This circular has been replaced by Circular 2016/01 .
Date 1 May 2015 | Circular 2015/06 | Category Funding
This circular is about Financial reporting requirements for licensed early childhood education (ECE) services (including services deemed to be licensed under sections 319K or 319L of the Education Act 1989), for the financial year ending in 2014.
This circular replaces 2014/37
The action needed is Service providers must send audited financial statements and supporting documentation for the financial year ending in 2014 to the Ministry by 30 June 2015.
It is intended for All ECE services and their umbrella organisations.
This circular does not apply to Te Kōhanga Reo and Playgroups.
For more information
Contact the Resourcing Contact Centre, Ministry of Education:
Resourcing Division, Ministry of Education, PO Box 1666, Wellington
Phone: (04) 463 8383 Fax: (04) 463 8374
Email resourcing@education.govt.nz
Copies of this circular are available at www.education.govt.nz/ministry- of-education/publications/education-circulars .
Introduction
As a condition of receiving government funding, early childhood education (ECE) services are required to send the Ministry of Education a copy of their audited financial statements each year.
This circular replaces all previous ECE financial reporting circulars and is an addendum to the financial reporting requirements outlined in Chapter 12 of the ECE Funding Handbook (ECE FHB).
You may wish to show this circular to your accountant and auditor to ensure that they understand the Ministry’s financial reporting requirements.
Documents required for financial reporting:
The following documents must be identified by service number and submitted together. They are to be received by the Ministry of Education before 30 June 2015 :
- Completed and signed declaration form for each service number.
- Audited financial statements.
- Independent auditor’s report , completed by a member of the Chartered Accountants of Australia and New Zealand (CAANZ, formerly NZICA).
- Report on any equity funding received from the Ministry.
Please note:
In 2014 the Ministry recognised that there was some confusion around the reporting requirements for audited consolidated financial statements. Although the requirements in Chapter 12-2 of the ECE FHB had been in place since 2010 the Ministry had accepted consolidated financial reports in certain circumstances. As a result the Ministry is reviewing its requirements for consolidation.
Audited financial statements required from:
Community-based services
Community-based services are generally operated by an Incorporated Society, Charitable Trust or Registered Charity for the benefit of the community they serve. Kindergartens, Playcentres and ECE services owned by public bodies (eg, health boards or government departments) are considered community-based services for the purpose of this exercise.
Community-based services or, where applicable, their umbrella organisations must provide general purpose financial statements that comply with generally accepted accounting practice.
Where material the financial statements should include specific reference to subsidies received from the Ministry of Education, including (if received) the ECE Funding Subsidy, 20 Hours ECE, Equity Funding and ATIS (Annual Top-Up for Isolated Services). These matters may be disclosed either on the face of the financial statements or as a note to the accounts.
Until we have completed a review of the consolidation requirements:
- Reporting for general purpose financial statements can be consolidated for services that are grouped under a service provider for funding purposes.
- Kindergarten Associations and Regional Playcentre Associations only need to provide audited consolidated general purpose financial statements.
All general purpose financial statements submitted to the Ministry must be audited by an independent auditor who is a member of Chartered Accountants of Australia and New Zealand (CAANZ, formerly NZICA).
Privately-owned services
Privately-owned services are those operated by any person or sole trader, or persons through a company, partnership or private trust.
Privately-owned services can choose to provide either general purpose financial statements that comply with generally accepted accounting practice (requirements for general purpose financial statements are explained under the reporting requirements for community-based services) or a special purpose financial report.
The following information must be included in the special purpose financial report :
- A statement of accounting policies comprising a definition of the reporting entity, statement of general accounting policies, statement of particular accounting policies, and a statement of changes in accounting policies
- Details of the amount of funding received from the Ministry including (if received): the ECE Funding Subsidy, 20 Hours ECE, Equity Funding and ATIS (Annual Top-Up for Isolated Services)
- Information on how this funding was spent
Until we have completed a review of the consolidation requirements:
- The above reporting areas of a special purpose financial report can be consolidated for services that are grouped under a service provider for funding purposes.
All general purpose financial statements and special purpose financial reports submitted to the Ministry must be audited by an independent auditor who is a member of the Chartered Accountants of Australia and New Zealand (CAANZ, formerly NZICA).
Equity funding reporting requirements for all services
Equity Funding is a subsidy that must be used for the specific purpose for which it has been paid. Services that received equity funding must report on the use of this funding.
Please use the format shown at the end of this circular and on the back of the declaration form.
Please note: Funding may be suspended for services that do not report on their Equity Funding.
Audit requirements for all services
Auditor requirements
Your auditor must be a Chartered Accountant who is a member of the Chartered Accountants of Australia and New Zealand (CAANZ, formerly NZICA).
You can check if your auditor is a CAANZ member at www.nzica.co.nz (using the ‘Find an Accountant’ function) or call 0800 469 422.
The auditor must be independent of your service’s management group. The person or entity preparing the financial statements cannot also audit those statements.
Audit report requirements
A copy of the audit report must be included with the financial statements sent to the Ministry.
The basic elements of an audit report are specified in the relevant auditing or other assurance engagement standard issued by the New Zealand External Reporting Board.
The Ministry will only accept reports that provide audit assurance. Limited assurance, which is provided under a review engagement, is not acceptable.
Please note: Funding may be suspended for services that do not comply with the Ministry’s audit requirements.
Financial reporting exemptions
- Services that did not complete a full financial year of operation for the financial year ending in 2014 do not have to submit audited financial reports.
PLEASE NOTE: If you have sold your service in the middle of the financial year, please submit your financial statements up to the point of sale. - Services with a total Ministry income of $80,000 (incl. GST) or less for the full financial year do not have to submit audited financial reports. The calculation of $80,000 must include any targeted funding received.
Please note: Exempt services must submit a signed and completed declaration form to the Ministry before 30 June 2015 , informing the Ministry they are exempt from financial reporting requirements.
Funding suspended for late or incomplete information
Funding may be suspended from services that do not :
- Submit the required documents relating to financial reporting to the Ministry.
- Meet the reporting deadline of 30 June 2015.
- Comply with the Ministry’s auditor and audit report requirements.
Where to send your audited financial statements
Please send the required documentation by 30 June 2015 to:
Resourcing Division, Ministry of Education, 45-47 Pipitea Street, Wellington 6011, PO Box 1666, Wellington 6140
Fax: (04) 463 8374, Email: resourcing@education.govt.nz
Issued by
Karin Dalgleish, Acting Group Manager ECE Early Learning, Parents and Whanau, Te Wāhanga Whakarato Rawa
Ministry of Education, National Office, 45 – 47 Pipitea Street, Thorndon, P O Box 1666, Wellington, New Zealand, Phone: (04) 463 8000, Fax: (04) 463 8001, Email: resourcing@education.govt.nz