We wrote about the key changes in our June 2022 blog “Better Governance for Members Inc.” The key changes were an increase in the minimum number of members, introduction of a governing body, officer duties, AGM and financial reporting deadlines, audit requirements depending on size, and disputes resolution.[i]

What financial reporting standards apply to Incorporated Societies?

An Incorporated Society’s financial statements must be filed with the Registrar within 6 months of balance date, under the Incorporated Societies Act 2022. In addition, the Incorporated Society must file an annual return, updating key information about the entity, such as address, officers and contact person details.

There are no changes for Incorporated Societies that are registered charities. They file their financial statements with the Charities Register.

A small society can prepare simple financial statements using cash or accrual basis accounting methods. It does not have to follow XRB accounting standards. Your society is a 'small society' if it is not a registered charity or donee organisation for tax purposes, and in each of the previous 2 financial years has total operating payments of less than $50,000, and total current assets of less than $50,000.

Large societies which are not charities follow XRB accounting standards under one of four Tiers[ii].

Tier 4 - total operating payments less than $140,000 a year. Simple cash accounting.

Tier 3 - total expenses less than less than $2m. Simple accrual accounting.

Tier 2 – total spending $2m - $30m.

Tier 1 – total spending over $30m. 

Charities follow XRB accountinf standards under the same four Tiers, but with different thresholds.

Tier 4 - total operating payments less than $140,000 a year. Simple cash accounting.

Tier 3 - total expenses less than less than $5m. Simple accrual accounting.

Tier 2 – total spending $5m - $33m.

Tier 1 – total spending over $33m.

Does our Incorporated Society need an Audit?

If an Incorporated Society is not a charity, it doesn’t need an audit until total expenditure of society and controlled entities exceed $3m.

If an Incorporated Society is a charity, it doesn’t need an audit until total expenditure of society and controlled entities exceed $1.1m.

You can include an audit requirement in the Constitution, even when expenditure is below the threshold. This increases running costs but will provide a greater level of comfort for your members and sponsors.

When do Incorporated Societies need to reregister under the Incorporated Societies 2022 Act?

Incorporated Societies must be reregistered by 5 April 2026.

The steps to reregister involve:

A.     Drafting a compliant Constitution

B.     Identifying Committee (governing body)

C.     Make decisions at an Annual General Meeting or Special General Meeting

D.     Prepare officer paperwork

E.      Prepare to keep society records

F.      Apply to reregister

What Happens to an Incorporated Society which doesn’t want reregister?

If an Incorporated Society decides not to reregister under the 2022 Act, then it may appoint a liquidator or apply to be dissolved. It will need to follow its current rules to liquidate or be dissolved. After 5 April 2026, the society will be removed by the Registrar from the Incorporated Societies Register, if not previously liquidated or dissolved. After being removed from the Incorporated Societies Register, the society will no longer have a separate legal entity, limited liability, ability to sign contracts or name protection.



Where to find out more

Our reregistration process checklist is attached as a PDF. Incorporated Societies will need to work with their members and lawyers to update their constitutions. MBIE has a handy Constitution Builder to help you to draft a compliant constitution[iii]. You can also contact MBIE for guidance, but they can only give general advice not expert legal advice.[iv]

Your incorporated Society will need to re-register within the next twelve months, and you can expect that MBIE will be very busy in early 2026, so start the process now.  

-         Serena Irving

Serena Irving is a director in JDW Chartered Accountants Limited. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.

Download a PDF version with checklist here or contact the author by email. Like our Facebook page for regular tips. 

An article like this, which is general in nature, is no substitute for specific legal advice. If you want more information about the issues in this article, please contact your lawyer or MBIE.

  [i] https://is-register.companiesoffice.govt.nz/law-changes-for-societies/key-changes

[ii] https://www.xrb.govt.nz/standards/accounting-standards/not-for-profit-standards/standards-list/explanatory-guide-eg-a1

[iii] https://isb.companiesoffice.govt.nz/constitutionbuilder/startscreen

[iv] https://is-register.companiesoffice.govt.nz/help-centre/reregistering/getting-ready-for-reregistering