Not-for-profit Update #1

  • Not-for-profit

Aimed at registered charities and other
not-for-profits, our Not-for-profit Update provides you an overview of recent External Reporting Board activities — new or revised standards, other news and financial reporting matters you will find useful.

Welcome to this our first issue of a newsletter especially for registered charities and other not-for-profits (NFPs).


It is important to keep you up-to-date, given that many of you could now be busy preparing your annual financial statements.  


In this issue, we explain recent developments and highlight some key matters likely to be of interest to you. Please be sure to share this with your colleagues and others you know. 

photo of Warren Allen CEOWarren Allen
Chief Executive

In this issue we cover...

  • What's my reporting tier?
  • An audit or review? What's the difference?
  • Reporting templates, explanatory guides, reporting standards...what are they?  Where do I find them? 
  • Recent changes to Tier 3 and Tier 4 standards for NFPs
  • How are standards set?
  • A guide for funding organisations
  • Small charities' assurance needs 

What's my reporting tier?

Our website’s Find Your Standard tool can help you find what you need in just a few simple steps.  It provides a series of questions designed to help you determine which set of standards apply to your entity.  

Find Your Standard tool

Here’s an at-a-glance view of the reporting tiers for NFPs. 

Diagram showing NFP Tiers

You can view this diagram and other useful information on the Charities Services website.

Our general standard XRB A1 Application of the Accounting Standards Framework establishes the:

  1. financial reporting tiers;
  2. criteria for each financial reporting tier;
  3. accounting standards and authoritative notices that apply to each tier; and
  4. requirements for an entity when moving from one tier to another. 
Have a look at XRB A1 Have a look at EG A1


Its accompanying Explanatory Guide (EG A1) further explains and supports the XRB A1 standard.

Note: If your entity has public accountability, then it must report as a Tier 1 entity. For a full description of public accountability see XRB A1.

An audit or review?  What's the difference?

Assurance engagements give your funders, donors and members trust and confidence in the credibility of your entity’s financial information. 

There are two main types of assurance engagement—audit or review.  So, what’s the difference between them?



Reasonable or high level of assurance about whether the financial statements are free from material errors or fraud. 

Limited assurance about whether the financial statements are free from material errors or fraud.


Are you clear about what is required for your entity?  The table below shows your reporting tier and the associated assurance requirement.


Threshold – Total expenses


Statutory Assurance Engagement


> $30 million




≤ $30 million





≤$2 million



< $1 million


Review or Audit

< $500,000


None required by law


< $125,000


None required by law

For Tier 3 entities, there are three possible levels of assurance—depending on your total expenses. 

For small entities in either Tier 3 or Tier 4, note that there is no statutory requirement for assurance.  But, you would also need to be guided by what your founding document (constitution) provides. This may require your entity to have an audit.  If you think an audit is an unnecessary financial burden, then you should consider changing your founding document to not require an audit.

You can find full guidance on assurance requirements for NFPs here in our
Explanatory Guide EG Au9 Guidance on the Audit or Review of the Performance Report of Tier 3 Not-For-Profit Public Benefit Entities.

Reporting templates, explanatory guides, reporting standards...

What are they?  Where do I find them? 

Building blocks image

Over 90% of all registered charities report as either Tier 3 or Tier 4 entities. 


XRB’s Tier 3 and Tier 4 standards for NFPs set down the minimum requirements you must follow when preparing your annual financial statements.

To help you understand and apply the standards correctly, Tier 3 and Tier 4  NFPs can use our financial reporting templates and related explanatory guidance. These are Microsoft Excel spreadsheets and cover most circumstances that are likely to apply to you. So, if you fill out the templates correctly, you will comply with the standard. 

Using these templates and their accompanying guidance notes is optional.  They have no legal status. 

For each of the Tier 3 and Tier 4 standards our website now provides you access to the standard document itself, the related explanatory guide and the reporting template, all on one page.

If you require just the templates, you can also access these on our Tiers 3 & 4 PBE Reporting page.  There are also some useful FAQs there to help step you through the process and address common issues.


Recent changes to Tier 3 and Tier 4 standards for NFPs

Update button on keyboard image

We have recently made some minor changes to both the Tier 3 and Tier 4 standards for NFPs. These changes don’t apply until reporting periods beginning on or after 1 January 2019, but you may adopt these changes earlier.


One new requirement is that your performance report (which includes your financial statements) must now be signed and dated—as evidence it has been approved by the relevant authorised parties in the entity.  We encourage you to do this in your current year’s report.

How are our standards set?

Flow chart of IPSASB standard setting process

The XRB Board has developed processes for setting new standards, or amending existing ones. 


We have converted these into flow charts to provide a straightforward guide to the full process.


Have a look

A guide for funding organisations

image of A Guide for Funders booklet

This helpful booklet provides funders with an overview of the different assurance options available to NFPs and how to choose the right one.


Many funders request audited financial statements, including those smaller NFPs that do not have a statutory requirement to have their financial statements audited or reviewed. This can be an added and unnecessary financial burden on that organisation.


It is important that the funder has a clear understanding of why it requests assurance and is confident that the type of assurance it requests provides the best solution to funder’s needs.


Have a look

Small charities’ assurance needs

Small Charities Assurance needs booklet cover

This booklet sets out the findings from our recent research looking at what drives small charities to obtain assurance over their financial statements.


We also wanted to find out if the needs of funders—philanthropic funding bodies and government agencies—were appropriately addressed by small charities' assurance engagements. 


Have a look


This Not-for-profit Update is intended to provide you with a summary of the recent activities of the External Reporting Board (XRB). Links to websites are correct at the time of publication. You should not rely on this newsletter as a definitive publication of updates. The External Reporting Board does not guarantee, and accepts no legal liability whatsoever arising from or connected to the accuracy, reliability, currency, timeliness or completeness of this newsletter. The information contained in this newsletter does not constitute advice and should not be relied upon as such.