting standards that performance reports are signed to show they have been “authorised for issue” by the charity. By doing this, it tells the reader that officers(external link) of the charity have reviewed the report and are satisfied that it accurately explains the activities of the charity.
The person / people who can authorise your performance report for issue will depend on the rules of your charity. In most cases this will be one or more of the officers(external link) of your charity.
Information about the reporting standards, including any new resources, are included in our regular newsletter – click here to subscribe. The website will be updated as resources are developed, and emails are sent to let charities know about workshops or other opportunities to learn more about the reporting standards.