New accounting standards for incorporated societies in New Zealand
Are you ready for the biggest shake-up in incorporated societies’ regulation in decades? The Incorporated Societies Act 2022 isn’t just tweaking the rules—it’s completely transforming how New Zealand societies handle their governance, administration and financial reporting.
One of the most significant changes is the formalisation of financial reporting requirements for incorporated societies. Many societies will now need to produce financial statements using External Reporting Board (XRB) standards – something that wasn’t required before. If you’re involved with an incorporated society in NZ, you’ll want to understand exactly what this means for your organisation.
Financial reporting requirements for incorporated societies
All incorporated societies must prepare and file annual financial statements that record their financial activities and position, but there are different reporting requirements based on the size and nature of the society.
What are the financial reporting requirements for my society?
Small societies under NZ incorporated society legislation
Societies with total operating payments less than $50,000 and total current assets less than $50,000 in each of the previous two financial years are classified as small incorporated societies in New Zealand.
These societies only need to meet the minimum requirements set out in the Act and their financial statements don’t need to be audited.
XRB accounting standards for incorporated societies
For societies that don’t qualify as small societies, XRB accounting standards apply*. These societies fall into one of four reporting tiers based on their size and financial activities:
• Tier 4 incorporated society reporting: Societies with total operating payments less than $140,000. Simple Format Reporting – Cash.
• Tier 3 incorporated society reporting: Societies with total expenses less than $2 million. Simple Format Reporting – Accrual.
• Tier 2 incorporated society reporting: Societies with total expenses less than $30 million. Public Business Entity (PBE) Standards with reduced disclosure requirements.
• Tier 1 incorporated society reporting: Societies with total expenses greater than $30 million. PBE Standards.
*If your incorporated society is a charity, different rules apply.
What are operating payments for NZ societies?
Total operating payments refer to the total of all payments made by your society either in cash or from your bank account during the year (including grant payments and income tax payments), except for capital payments such as those relating to purchasing assets or repayments of loan borrowings.
What are current assets for incorporated societies?
Total current assets refers to the value of all the assets of the society that meet one or more of the following conditions:
- The society expects the asset to be realised, consumed, sold or otherwise disposed of within 12 months after the society’s balance date
- The asset is primarily held for the purpose of being traded (such as stock for fundraising)
- The asset is cash or a cash equivalent and isn’t restricted from being exchanged or used to settle a liability for at least 12 months after the society’s balance date
Audit requirements for incorporated societies in New Zealand
The new Act specifies that financial statements for Tier 1 incorporated societies must be audited, while other tiers may not require an audit. This ensures that larger societies, which have a greater impact on the community, are held to higher standards of accountability.
Other important details for NZ incorporated societies
Annual returns for incorporated societies
Societies must complete an annual return for incorporated societies each time they file their annual financial statements. This involves reviewing, updating and confirming key information about the society to ensure it’s still operating legally.
Transition period for the Incorporated Societies Act 2022
Societies have until April 2026 deadline to re-register under the new Act and comply with the new accounting standards. This transition period allows societies to adjust their financial reporting processes and ensure compliance with the new requirements.
Need more help with incorporated societies in New Zealand?
At IGS, we offer a fixed fee service specifically designed for incorporated society compliance in NZ. This transparent pricing gives you certainty while ensuring your society meets all the new 2022 Act obligations. Find out more
