Attention Incorporated Societies – New Reporting and Audit Requirements on the Way
The Ministry of Business, Innovation and Employment (MBIE) has confirmed a new Incorporated Societies Act is expected to be released (the new Act), once the Incorporated Societies Bill is introduced to Parliament for final reading later this year.
All incorporated societies will be required to re-register under the new Act (there will not be an automatic transfer of current Incorporated Societies to the new Act) and there will be a 2½ year transition period into the new regime.
Some of the proposals under the new Act are summarised below:
Incorporated Societies that are not registered as Charities under the Charities Act 2005 will be required to report using External Reporting Board (XRB) standards when they satisfy one or more of the following criteria:
- Annual payments of $10,000 or more;
- Assets of $30,000 or more; or
- “Donee status” under the Income Tax Act 2007.
(Incorporated Societies that are registered Charities are already required to report using XRB standards.)
Incorporated Societies that are not registered as Charities under the Charities Act 2005 will be required to have a mandatory audit when they satisfy one of the following criteria:
- Annual expenditure over $2 million; or
- Assets over $4 million.
(Incorporated Societies that are registered Charities already have a mandatory audit when annual expenditure is over $1 million and a mandatory review when annual expenditure is over $500,000.)
As a result of the new Act, the Companies Office and MBIE will be undertaking an education campaign about the new Act, and will also be enhancing the Register of Incorporated Societies going forward.
For more detail on the upcoming changes, please refer to the MBIE website