Early Learning Funding Update – February 2018
An update on the financial reporting requirements for early learning services for the year ending in 2017, and information about Targeted Funding.
- Financial reporting requirements for the year ending in 2017
- Targeted Funding for Disadvantage
- Playgroup funding information for January – June 2018
ECE services that receive Ministry income of more than $80,000 and completed a full financial year in 2017 must send their audited financial statements to the Ministry of Education by 30 June 2018.
New accounting standards
The Financial Reporting Act 2013 delegated responsibility to the External Reporting Board (XRB) to develop standards for financial reporting. The XRB have made the accounting standards(external link) available on their website. These standards are intended to simplify financial reporting for many entities. Many of you may already be following these standards for your financial reporting to other agencies (eg, to Charities Services if you are a registered charity). The Ministry has adopted these standards to better align with other agencies’ reporting requirements.
From the 2016/17 financial year (reporting due to the Ministry 30 June 2018) all services required to follow these reporting standards will be expected to do so.
Services not required to report under these accounting standards for the year end 2017 should refer to Chapter 12 of the ECE Funding Handbook (ECE FHB).
Your accountant will be able to advise if you are required to follow these standards. For those services following the new standards your accountant will be able to advise on what is required.
Please note: all financial reports submitted to the Ministry must be audited by an independent auditor.
Below you will find the information that outlines this year’s financial reporting requirements and where to send them.
For more information on submitting your financial reporting to the Ministry, please see our ECE financial reporting requirements for the financial year ending in 2017 frequently asked questions [DOCX, 423 KB].
Please note: we will not be sending out a letter to confirm you have met the financial reporting requirements. We will contact you as soon as possible if you have not met the requirements to follow up on missing information.
If you send your financial statements to us by email you will receive an email back confirming we have received them. We will only contact you further if anything is missing or incomplete.
This year all ECE services will receive the declaration form [DOCX, 73 KB] via email. All financial reporting requirements from now on will be notified in this Bulletin.
Financial reporting requirements for early childhood education services
As a condition of receiving government funding, early childhood education (ECE) services are required to send the Ministry a copy of their audited financial statements each year.
This Bulletin article is an addendum to the financial reporting requirements outlined in Chapter 12 of the ECE FHB.
You may wish to show this article 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 2018:
- Completed and signed declaration form [DOCX, 73 KB] for each service number
- Audited financial statements
- Independent auditor’s report
- Report on any Equity Funding received by each service from the Ministry.
Please ensure each document is marked with the relevant service number. Do not send your documents separately.
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. Some reporting areas can be consolidated for services that are grouped under an ECA for funding purposes. Refer to Chapter 12 of the ECE FHB for more information.
These 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, 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 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
- 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 or do not use the appropriate format for reporting.
The required qualifications for auditors are defined in section 36 of the Financial Reporting Act 2013(external link). The following resources may be of use in helping you to find an auditor:
- Chartered Accountants Australia and New Zealand: www.charteredaccountantsanz.com(external link)
- CPA Australia: www.cpaaustralia.com.au/(external link).
The auditor must be independent of your service’s management group. The person or entity preparing the financial statements or special purpose financial report cannot also audit the statements or report.
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 XRB(external link).
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 2017 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 2018, 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 2018
- 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 2018 to:
Ministry of Education
33 Bowen Street, Wellington 6011
PO Box 1666, Wellington 6140
Guidelines for Targeted Funding
The Guidelines for Targeted Funding for Disadvantage [PDF, 681 KB] (Targeted Funding) are now available on the Ministry’s website. These guidelines explain how early childhood education (ECE) services and ngā kōhanga reo can use Targeted Funding.
Reporting requirements for Targeted Funding
The reporting template for Targeted Funding [PDF, 166 KB] is also available on the Ministry’s website. ECE services and ngā kōhanga reo that receive Targeted Funding in 2018 are required to complete and submit this template by February 2019.
Funding Handbook chapter
We have introduced Chapter 13 on Targeted Funding in the ECE Funding Handbook. If you receive Targeted Funding in 2018, please ensure you are familiar with the content of this chapter.
The playgroup operational funding (PG3) forms for the period January – June 2018 were sent to eligible playgroups in January 2018. If you have not received a PG3 form please contact your regional Ministry of Education office.
Completed PG3 forms must be returned to your Regional Ministry of Education office by 28 February 2018.
Updating playgroup details
It is important that the Ministry has the most current details for your playgroup. If your playgroup’s funding contact person, postal address or bank account details have changed, please notify your regional Early Childhood Education Playgroup Advisor as soon as possible. Incorrect details may result in delayed funding.
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