CHANGES TO PARISH ACCOUNTING COMPLYING WITH NEW FINANCIAL REPORTING REGULATIONS

THIS SESSION WILL COVER….. Annual reporting to Charities Services Know which Tier you will report under, and when the new standards will apply An example Performance report Some key information to collect throughout the financial year Tools to help you Questions, feedback, concerns

PARISHES TO TIER 3 Reporting requirements are different depending on the size of the charity Medium charities are those with annual operating expenditure – day-to-day expenses – below $2 million Based on accrual accounting Parishes currently use cash based accounting, and will now need to shift to accrual accounting

REGISTERED CHARITIES Receive benefits Exempt from paying income tax Are able to themselves as “Registered Charity” Have a dedicated listing on the Charities Register Meet obligations: Operate in accordance with their charitable purpose Report every year to Charities Services

PARISHES ARE REGISTERED CHARITIES Charities Services Registration: Each Parish is registered as a charity members of the Dunedin Diocese “Group” The Diocese is a separately registered charity, and is the “parent” of the Dunedin Diocese Group Up until now Diocese has filed “aggregated” annual return on behalf of Parishes After 30 June 2016 Parishes will need to file their own annual return with Charities Services

ANNUAL REPORTING Annual reporting to Charities Services includes: Completing an annual return Providing financial statements Until now any form of financial statements has been accepted The content is now determined by new reporting standards developed by the External Reporting Board (XRB) All Charities have to apply XRB standards

REPORTING OBJECTIVES – “TELLING OUR STORY” The ultimate objective of these new standards is for all charities to “tell their story” by considering the following questions: Who are we? Why do we exist? What did we do? When did we do it? What did it cost? How was it funded? How did we account for our activities? What do we need to continue?

PERFORMANCE REPORT Includes financial and non-financial information Contains three main sections: 1.Non-financial 2.Financial 3.Supporting information

PERFORMANCE REPORT 1.Non-financial  Parish information  Statement of Service Performance 2.Financial  Statement of Financial Performance  Statement of Financial Position  Statement of Cash Flows 3.Supporting Information  Statement of Accounting Policies  Notes to support the information in the performance report

STANDARD APPLIES FROM 1 APRIL 2015 Apply to 1 st FULL year after balance date For Parishes this will be 31 December st return due by 30 June 2017

TIER 3 PERFORMANCE REPORT Parish Information Service Performance Financial Performance Financial Position Policies & Notes Cash Flows Non-Financial Financial Supporting Info

PARISH INFORMATION Who are we? Why do we exist? Service Performance Financial Performance Financial Position Policies & Notes Cash Flows Parish Information

DATA COLLECTION: PARISH INFORMATION Description of the Parish’s purpose or mission Tends to remain relatively unchanged Brief description, not quantities EG: “……….The parish of ……… exists to support its members in their spiritual life. We do this by……” Description of parish structure Main sources of parish cash & resources Main methods used by parish to raise funds Parish reliance on volunteers and donated goods or services Parish Information

EXAMPLE ENTITY INFORMATION STATEMENT RCDD Example

YOUR PARISH What did your parish do last year? Why were those activities important to your charity?

STATEMENT OF SERVICE PERFORMANCE What change are we seeking? (outcomes) What did we do last year? (outputs) Auckland Parish Example Parish Information Financial Performance Financial Position Policies & Notes Cash Flows Service Performance

DATA COLLECTION STATEMENT OF SERVICE PERFORMANCE Decide what data is sensible to collect throughout the year EG: Number of Mass/Services during the year (excl funeral & Marriage) Number of Baptisms Number of confirmations Number of first communions Number of marriages Number of funeral services Annual Sunday Mass count Develop record-keeping strategies to support your reporting Service Performance

SO FAR SO GOOD….. Non-financial information  Adds richness to your story  Creates better understanding Parish InformationService Performance Non-Financial Who are we? Why do we exist? What did we do? Why those activities?

