We're lucky to have charities to help fill the gaps in society where there aren't quite enough resources to go around.
They provide necessary support for education, sport, poverty and other community initiatives.
But no one has ever said that charities get an easy time.
We see all the time how their financial resources are stretched thin especially where a lot of their support is voluntary. It is not always straightforward to find volunteers with accounting knowledge or funding for operating costs such as book-keeping.
The introduction of some simplifications for charities' accounting departments are welcome.
The changes allow them to continue to focus on what's important, their charitable purpose, and standardise reporting based on their size.
The changes will allow smaller registered charities -- estimated to be 95 per cent of them, or about 26,000 registered charities in New Zealand -- to simplify the reporting of their financial statements.
Compliance requirements can be very difficult for small organisations, which run on the bare minimum of funding, to meet.
But fiscal responsibility and management are vital to grow an organisation. So is the ability to access, interpret and articulate financial information as performance feedback and to assist with plans for the future.
The XRB (External Reporting Board) is responsible for developing and issuing accounting standards.
The new four-tier reporting standard for charities comes into effect on April 1, and applies to a full financial year that starts and ends after that date.
The good news is you don't need to wait until then to change your reporting.
In fact, it might be better for charities to start to adopt the changes earlier to familiarise themselves with the new reporting formats.
Reporting standards will be based on expenses or operating payments and public accountability.
For the 95 per cent that these standards will apply to you're in tier three if your annual expenses are under $2 million and there is no public accountability.
Public accountability applies if as a charity you hold cash or assets for people and it's one of your main activities to do so.
• Jeremy Tauri is an associate at Plus Chartered Accountants.
By Jeremy Tauri
Phone: (09) 438 3322
Fax: 438 8455
134 Bank Street, Whangarei
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