-
Business valuations
We offer expert valuation advice in transactions, regulatory and administrative matters, and matters subject to dispute – valuing businesses, shares and intangible assets in a wide range of industries.
-
Capital markets
You need corporate finance specialists experienced in international capital markets on your side if you’re buying or selling financial securities.
-
Complex and international services
Our experience of multi-jurisdictional insolvencies coupled with our international reputation allows us to deliver the best possible outcome for all stakeholders.
-
Corporate insolvency
Our corporate investigation and recovery teams can help you manage insolvency situations and facilitate the best outcome.
-
Debt advisory
An optimal funding structure for your organisation presents unprecedented opportunities, but achieving this can be difficult without a trusted advisor.
-
Expert witness
Our expert witnesses analyse, interpret, summarise and present complex financial and business-related issues which are understandable and properly supported.
-
Financial models
A sound financial model will help you understand the impact of your decisions before you make them. Talk to us about our user-friendly models.
-
Forensic and investigation services
We provide investigative accounting and litigation support services for commercial, matrimonial, criminal, business valuation and insurance disputes.
-
Independent business review
Is your business viable? Will it remain viable in the future? A thorough independent business review can help your organisation answer these fundamental questions.
-
IT forensics
Effective ESI analysis is integral to the success of your business. Our IT forensics experts have the technical expertise to identify, preserve and interrogate electronic data.
-
Mergers and acquisitions
Grant Thornton provides strategic and execution support for mergers, acquisitions, sales and fundraising.
-
Raising finance
Raising finance - funders value partners who can deliver a robust financial model, a sound business strategy and rigorous planning. We can guide you through the challenges that these transactions can pose and help you build a foundation for long term success once the deal is done.
-
Relationship property services
Grant Thornton offers high quality independent advice on the many financial issues associated with relationship property from considering an individual financial issue to all aspects of a complex settlement.
-
Restructuring and turnaround
Grant Thornton’s restructuring and turnaround service capabilities include cash flow, liquidity management and forecasting; crisis and interim management; financial advisory services to companies and parties in transition and distress
-
Transaction advisory
Our depth of market knowledge will steer you through the transaction process. Grant Thornton’s dynamic teams offer range of financial, commercial and operational expertise.
-
Virtual asset advisory
Helping you navigate the world of virtual currencies and decentralised financial systems.
-
Corporate tax
Grant Thornton can identify tax issues, risks and opportunities in your organisation and implement strategies to improve your bottom line.
-
Employment tax
Grant Thornton’s advisers can help you with PAYE (payroll tax), Kiwisaver, fringe benefits tax (FBT), student loans, global mobility services, international tax
-
Global mobility services
Our team can help expatriates and their employers deal with tax and employment matters both in New Zealand and overseas. With the correct planning advice, employee allowances and benefits may be structured to avoid double taxation and achieve tax savings.
-
GST
GST has the potential to become a minefield and can be expensive when it goes wrong. Our technical knowledge can help you minimise the negative impact of GST
-
International tax
International tax rules are undergoing their biggest change in a generation. Tax authorities around the world are increasingly vigilant, especially when it comes to global operations.
-
Research and Development
R&D tax incentives are often underused and misunderstood – is your business maximising opportunities for making claims?
-
Tax compliance
Our advisers help clients manage the critical issue of compliance across accountancy regulations, corporation law and tax. We also offer business and wealth advisory services, which means we can provide a seamless and tax-effective offering to our clients.
-
Tax governance
Mitigate tax risks and implement best practice governance that will stand up to IRD scrutiny and audits.
-
Transfer pricing
Tax authorities are demanding transparency in international arrangements. We businesses comply with regulations and use transfer pricing as a strategic planning tool.
-
Audit methodology
Our five step audit methodology offers a high quality service wherever you are in the world and includes planning, risk assessment, testing internal controls, substantive testing, and concluding and reporting
-
Audit technology
We apply our audit methodology with an integrated set of software tools known as the Voyager suite. Our technology has been developed to produce quality audits that are effective and efficient.
-
Financial reporting advisory
Our financial reporting advisers have the expertise to help you deal with the constantly evolving regulatory environment.
-
Business architecture
Our business architects help businesses with disruptive conditions, business expansion and competitive challenges; the deployment of your strategy is critical to success.
-
Cloud services
Leverage the cloud to keep your data safe, operate more efficiently, reduce costs and create a better experience for your employees and clients.
-
Internal audit
Our internal audits deliver independent assurance over key controls within your riskiest processes, proving what works and what doesn’t and recommending improvements.
-
IT advisory
Our hands on product experience, extensive functional knowledge and industry insights help clients solve complex IT and technology issues
-
IT privacy and security
IT privacy and security should support your business strategy. Our pragmatic approach focuses on reducing cyber security risks specific to your organisation
-
Payroll assurance
Our specialist payroll assurance team can conduct a review of your payroll system configuration and processes, and then help you and your team to implement any necessary recalculations.
