Date 26 April 2016 | Circular 2016/01 | 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 2015.
This circular replaces 2015/06
The action needed is Service providers must send audited financial statements and supporting documentation for the financial year ending in 2015 to the Ministry by 30 June 2016.
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 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 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.
Please note: This is the last ECE Financial Reporting circular. In the future, information regarding the financial reporting requirements will be communicated via He Pānui Kōhungahunga – the Early Learning Bulletin which is distributed monthly via email. If you have not yet subscribed to the Bulletin, please email earlylearning.bulletin@education.govt.nz to be part of the mailing list.
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 2016:
- 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.
Audited financial statements required
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).
Reporting can be consolidated for services that are grouped under a service provider for funding purposes.
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.
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
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 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.com (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 2015 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 2016, 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 2016.
- 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 2016 to:
Resourcing Division, Ministry of Education, 33 Bowen Street, Wellington 6011, PO Box 1666, Wellington 6140, Email: resourcing@education.govt.nz.
Issued by
Susan Howan, Associate Deputy Secretary, Sector Enablement and Support, Te Wāhanga Whakarato Rawa, Ministry of Education, National Office, 33 Bowen Street, P O Box 1666, Wellington, New Zealand, Phone: (04) 463 8000, Fax: (04) 463 8001, Email: resourcing@education.govt.nz.