RSM New Zealand

Service Performance Standard Issued for larger PBEs

New Zealand now has an accounting standard for service performance reporting for Tier 1 & 2 Public Benefit Entities. This article looks at the rationale for this important reporting standard, what it requires, when it is mandatory, as well as some observations regarding adoption and best practice reporting. 


Service performance reporting is increasingly being recognised as a key feature of Public Benefit Entity (PBE) reporting going forward in New Zealand. 

Conceptually this type of reporting significantly assists readers gain a much more holistic view of the performance of a charitable, not-for-profit or other type of publicly accountable entity.  It is similar in concept to the growing trend in the for-profit world for Integrated Reporting.  In fact, we at RSM have been known to term this “Integrated Reporting Lite” as both conceptually are about providing a broader view of the organisation rather than just financial reporting.

Such reporting can significantly assist in providing context to the financial statements and hence enable a much better understanding of the PBE’s operations and performance. 

For that reason, our financial reporting standard setter, the External Reporting Board (XRB) decided when they first issued the PBE standards back in 2013 that all PBEs should in future be required to present a service performance report as part of their annual reporting.  As is the approach with our new multi-tier accounting standards, the reporting required should be of an appropriate complexity according to the size and nature of the entity 

Our smaller PBEs (tier 3 & 4 entities) were mandatorily required to provide service performance reporting from early 2016.  To many, it may initially appear illogical that the standard setter would impose a new requirement on smaller, and less resourced entities before larger ones.  However, this occurred as the reporting standards for smaller PBEs were written in New Zealand from scratch, and hence the requirement for some simple service performance reporting was able to be easily written into the Tier 3 & 4 reporting standards.   

While it is still relatively early days for this new requirement, most smaller entities appear to have coped with this new requirement well.  Possibly because it allows them the opportunity to better tell their story and highlight their achievements.  And for users of their annual reports the service performance report generally provides a very useful description of what the entity set out to do and what they actually achieved.  As required by our job as auditors, as well as occasionally from personal interest, having read a large number of annual reports we can personally attest to the often very helpful contextualising information that the statement of service performance provides.  As such, a reader obtains a much deeper and more holistic view of the entity and its activities.

However, for larger PBEs the XRB has based its new financial reporting standards on an international standard suite: International Public-Sector Accounting Standards (IPSAS).  The rationale is so that we are, and are seen to be, adopting global best practice for larger, more complex entities.  This makes good sense.  As regards statements of service performance though, the IPSAS suite of standards does not yet include a service performance reporting standard.  Hence the NZ Accounting Standards Board of the XRB had to develop one from scratch in NZ.

What’s been issued and when is it effective?


PBE FRS 48 Service Performance Reporting is the new accounting standard that was issued by the XRB in late 2017.  It is mandatory for Tier 1 and Tier 2 Public Benefit Entities for periods beginning on or after 1 January 2021. 

While that mandatory date may seem a long time away, earlier application is permitted.  From a look at some of the leading innovative PBEs, readers will notice that many of these are starting to explore service performance reporting in their annual reports already.

What’s required?

The standard focuses on high-level principles and uses general terms.  This should suit both the not-for-profit and public sectors and give larger PBEs much more flexibility in how they report on their service performance.


The standard requires that an entity provide:

  • Sufficient contextual information to understand why the entity exists, what it intends to achieve in broad terms over the medium to long term, and how it goes about this; and
  • Information about what the entity has done during the reporting period in working towards its broader aims and objectives.
  • Application of the qualitative characteristics of information and pervasive constraints on information identified in the PBE Conceptual Framework – i.e. balancing the constraints on information to ensure that it is appropriate and meaningful to users of the annual report.
  • Disclosure of the critical judgements made in the selection and aggregation of its service performance information. 
  • Comparative information

For entities required, or choosing to comply the standard can be found at


Best practice observations

As well as seeing the more innovative PBEs already starting to report service performance the following best practice observations are also becoming apparent:


  • Innovation in communication techniques – especially via the use of infographics.  A picture really does tell a thousand words.
  • Less is more.  Perhaps one of the most challenging aspects of communication is achieving clarity and impact through brevity.  However, some organisations are getting around this by referring to other mediums where more information can be found.  For example, referring to their organisation website where the “peel the onion” approach is followed i.e. if you want more information you can click on an image and it takes you to a more detailed level of information and so on.   
  • There appears to be a more seamless reporting of key performance indicators (KPIs) between internal and external reporting.  i.e. the annual reporting is really just a summary of performance measures that management use to manage, and the governing body use to govern, aggregated into an annual form.  This saves the annual report process being a “big production” and makes for more cost-effective reporting.  


Talking to some of the leading and innovative PBEs it is also apparent that they have had to do some internal systems improvements in order that the non-financial information required is being completely and cost effectively captured as easily as possible.   These systems and their integrity will also be increasingly important once the reporting is mandatory as the output will be required to be independently audited.

Deciding what is “material” (i.e. significant or important) to readers is an interesting challenge for many PBEs to determine in the first place.  However, as long as the reporting entity has good disclosure of their judgements in the selecting and reporting of their service performance measures and results, as well as good systems so that this information is verifiable, then competent auditing should be achievable.

What do you need to do now?

As we have said before; no matter when it is mandatory, the bottom line is that the requirement for mandatory service performance is coming for larger PBEs in New Zealand. 


Good quality service performance reporting will firstly require focused engagement from governing bodies and senior management to determine what should be reported on and how your story should be told.  It will likely entail some systems and process development to ensure that your reporting on such non-financial measures will be able to be efficiently compiled and effectively audited in future.  Accordingly, we recommend early consideration is given to your development of your service performance reporting, to the specific types of information that you will report in future, and to any information capture systems that may be required.


As much as anything, the key is to have a mindset that embraces this as an opportunity to improve your stakeholder engagement in what you do, rather than view this as a compliance requirement.


For more information, please visit our website and search “service performance”.  In addition, we would be happy to further discuss this requirement with you if of value. 


How can we help you?

Contact us by phone 0800 774 623 or submit your questions, comments, or proposal requests.