Updated 2 September 2025

Registered charities must report to Charities Services using a tier system based on:

• their method of accounting
• annual expenses or operating payments
• if they have public accountability.

Each tier has corresponding accounting standards that are required to be used to prepare your Performance Report or Financial Report.

Determining your charity's reporting tier

The accounting method you use (cash-based or accrual-based) depends on how complex your charity's transactions are and affects your reporting tier. You can use this flowchart to help you work out your tier.

Cash-based Accounting (Tier 4)

In cash-based accounting, you only record transactions when you receive or spend money, not when you earn or owe it. This method is often used by charities with simple and small transactions. A cash book is often used to track these transactions. This method does not include depreciation.

Accrual-based Accounting (Tiers 1, 2, 3)

In accrual-based accounting, revenue and expenses are recorded when they are earned or incurred, even if the cash hasn't been received or paid yet. This method is often used by charities with more transactions, and they may use accounting software or an accountant. Accrual accounting also includes things like depreciation and debts.

Does your charity have public accountability?

Most charities will not have public accountability as defined by the Accounting Standards. Public accountability has a specific meaning for financial reporting purposes. An entity has public accountability if it:

• is listed on a public market (such as the New Zealand Stock Exchange)
• provides financial services to a wide group of people (this is common for banks, credit unions and insurance companies)
• is considered to have a higher level of public accountability  under the Financial Markets Conduct Act 2013.

If your charity has public accountability, it is required to report using the Tier 1 accounting standards.

Tier thresholds

Moving to a higher tier

If your charity has become too large for your tier, you do not need to change tiers immediately. You can stay in your current tier for two reporting periods before moving to the next tier. In effect, this means you are not required to change until the third year.

Exception

Tier 2 charities that exceed $33 million for two consecutive years must move up to Tier 1 immediately for the second year, rather than waiting for two reporting periods.

Moving to a lower tier

If your charity qualifies for a lower tier, you can switch immediately. However, if you expect to exceed the threshold again soon, you may choose to stay in your current tier to avoid moving back up later.

Exceptions

• To move down to Tier 4, your payments must be under $140,000 in at least one of the previous two years.
• If you had to use Tier 1 because of public accountability, you must keep using it until that accountability ends. After that, you can move to the tier that matches your expenses.

Examples of moving tiers

Example A

Example B

Example C

Example D

More information

For more details about the reporting tiers, visit the External Reporting Board's website.