Tier 1 and Tier 2 NFPs/Charities: It’s now time to tell your performance story

If you’re responsible for reporting for a Tier 1 or Tier 2 public benefit entity (PBE), read on…

For many larger charities and NFPs, a new reporting standard (PBE FRS 48,) has come into effect that we all need to think about in the next few months.

If your organisation hasn’t started implementing PBE FRS 48, now is a great time to start. This new reporting standard isn’t just another compliance exercise; it’s a valuable opportunity to tell stakeholders your performance story and the wider impact your organisation has on the community.

Service performance reporting is also a very useful way to communicate how your organisation is achieving its objectives - a crucial piece of information for funders who want to see your performance outcomes.

Tier 3 and Tier 4 entities have been producing performance reports for some years now. PBE FRS 48 is a principles-based reporting standard that provides NFPs flexibility in how they tell their performance story, it also helps establish better decision-making and greater accountability. Entities can apply judgement to the selection, measurement, aggregation, and presentation of service performance information when adopting PBE FRS 48.

The standard requires an entity to provide its readers with useful contextual information about:

• why the entity exists
• how/what aims and objectives it intended to achieve
• how did the entity go about achieving service performance objectives during the year?
• what other factors are relevant to the entity’s service performance during the period (e.g., financial, legal, economic, or social)?

Getting started

The mandatory requirements for Tier 1 and Tier 2 IPSAS reporting entities apply from 1 January 2022. Unless permitted otherwise by legislation, PBE FRS 48 requires service performance information to be presented for the same reporting entity and period covered in your financial statements. Comparative information should be prepared so it is available following adoption of the standard. For example, if your organisation’s financial year ends 31 December 2022, the information needed to report against previous performance measures will need to be collated from 31 December onwards.

We recommend NFPs prepare for this new requirement by reviewing the systems and controls in place for collating performance information. It’s also important to assess the reliability and accuracy of this data.

We also suggest getting your SSP underway sooner rather than later so your organisation can meet its reporting obligations on time and in full.

For further information, contact: