Financial reporting tools for Public Benefit Entities

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Public Benefit Entities (PBEs)


The definition of a public benefit entity (PBE) is as follows:

“PBEs are entities whose primary objective is to provide goods or services for community or social benefit, and where equity has been provided with a view to supporting that primary objective, rather than for a financial return to equity holders”

For-profit entities are reporting entities that are not PBEs.
 
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Public Sector PBEs


Public sector public benefit entities (Public Sector PBEs) are PBEs that are public entities as defined in the Public Audit Act 2001, and all Offices of Parliament.
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Not-for-profit PBEs


Not-for-profit public benefit entities (NFP PBEs) are reporting entities that are PBEs but that are not public sector PBEs.
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PBE Standards


PBE Standards are based on International Public Sector Accounting Standards as issued by the International Public Sector Accounting Standards Board (IPSASB).
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"Publicly accountable" entities


In accordance with the IASB definition, an entity has public accountability if:

(a) its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or
(b) it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. This is typically the case for banks, credit unions, insurance providers, securities brokers/dealers, mutual funds and investment banks.

Some entities may also hold assets in a fiduciary capacity for a broad group of outsiders because they hold and manage financial resources entrusted to them by clients, customers or members not involved in the management of the entity. However, if they do so for reasons incidental to a primary business (as, for example, may be the case for travel or real estate agents, schools, charitable organisations, co-operative enterprises requiring a nominal membership deposit and sellers that receive payment in advance of delivery of the goods or services such as utility companies), that does not make them publicly accountable.

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Entities deemed to be publicly accountable


Under XRB A1, an entity is deemed to be publicly accountable in the New Zealand context if it is:

For periods beginning on or after 1 April 2014

  • an issuer of equity securities or debt securities under a regulated offer;
  • a manager of registered schemes, but only in respect of financial statements of a scheme or fund;
  • a listed issuer;
  • a registered bank;
  • a licensed insurer;
  • a credit union;
  • a building society;
  • an entity or class of entities that is considered to have a higher level of public accountability by a notice issued by the Financial Markets Authority (FMA); and
  • an issuer under the transitional provisions of the Financial Reporting Act 2013.

An entity is not deemed to be publicly accountable if it is not considered to have a higher level of public accountability than other FMC reporting entities by a notice issued by the FMA

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Not-for-profit enhancements


The initial suite of PBE Standards was developed primarily with public sector entities in mind. The Enhancements to the PBE Standards for Not-for-Profit Entities enhance PBE Standards to make them appropriate for application by Tier 1 and Tier 2 NFP PBEs.
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This page contains content and resources that are relevant to Public Benefit Entities with requirements to prepare financial statements in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP).

Please view our other sites for content and resources relating to for-profit entities or visit our Financial Reporting in New Zealand homepage.

Accounting Standards Framework overview

Public Benefit Entities (PBEs) with statutory requirements to prepare financial statements are required to comply with PBE Accounting Standards as issued by the External Reporting Board (XRB).

The Accounting Standards Framework for PBEs has a multi-tiered structure, whereby entities will fall into Tier 1 by default, but can opt-in to a lower tier if they meet the criteria of that tier.

Public Sector PBEs
Public Sector PBEs are required to transition to the new suite of PBE Accounting Standards for reporting periods beginning on or after 1 July 2014.

Not-for-profit (NFP) PBEs
Not-for-profit PBEs are required to transition to the new suite of PBE Accounting Standards for reporting periods beginning on or after 1 April 2015 (early adoption is permitted).

The Accounting Standards Framework for PBEs is summarised in the below table.

 

Entities

New PBE Accounting Standards

Key Dates

Tier 1

PBE Standards

Public Sector

Now effective

NFP

Effective date 1 April 2015, early adoption permitted

Tier 2

  • Medium sized entities (expenses between $30m and $2m) that are not publicly accountable

PBE Standards with Reduced Disclosure Requirements (PBE Standards RDR)

Tier 3

  • Small entities (expenses ≤ $2m) that are not publicly accountable

 

PBE Simple Format Reporting – Accrual accounting

Public Sector

Now effective

NFP

Effective date 1 April 2015, early adoption permitted

Tier 4

  • Micro entities (expenses < $125,000 and permitted by legislation to be in Tier 4) that are not publicly accountable

 

PBE Simple Format Reporting – Cash accounting

 

How we can help you

We can help your organisation assess how the revised framework will impact your reporting obligations and assist with the interpretation and implementation of new accounting standards applicable to your organisation.

To help you prepare and plan for the transition to new PBE Standards, we can assist with the following steps:

  • Entity classification assessment – a review of the entity’s assessment of its classification as a PBE or for-profit entity for financial reporting purposes
  • Initial diagnostic phase – this would include a review of current accounting policies and an initial assessment of the impact of the move to PBE Standards
  • Identification and assessment of specific issues – identify specific areas of focus for the transition, consideration of the impacts on the financial statements and the processes and systems currently in place
  • Implementation – assist to create new accounting policies, update financial information and systems and implement the transitional provisions, to help create an opening balance sheet
  • Post implementation – monitor and assess the progress of adoption of new standards and ensure financial information produced is in line with the new requirements