Many incorporated societies have now re-registered under the Incorporated Societies Act 2022. For some societies, this means their financial reporting requirements have changed.
If your society previously prepared Special Purpose Financial Statements (SPFS), it is worth checking whether that approach is still appropriate. The reporting requirements now depend on the size and circumstances of your society.
What reporting requirements apply to your society?
The first step is to work out whether your society is a ‘small society’ under the new Act.
If your society is not a registered charity or donee organisation, and in each of the previous two financial years it had total operating payments of less than $50,000 and total current assets of less than $50,000, it may meet the definition of a small society.
Small societies have minimum financial reporting requirements under the Incorporated Societies Act 2022 and do not need to apply the XRB accounting standards.
If your society does not meet the small-society criteria, it will generally need to use one of the External Reporting Board (XRB) reporting tiers. The tier that applies depends on your society’s size and circumstances.
This means that re-registration itself does not automatically determine which reporting requirements apply. It is important to establish which requirements apply to your society.
One important change: reporting on what your society does
If your society needs to report under Tier 3 or Tier 4, one of the most noticeable changes may be the requirement to include a Statement of Service Performance (SSP).
The SSP is about more than the numbers. It explains what your society is working to achieve and the significant activities it has undertaken during the year. Where practical, it can also include information about what was achieved.
For societies that have not previously prepared this type of information, it may require some planning during the year rather than trying to pull everything together when the financial statements are due.
Much of this information may already exist within your society. The key is making sure it is captured throughout the year and reported in a way that meets the applicable requirements.
What should you do now?
If your society has re-registered under the Incorporated Societies Act 2022, it is worth checking that you are using the right reporting requirements for your society.
We recommend talking to your accountant or adviser to confirm:
- whether your society meets the definition of a small society;
- if not, which XRB reporting tier applies to your society; and
- if Tier 3 or Tier 4 applies, what information you need to collect during the year for your Statement of Service Performance and other reporting requirements.
Checking this early can help avoid surprises when your annual financial statements are being prepared and make it easier to gather the information you need throughout the year.
Helpful resources
The Companies Office and External Reporting Board (XRB) provide guidance and resources to help incorporated societies understand and meet their financial reporting requirements.
Companies Office – financial reporting standards for small societies
https://is-register.companiesoffice.govt.nz/help-centre/meeting-your-annual-filing-requirements/financial-reporting-standards-for-small-societies/
XRB – resources for incorporated societies
https://www.xrb.govt.nz/standards/accounting-standards/incorporated-societies/resources/
XRB – Tier 3 NFP reporting requirements
https://www.xrb.govt.nz/standards/accounting-standards/not-for-profit-standards/standards-list/reporting-requirements-for-tier-3-not-for-profit-entities/
XRB – Tier 4 NFP reporting requirements
If your society is a registered charity, Charities Services also provides guidance and resources on Tier 3 and Tier 4 reporting.
Charities Services – Tier 3 reporting : https://www.charities.govt.nz/annual-reporting/tier-3
Charities Services – Tier 4 reporting : https://www.charities.govt.nz/annual-reporting/tier-4
Want to know more about how an audit can benefit your society? Read our article, https://bvoaudit.co.nz/audits-for-incorporated-societies/
If you are unsure which reporting requirements apply to your society, talk to your accountant or adviser, or contact the BVO Audit team for guidance.
