Public Benefit Entity Accounting Standards (PBE Standards)

Financial Reporting: EY New Zealand

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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 IFRS 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 November 2012

  • an issuer;
  • a registered bank or deposit taker, as defined by the Reserve Bank Act 1989; and
  • a registered superannuation scheme, as defined by the Superannuation Schemes Act 1989 unless exempted from the requirement to prepare GPFR.
     

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;
  • a listed issuer;
  • a registered bank;
  • a licensed insurer;
  • a credit union;
  • a building society; and
  • 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).

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 would 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 (PBEs) with requirements to prepare financial statements in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP).

Visit our other sites for content and resources relating to for-profit entities or EY New Zealand's Financial Reporting homepage.

Public Benefit Entity Accounting Standard Framework overview

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

The PBE Accounting Standards Framework 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 with reporting periods beginning before 1 July 2014 will apply various suites of standards (including NZ IFRS PBE and “old NZ GAAP”). Public Sector PBEs with reporting periods beginning on or after 1 July 2014 will be required to transition to the new suite of PBE Accounting Standards (early adoption is not permitted).

Not-for-profit (NFP)
Not-for-profit PBEs with reporting periods beginning before 1 April 2015 will apply various suites of standards (including NZ IFRS PBE and “old NZ GAAP”). Not-for-profits with reporting periods beginning on or after 1 April 2015 will be required to transition to the new suite of PBE Accounting Standards (early adoption is permitted).

The PBE Accounting Standard Framework is summarised in the below table.

 

Entities

Current Accounting Standards

New PBE Accounting Standards

Key Dates

Tier 1

NZ IFRS PBE

(usually)

PBE Standards

Public Sector

  • Effective date 1 July 2014
  • Early adoption not permitted

NFP

  • Effective date 1 April 2015
  • Now available for early adoption
  • NFP enchantments are expected to be issued in Q4 2014

 

Tier 2

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

Various (e.g. NZ IFRS PBE (full or differential reporting) or old NZ GAAP or no specific requirements)

PBE Standards with Reduced Disclosure Requirements (PBE Standards RDR)

Tier 3

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

 

Various (e.g. NZ IFRS PBE differential reporting or old NZ GAAP  or no specific requirements)

 

PBE Simple Format Reporting – Accrual accounting

Public Sector

  • Effective date 1 July 2014
  • Early adoption not permitted

NFP

  • Effective date 1 April 2015
  • Now available for early adoption

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