Statutory audit and review requirements

Changes to the Charities Act 2005 created statutory audit and review requirements for medium and large registered charities. The current thresholds have come into effect from 1 January 2022  

Are you affected?

If your total operating expenditure for each of the previous two accounting periods was:

  • over $550,000 (medium) –  your financial statements must be either audited or reviewed by a qualified auditor
  • over $1.1 million (large) – your financial statements must be audited by a qualified auditor.

Charities that are required by statute to have an audit or review will also have their non-financial information (e.g. service performance reporting) audited or reviewed.

What is the difference between audit and review?




Level of assurance

A reasonable or high level of assurance about whether the financial statements as a whole are free from material errors or fraud.  Reasonable or high assurance is not absolute assurance.

Limited assurance about whether the financial statements as a whole are free from material errors or fraud. Limited assurance is less than reasonable assurance.

Report provided

Independent Auditor’s Report

Opinion is expressed in a positive form, e.g. “The financial statements are free from material misstatement.”


Independent Review Report

Conclusion is expressed in a negative form, e.g. “Nothing has come to our attention that causes us to believe that the financial statements are not free from material misstatement.”

Nature of procedures

Procedures normally involve detailed tests of accounting records using techniques such as inspection, observation, confirmation, recalculation and re-performance, as well as inquiry and analytical review.

Procedures are primarily based on inquiry and analytical review.

Assurance standards

Auditing Standards(external link) – All 36 ISAs (NZ)

Review Standards(external link) – Review Standards: ISRE (NZ) 2400 and NZ SRE 2410

What if our rules say we need an audit, but we're below the statutory audit and review threshold?

Registered charities with total operating expenditure of less than $550,000 are not required by law to have an audit or review. However, you may be required by your rules (e.g. trust deed, constitution, or charter) or as a condition of receiving a grant to have your financial statements audited or reviewed. These charities may choose who performs the audit; it does not need to be a qualified auditor unless stated in your rules.

If a registered charity that does not have a statutory requirement to have an audit or review of its performance report elects to have an audit or review, the charity can decide whether it wants the Entity Information and Statement of Service Performance included in the assurance engagement. In these circumstances:

  • The engagement letter from the auditor needs to set out the scope of the engagement and reporting
  • The audit or review report needs to be clear about what information in the Performance Report the conclusion covers.

When deciding whether to have the non-financial information in the Performance Report audited or reviewed, the charity should carefully consider the following:

  • What are the rules of the charity? Does the Constitution or Trust Deed specify what is to be audited or reviewed?
  • Will any other users of the Performance Report (e.g. funders or a bank) require the non-financial information to be audited or reviewed?
  • The scope of the assurance engagement should be thoroughly discussed with the auditor prior to them commencing their work so that there are no surprises for either party at the conclusion of the audit or review.

 Neither an audit nor a review will guarantee complete accuracy of financial statements, or detect fraud.

Who are qualified auditors?

Statutory audits and reviews must be done by a qualified auditor. Qualified auditors are defined under sections 35(external link) and 36(external link) of the Financial Reporting Act 2013(external link).

Chartered Accountants Australia New Zealand  offers qualified auditor recognition through the New Zealand Institute of Chartered Accountants (NZICA) which is their New Zealand regulatory body. You can find the NZICA Register of Qualified Auditors on the Chartered Accountants Australia New Zealand website(external link).

CPA Australia is another professional accounting body which also provides recognition. You can find out more about CPA Australia’s qualified auditor recognition on their website(external link).

Where can I find out more?

Information will be updated on the Charities Services website as it becomes available.  

The External Reporting Board (XRB) has also published a booklet on small charities' assurance needs. You can access it through this link [PDF, 189 KB].