RSM New Zealand

Important Update for Tier 1 & 2 Public Benefit Entities

For ALL Tier 1 and Tier 2 PBEs  – Service Performance Reporting : Proposed Deferral of Effective Date of PBE FRS 48 and Update on Implementation and COVID-19 impacts.

NZASB Proposal to Defer Effective Date of Service Performance Reporting from 1 January 2021 to 1 January 2022.

This is an important message for all Tier 1 and 2 Public Benefit Entities (PBEs). We have copied the text below from the NZASB announcement and encourage you to read the ED and invite your organisation to comment if you wish.

The New Zealand Accounting Standards Board (NZASB) has published for public comment NZASB ED 2020-1 Proposed 2020 Amendments to PBE FRS 48.

Given the disruption to the operations of many PBEs during 2020 as a result of COVID-19 some PBEs may be unable to successfully implement PBE FRS 48 Service Performance Reporting by its effective date. The NZASB is therefore proposing to defer the effective date of PBE FRS 48 by one year (from 1 January 2021 to 1 January 2022). The standard remains available for early adoption.
 
The NZASB has stressed its ongoing support for the objective of the standard (being to establish principles and requirements for an entity to present service performance information that is useful for accountability and decision-making purposes) and the importance of service performance information for users of PBE financial reports. In issuing this ED the NZASB is motivated by a desire to provide affected PBEs, with more time, in the current circumstances, to successfully implement the standard and meet this objective.

The NZASB encourages you to read the ED and accompanying Invitation to Comment, and to comment on the proposals. Send your comments—both formal and informal—by 10 August 2020 to the NZASB using the form via this link.

Update on Implementation of Service Performance Reporting and COVID-19 Impact. 

In the past six months we have been discussing the stage of development of service performance reporting with many of our Tier 1 and 2 PBE clients. We have found a broad range of responses. There are some who are quite advanced along the journey where they are clear about their vision and missions, the service performance measures to be adopted and have implemented appropriate data collection systems. At the other end of the range, some organisations have not got too far at all. As expected, we generally have found December year end clients to be at a more advanced stage of thinking and preparation.

Setting aside the issue of a possible extension of the effective date of the standard as detailed above, we recommend that organisations develop and work to a plan for engagement with this new non-financial reporting opportunity. This engagement needs to be at all levels of the organisation, lead from the governing body.

We have observed some organisations who have clearly embraced the idea that this is a positive opportunity to better communicate and demonstrate their impact to key stakeholders. They have realised the story-telling power of this reporting that provides the context for a much richer understanding of the accounting numbers  - and this translates into improved stakeholder support. It is encouraging when we observe this willingness to see the benefit of the opportunity, rather than just the cost of compliance.

Undoubtedly, the current COVID-19 pandemic has had a significant impact on many PBE organisations, and for some unfortunately, has put them in a very real fight for survival. Others, who while may not be immediately at threat , are busy planning their new normal in the future, given old ways of raising funds, delivering services and communicating results may no longer cut it.

Hence, COVID-19 has served to amplify the importance of a few fundamental questions that were necessary anyway when developing service performance reporting:

  • Why do we exist? And even more fundamentally before that, Should we exist? COVID-19 impacts have brought these questions into very sharp focus for governing bodies.
  • Are our objects, vision, mission, strategies and goals in alignment with where we want and need to be? These may need amendment when considering the impacts of COVID-19.
  • How will external stakeholders, including funders, measure our success and impact?
  • Do we have clarity over what the significant measures are we need to report on?
  • Are we clear on the outcomes we are seeking to achieve or influence and is there a clear connection between outputs we deliver and these outcomes?
  • Do we have data capture systems to measure the metrics that are significant to articulating our service performance?

We have written various articles over the past few years around service performance reporting which can be found here on our website. We also intend to provide further guidance, observations and opportunities to share learning in future.

For your benefit also, we refer you to a useful guide that XRB has published in advance of entities adopting PBE FRS 48, being EG A10 Service Performance Reporting. This can be found here.

We recommend you read this to assist you when considering the further development of your service performance reporting.

As a final thought, COVID-19 has presented us all with significant social and economic challenges, whereby the “bang for buck” of PBE’s is likely to be subject to even greater focus.

Better understanding of service performance delivered, impacts made and stronger engagement with stakeholders can play a key role in the PBE sector thriving, not just surviving, into the future.

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Authors

Wayne Tukiri
Audit & People Partner