STATEMENT OF FINANCIAL PERFORMANCE How was it funded? What did it cost? Parish Information Service Performance Financial Position Policies & Notes Cash Flows Financial Performance

GRANTS RECEIVED BY THE PARISH Need to keep a grant-tracking system that notes: The purpose of the grant  Allocate to revenue category according to purpose Any conditions attached to the grant  Note “use or return” conditions How much of the grant is spent; how much remains This will also apply to “Special Purpose” Donations – especially where they are significant Financial Performance

MEMBERS AND NON-MEMBERS The standard requires revenue from members to be recorded separately to revenue from non-members This is designed to show the reader the extent to which a charity is self-funded or funded from external sources Financial Performance

PERFORMANCE REPORT WORKSHEET Chart of Accounts Performance Report Template Statement of Financial Performance (Profit & Loss report) NB Parishes are GST-registered entities, therefore statements to be prepared on a GST- exclusive basis. Financial Performance

DATA COLLECTION: STATEMENT OF FINANCIAL PERFORMANCE Maintain a record of all grants (grants tracking worksheet) Track member & non-member revenue (member/non-member revenue worksheet) Be consistent in use of codes on the chart of accounts Financial Performance

STATEMENT OF FINANCIAL POSITION What do we own? What do we owe? Entity Information Service Performance Financial Performance Policies & Notes Cash Flows Financial Position

STATEMENT OF FINANCIAL POSITION Provides a snapshot at balance date of the value of ALL parish assets, liabilities and accumulated funds Separate out current and non-current assets and liabilities Notes to the Statement of Financial Position are required. Performance Report Template Statement of Financial Position (Balance Sheet)

DATA COLLECTION STATEMENT OF FINANCIAL POSITION Provide an opening position ‘Property, plant and equipment’ category requires a value of fixed assets Valuations can include Rateable values (eg land and buildings) Estimated current value (eg motor vehicles, IT equipment) Initially, Parishes should use historical balance sheet amounts as their opening position

STATEMENT OF CASH FLOWS Cash in Cash out Entity Information Service Performance Financial Performance Financial Position Policies & Notes Cash Flows

STATEMENT OF CASH FLOWS Accounts for movements in cash during the financial year Is an indication of the sustainability of the parish Is there positive cash flow? Indicates the level of investment activity How much money was spent acquiring assets? Provides a summary of the parish cashbook Performance Report Template Statement of Cash Flows (Cash Flow Report) Cash Flows

SUPPORTING INFORMATION Accounting Policies Are contained in the Performance Report WorksheetPerformance Report Worksheet Will generally not be subject to change Notes to the report A template will be provided as part of the Performance Report Worksheet Entity Information Service Performance Financial Performance Financial Position Cash Flows Policies & Notes

SUPPORTING INFORMATION Statement of Accounting Policies Basis of preparation, GST Notes – optional and compulsory Notes allow room for more information and context Only include information where it’s relevant to the parish If a note doesn’t apply (on the template) it doesn’t need to be included Policies & Notes

RELATED PARTIES ‘Related Parties’ are people who hold decision-making power in the parish and their close family members Related parties can also be other organisations, eg the Diocese, other parishes Transactions must be stated in the notes Transactions could be cash or non-cash (in kind) donations Transparency about these kinds of transactions is meant to protect a charity’s reputation Policies & Notes

THE PERFORMANCE REPORT Entity Information Service Performance Financial Performance Financial Position Policies & Notes Cash Flows

AUDIT AND REVIEW REQUIREMENTS Only required if: Opex over $500,000 = audit or review Opex over $1 million= audit Parishes currently don’t meet the threshold, therefore No statutory requirement However, need to consider any rules or conditions of grants.

TOOLS TO HELP Diocesan Templates Diocesan Software access Diocesan Help Desk (Lyn/Kevin) Resources on Charities Services website XRB website standards, templates, FAQs

TOOLS TO HELP Diocesan Templates Excel templates to be ed to parishes Templates will be made available for download through the Diocesan website PDF versions of the templates can be posted These will include samples for reference purposes Diocesan Software access Banklink Parish cashbook Can produce reports that can be used to complete Performance Report templates at Year End Currently accessed by some Parishes, but not all. Diocese maintains cashbooks on behalf of Parishes, but this responsibility needs to move to Parishes.

QUESTIONS, FEEDBACK, CONCERNS