Appendix 3: A guide to the New Financial Reporting Framework for public entities

	Public sector for-profit entities with reporting periods beginning on or after 1 December 2012		Public sector public benefit entities with reporting periods beginning on or after 1 July 2014
	Entities	Accounting Standards	Entities	Accounting Standards
Tier 1	Expenses >$30m or publicly accountable	NZ IFRS	Expenses >$30m or publicly accountable	PBE Accounting Standards
Tier 2	Expenses ≤ $30m and not publicly accountable Can elect to report as a tier 2 entity	NZ IFRS Reduced Disclosure Regime (NZ IFRS RDR)	Expenses >$2m and ≤ $30m and not publicly accountable Can elect to report as a tier 2 entity	PBE Accounting Standards Reduced Disclosure Regime
Tier 3	Not publicly accountable and either all of its owners are members of the entity's governing body or not large. If an entity's parent or ultimate controlling party has the coercive power to tax, rate, or levy, it must satisfy the not large criterion. Can elect to report as a tier 3 entity	NZ IFRS Differential Reporting (NZ IFRS Diff Rep)	Expenses ≤ $2m which are not in tier 4 and not publicly accountable Can elect to report as a tier 3 entity	PBE Simple Format Reporting Standard – Accrual
Tier 4	Applied "old GAAP" at 30 June 2011, not publicly accountable, not required to file financial statements under section 19 of the Financial Reporting Act 1993, and not large. Can elect to report as a tier 4 entity	Old GAAP	All entities permitted by law to use cash accounting Can elect to report as a tier 4 entity	PBE Simple Format Reporting Standard – Cash

Transitional tiers will be removed when certain financial reporting legislative changes come into force. The timing of this is uncertain.

Publicly accountable has a specific meaning within the framework that is narrower than its general meaning.

Large – An entity is large if it exceeds two of total income of $20m, total assets of $10m, or 50 employees.