Tier 3 minimum categories

The Tier 3 standard sets out minimum categories that must be used in preparation of the Statement of Financial Performance and Statement of Financial Position.

For each statement these would be:

Statement of Financial Performance

Revenue categories

• Donations, fundraising and other similar revenue
• Fees, subscriptions and other revenue from members
• Revenue from providing goods or services
• Interest, dividends and other investment revenue
• Other revenue
  
  

Expenses categories

• Expenses related to public fundraising
• Volunteer and employee related costs
• Costs related to providing goods or services
• Grants and donations made
• Other expenses

These minimum categories show what must be kept separate in the Statement of Financial Performance. They are designed to make it simple for readers of the performance report to quickly and easily understand where revenue came from and expenses went. Presenting the information in this way helps to tell your charity’s story.

Statement of Financial Position

Asset Categories

Current Assets

• Bank accounts and cash
• Debtors and Prepayments
• Inventory
• Other Current Assets
  
  

Non-Current Assets

• Property, plant & equipment
• Investments
  
  

Liabilities

Current Liabilites

• Bank Overdraft
• Creditors and accrued expenses
• Employee costs payable
• Unused donations and grants with conditions
  
  

Non-Current Assets  

• Loans
• Other non-current liabilities

These minimum categories show which types of assets, liabilities and accumulated funds must be separately distinguished. They are designed to make it clear to readers of your performance report the main types of assets available for use by the charity and the liabilities and accumulated funds which have claims against these assets. Presenting this information provides a picture of the health of your charity at the date of your financial statements. 

What if we want to provide more detail?

The notes section of the Performance Report can be used to provide more detailed information. For example, the amount included in the ‘Donations, fundraising and other similar revenue’ category can be broken down into separate fundraising events. These might include street collections, postal appeals, or raffles. A charity may choose to do this so it can compare the success of different fundraising events over time. Similarly 'Investments' may be presented in one line on the statement of financial position and then broken down into separate investments within the notes. This could then detail the amount of investment in shares, bonds, and long term deposits. Displaying this information can make it clear where a charity has invested its funds and its strategy for managing its finances.

Can we change or delete the categories?

You can’t change the type of information that must be reported within each category. However, you can split a category or rename it to make it more meaningful for your charity, or to help readers better understand the information.  For example, a charity that provides classes and sells education books, might want to rename the category ‘Revenue from providing goods or services’ and change it to ‘Class fees and book sales’. Or a charity that only holds inventory as promotional materials for distributions at fundraising events might want to rename the inventory category materials for fundraising events.

A long list of items will make it difficult for readers to understand your overall story, so only make changes which are important and useful to your charity. Remember that the notes section is where you can add extra details.

If a category doesn’t apply to your charity and there is nothing to record, you can simply delete the category. For example, if your charity doesn’t have members, the ‘Fees, subscriptions and other revenue from members’ category will not be relevant and could be deleted.

It is important that any changes you make to the categories are used consistently in the future so that the information can be compared over time.

Examples for Revenue Categories

Examples for Asset Categories

What types of transactions are included in the categories?

The Tier 3 guidance notes and the Tier 3 standard include information about what type of transactions and items should be reported in each of the categories. A charity will need to read this information and use its best judgement to decide which category a particular item or transaction best fits in. What’s important is that information is reported consistently so it can be compared over time.

Here are some examples:

Recording GST

If your charity is registered for GST, you can choose to record amounts in the performance report as including GST or excluding GST. Once you decide how your charity will record GST, you’ll need to be consistent throughout the performance report, and from each financial year to the next. If your charity isn’t registered for GST, record all amounts with the GST included. You may find it easier to record all amounts with the GST included even if you are registered for GST because these are the amounts that actually come in and out of your bank account. This will make preparing the Statement of Cash Flows in the performance report a bit more straightforward.

You’ll also need to state in the Statement of Accounting Policies in the performance report whether you have recorded amounts in the performance report as including or excluding GST.