Indian Newslink July 15 Digital Edition

JULY 15, 2016
BUSINESSLINK 15
Reporting changes bring opportunity for non-profits
In the final part of the BNZ non-profit series, BNZ Partner, Cherie Trewavas shares her insights on
building the financial capabilities of Non-Profit Organisations.
Compliance is one of those
words that sends a shiver
down the spine of
many people working in
non-profit organisations.
Changes to the rules surrounding
the reporting of financial
accounts for non-profits
came into effect on July 1, 2015.
These changes have only exemplified
these feelings of
dread; however, after a few
deep breaths and a little time
considering the changes, we can
see that they can actually bring
benefits.
First, charities are now required
by law to follow External
Reporting Board (XRB) standards.
There are too many details
to go into here, so if would like
to see more, please visit the XRB
website.
Higher standards
The changes themselves will
generally hold non-profit organisations
to a higher standard of
financial reporting than what
they have previously been required
to do.
However, because of the way
non-profits have been separated
into four different tiers, these
effects will be felt differently
across the sector depending on
the size of the operation.
Smaller entities may well find
the accounting process is now
easier than before.
You can find a good summation
of the tiers and how the
changes affect each on the RSM
Hayes Audit website.
While the detail understandably
goes into some depth, here
are a few of the key points that
the changes address:
Non-profits are unique
Businesses operating to make
profit, quite obviously, have
a different set of drivers and
goals, so it makes sense to treat
non-profit groups differently.
Donations are, after all, a major
source of income for most
non-profits.
Non-profits are no longer
treated in the same way as a
profit-based business.
The new rules take into account
the different motivating
factors behind the income generation
of a non-profit organisation
and as such are now able
to more accurately measure the
success of a non-profit beyond
mere financial terms.
Greater opportunity
Until now, the stakeholders of
a non-profit have had little in
the way of hard data on which
funding decisions can be based.
This is because non-profits
had no legal compulsion to
generate the kind of financial
information related to their operation
that would enlighten
the various donors, funders and
other interested parties.
From this point of view, it may
well increase the flow of funding
simply because these external
stakeholders have more
transparency.
The new tier-based approach
means small charities no longer
have to produce the same level
of financial reporting as large
ones. The upshot of this is the
cost of compliance does not exceed
the benefits of a compliant
financial reporting process.
Further reading
Even though the thought of
increased compliance requirements
is not necessarily something
we all look forward to,
hopefully you can now see that
these new rules are, in fact,
as much about bringing new
opportunities for success as
anything.
If you have any questions
about how BNZ can support
your non-profit organisation
call us on 0800-273916.
This above article is intended
as a general discussion only,
and is based on selective information
which may not be suitable
for your purposes. BNZ
strongly recommends that recipients
take independent legal,
investment and financial advice
prior to making any financial or
investment decisions.
BNZ is the Title Sponsor and
Sponsor of the ‘Supreme
Business of the Year’ and ‘Best
Large Business’ Categories
of the Ninth Annual Indian
Newslink Indian Business
Awards 2016. BNZ is also the
Title Sponsor of the Sixth
Indian Newslink Sir Anand
Satyanand Lecture scheduled
to be held at Pullman Hotel
Auckland on Monday, July 25,
2016. Reserve Bank of New
Zealand Governor Graeme
Wheeler is the Guest Speaker.
For more details and tickets,
please call (09) 5336377 or (09)
3910203. Email editor@indiannewslink.co.nz