Not sure whether your charity or community group needs an audit or a review? Here’s a plain-English guide to the rules for registered charities in Aotearoa New Zealand.
Heads up – the limits have changed. Our older “Audit or review?” PDF (2021) shows the previous thresholds of $500,000 and $1 million. The current limits are $550,000 (review or audit) and $1.1 million (audit). We’re updating the PDF soon – please use the figures on this page in the meantime.
Does my organisation need an audit or a review?
For registered charities, it depends on your total operating expenditure in each of the previous two financial years:
| Operating expenditure (each of the last 2 years) | What’s legally required |
|---|---|
| $550,000 or less | No audit or review required by law – but check your rules and funders (see below) |
| Over $550,000 (medium) | A review or an audit by a qualified auditor |
| Over $1.1 million (large) | An audit by a qualified auditor |
If you’re required by law to have an audit or review, it also covers your non-financial information – your Entity Information and Statement of Service Performance.
Below the threshold? You might still need one
- Your rules: your trust deed, constitution or governing rules may require an audit or review.
- Your funders: a funder or grant provider may ask for one as a condition of funding.
In these cases you can usually choose who does the audit or review (unless your rules say it must be a qualified auditor) and agree what it covers. Talk to your auditor or reviewer early and agree the scope before your financial year ends.
What’s the difference between an audit and a review?
| Audit | Review | |
|---|---|---|
| Level of assurance | Reasonable (high) assurance that the financial statements are free from material error or fraud | Limited assurance – less than an audit |
| Report you get | Independent Auditor’s Report, with a positive opinion (e.g. “the statements are free from material misstatement”) | Independent Review Report, with a negative conclusion (e.g. “nothing has come to our attention…”) |
| What the work involves | Detailed testing of your records – inspection, confirmation, recalculation – plus enquiries and analysis | Mainly enquiries and analytical review |
| Cost and time | More work, so usually costs more | Less work, so usually costs less |
Who can do a statutory audit or review?
If it’s required by law, it must be done by a qualified auditor under sections 35 and 36 of the Financial Reporting Act 2013. You can find one through Chartered Accountants Australia and New Zealand or CPA Australia.
This page is general guidance only. Rules change, so always check the latest information from Charities Services and your own governing documents.
Still not sure? Ask us – it’s free.
Our team can help you work out what your organisation needs and get your records ready. In person in Ōtepoti Dunedin or by Zoom anywhere in New Zealand.