-
PCI DSS
Our information security specialists are approved Qualified Security Assessors (QSAs) that have been qualified by the PCI Security Standards Council to independently assess merchants and service providers.
-
Process improvement
As your organisation grows in size and complexity, processes that were once enabling often become cumbersome and inefficient. To maintain growth, your business must remain flexible, agile and profitable
-
Procurement/supply chain
Procurement and supply chain inputs will often dominate your balance sheet and constantly evolve for organisations to remain competitive and meet changing customer requirements
-
Project assurance
Major programmes and projects expose you to significant financial and reputational risk throughout their life cycle. Don’t let these risks become a reality.
-
Risk management
We understand that growing companies need to establish robust internal controls, and use information technology to effectively mitigate risk.
-
Robotic process automation (RPA)
RPA is emerging as the most sophisticated form of automation used to help businesses become more agile and remain competitive in the face of today’s ongoing digital disruption.
The power of sunlight: Are you ready for your NFP reserves to be made public?
Barry Baker
01 Aug 2022
A recommendation from the recent Charities Act Review could mean charities with annual operating expenses over $140,000 will be required to disclose information about the reserves they hold, and why they hold them. This information will also be available to the media and general public.
If this disclosure becomes an obligation for registered charities, I expect this information to also be demanded from non-charitable NFPs’ stakeholders including members, funders or communities.
If this sounds alarming, it shouldn’t be, but you do need to plan ahead for this change.
Think of it as an opportunity for your organisation to review the levels and possible uses for your reserves, and consider how you’ll effectively report on them to stakeholders, funders, employees, donors, and the public. It’s also a chance for you to consider whether you’re getting the most from your reserves.
How much should we have in reserves?
Naturally, it depends on the nature and size of your organisation, so there’s no single answer to this except that all NFPs should have some reserves.
Our 2022 Not for Profit sector survey found around 75% of NFPs could survive for at least six months on their current reserves, which is encouraging; the other 25% have yet to reach this level. But others have dramatically more: 11% of NFPs say they could operate for five years or more on their reserves.
Without more context five years does rather feel like a lot.
Reserves are typically used for the following purposes and activities:
- Costs of winddown: If you lost your income or had to shut down tomorrow, how much cash do you need to pay redundancies, or meet lease commitments to ensure an orderly shutdown?
- “Rainy day” fund: Some cash is held to offset any large, unexpected costs, delays in funding or errors in forecasting. The amount of this reserve depends on how reliable your income sources are and how fixed your costs are
- Large asset purchases: This may only happen every three to five years, but you need to put aside money each year for things like buildings, cars, databases and IT equipment
- Tools, materials or knowledge that are developed across multiple years
- Expected annual deficits for the next two years while making changes to the organisation
- Cover drops in investment income or values
Many NFPs use six months’ worth of costs as a target for reserve – and this is better than nothing, but we do recommend a more structured approach like developing a formal reserves policy (see below).
How do we measure our reserves?
A word of caution: the equity amount in your balance sheet is not your reserves total. Your current reserves total is the assets you could turn into cash reasonably quickly less your current commitments (creditors, holiday pay, loans etc).
You may have significant assets like databases, furniture and IT equipment on your balance sheet, but these should be excluded from your calculation of reserves as they would raise little cash if you sold them.
How should we communicate our reserves?
Many organisations display their reserves in their balance sheets or in the financial statement notes. However, I recommend a supplementary page to your financial statements to help readers easily understand how much you have in your reserves and why you have them.
The New Zealand Public Service Association has some great examples of how to display reserves which can be downloaded here along with our guide to creating a plain English reserves policy.
Should we have a reserves policy?
Yes. A reserves policy is a critical governance process to assist in the sustainability of your organisation and to achieving your strategy over the long term. It should include the following information:
- A description of why you have certain reserves and the trigger points for using them
- Each reserve should be linked to risk, that is, degree of probability and level of impact (low, medium, high, very high)
- A description of the level of funds required in each reserve, how this is calculated and a comparison of current level versus target
- Perhaps some guidance for each reserve around the type of investment that can be held to fund them. For example, your base line reserve should be held in a form that is easily turned into cash, whereas a reserve to move buildings in six years’ time could be held in a longer term, less fluid form
- Details about the process to review the policy, when it was reviewed last, and who can authorise changes
If you have a statement of investment policy and objectives (SIPO), this should be aligned with your reserves policy. You can also use your reserves policy and SIPO to help guide your investments.
A catalyst for positive change
It would be great to see the proposed changes from the Charities Act Review become a catalyst for NFPs to think carefully about how they use their reserves – especially reserves held in cash or property.
Property can be a repository of huge reserves for some organisations. If your NFP owns several buildings, are they underutilised? Review your portfolio and ask yourself: Are we getting the best out of our assets?
If you have significant cash or term deposits, have you spoken to a professional investment advisor to see if you are getting the best chance for returns in a way that would align to your strategy and organisational risks?
This proposed change might seem onerous at first, but if it gives your organisation the impetus it needs to improve financial stability or performance – even by a fraction – it will quickly pay for itself.
