Monthly Archives: June 2015

Financial Reporting within the Methodist Church of New Zealand – 30 June 2015

Introduction

As we all should know, the way that annual financial accounts are prepared and furnished to Charities Services is changing.  There has been much said and written within the Church regarding these and it has been expected that treasurers and others appointed to look after the financial affairs of a Church based entity have been keeping up to date with these changes.

As a consequence of these changes, for the year ending 30 June 2015 the Connexional Financial Review Committee will be checking the annual accounts of Tier 3 and 4 entities within the Church to ensure that they comply with the financial reporting standards issued by the External Reporting Board.  If the annual financial accounts do not comply with these standards, then the Connexional Office will be sending them back to the entity concerned to be reassessed and returned back to us within an agreed timeframe.

You will then use these annual financial statements to present at parish/synod annual meetings for approval and then file these as part of your annual return.

Please refer to the following web sites for help:

http://accounting.methodist.org.nz/ – Methodist Church Accounting Blog Site

https://www.charities.govt.nz/im-a-registered-charity/new-reporting-standards/tier-4/tier-4-get-started-videos/ – Charities Services videos on Tier 4 reporting

https://www.charities.govt.nz/im-a-registered-charity/new-reporting-standards/tier-3/tier-3-get-started-videos/ – Charities Services videos on Tier 3 reporting

http://www.xrb.govt.nz/Site/Accounting_Standards/Current_Standards/Standards_for_Not-For_Profit_PBEs/Stds_for_Not-For-Profit_T1-4.aspx – External Reporting Board to get the actual standards, guidance notes, etc. (these are also on the Accounting Blog Site).

To make it clear.

Format of Annual Accounts

If the operating payments of your parish, synod or other entity are under $125,000 for the 12 months ending 30 June 2015 and for the periods end 30 June 2014 and 2013 then you need to prepare your financial accounts for the 30 June 2015 using the Tier 4 standards.  There are guidance notes and an Excel spreadsheet to help you achieve this. Please contact either Rebecca, Sarah or Peter in the Connexional Office for these.

If the operating expenditure of your parish/synod or other entity is over $125,000 for the 12 months ending 30 June 2015 and has been over $125,000 in the year ending 30 June 2014 and 30 June 2013 then you will need to prepare your financial accounts for the 30 June 2015 using the Tier 3 standards.  There are guidance notes and an Excel spreadsheet to help you achieve this.  Please contact either Rebecca, Sarah or Peter in the Connexional Office for these.

Statistical Returns

The M4 Form is in addition to and not a substitute for the annual accounts.  The information in the M4 comes from the annual accounts.  Please follow the instructions supplied with the M4.

Audit or Review

There have been other posts on this blog site regarding the need to have accounts audited or reviewed and I would refer you to the full posting HERE.

To recap, an it summary, subject to the policy document.  If you have operating expenditure UNDER $500,000 there is no formal requirement for an audit or review (but you can have one done if you so choose).   If the operating expenditure is OVER $500,000 but UNDER $1,000,000 the you need to have an independent review undertaken by a qualified person.  If your operating expenditure is OVER $1,000,000 then you need to have an audit conducted by an independent qualified person.

Annual Return to Charities Services

Once the annual accounts have been completed and approved, you are then able to log onto Charities Services website and lodge your Annual Return.  Please do this before 31 December 2015.

 

Charities Services – Tier 3 Annual Accounts/Reporting Standards

For those who were waiting for the Tier 3 e-mail about reporting standards, here is the Tier 3  one and link that goes with it.

Charities Services have continued to provide resources to help charities complete annual accounts using Tier 3 standards issued by the External Reporting Board.  here is a link to the video and workbook.

https://www.charities.govt.nz/im-a-registered-charity/new-reporting-standards/tier-3/tier-3-get-started-videos/

Election of Tier 3 or 4

The accounting standards require a reporting entity (parish, synod, trust, etc) to elect which Tier of financial reporting they have chosen.  The standards provide:XRB A1 clauses 129 and 130

XRB A1 clauses 129 and 130

I would suggest that each parish, synod, trust,etc passes a resolution confirming the election and the reasons why at a Parish Council meeting and record this in the minutes.  Here are two examples, one for Tier 3 and one for Tier 4:

Tier 3

The Parish Council resolved:

That the ABC Methodist Parish has designated itself as a Tier 3 public benefit entity and will apply PBE SFR-A (NFP) Public Benefit Entity Simple Format Reporting – Accrual (Not-For-Profit) on the basis that it does not have public accountability and has total annual expenses are to equal to or less than $2,000,000 for the 12 months ended 30 June 2015 and for the last two financial years.

Tier 4

The Parish Council resolved:

That the ABC Methodist Parish has designated itself as a Tier 4 public benefit entity because it does not have public accountability and it is permitted by law to apply this standard because its operating payments are less than $125,000 for the 12 months ended 30 June 2015 and for the last two year financial years.

Saturday Help in Canterbury with Annual Accounts

I promised Canterbury Treasurers that they could come into the Connexional Office on a couple of Saturday’s if they needed help with the new Tier 3 and 4 templates.  At the moment the dates will be 25 July and 1 August from 1.45pm to 5.00pm.

I can cope with 6 or 7 people at a time, due to space constraints so you will need to let me know if you want to come in.  E-mail me is the best way (peterv@methodist.org.nz).

However, you are welcome to come during the week but you will need to give me advanced warning as the month of July is very busy and I need to focus on getting my own work completed.  Also, we have limited space in the office to put people.  Once again, e-mail me at least two to three days in advance.

For others, outside of Christchurch, we are looking at other ways of providing assistance and we keep you informed of these.

Peter van Hout

Methodist Trust Association-Withdrawals

From time to time the Connexional office are asked to withdraw funds from deposits held in the Methodist Trust Association and deposit those funds into bank accounts.
Within the depositors system we hold bank account information for parishes, synods and other Methodist entities.
The policy of the Methodist Trust Association is that when a depositor (i.e. parishes, synods and other Methodist entities) asks for a withdrawal of funds, the Connexional Office will only deposit those funds into the bank account that is stored within the depositors system OR to a suffix account that relates to the base account number and no other account. This policy has been put in place to protect the depositor and allow for the correct flow of cash from the Methodist Trust Association to the depositor rather than to a third party bank account. It also means that the possibility of human error occurring through entering the wrong bank account is eliminated.

For example, if a parish requests that $5,000 is to be withdrawn from account 10010002 to a bank account number 02-0256-0101123-01 and that is the account the Connexional Office have set up, then the transfer will be done on the written instruction of the parish.
Assuming the same base number as above (0101123), if a parish requests that $5,000 is to be withdrawn from account 10010002 to a bank account number 02-0256-0101123-05 we will still make the transfer as the BASE account number of 0101123 remains the same.
If a parish requests that $5,000 is to be withdrawn from account 10010002 to a bank account number 02-0256-0991123-01 then the transfer will NOT be done as the base number is NOT the same.

As mentioned, this practice has been put in place to protect the depositor and the Church.