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Why are we doing this?

School financial reporting is currently complex, costly, and not always meaningful for the average reader.

Kiwipark is designed around the Tier 2 financial reporting framework, despite many schools being eligible to report under the Tier 3 framework.
As Crown entities, schools have important accountability obligations. However, schools generally have relatively simple operating models and limited operational risk.
Audit fees have increased and are expected to continue rising. Key drivers include:

Evolving audit standards
Auditor shortages
Historically constrained audit fees
Increased audit effort and time requirements

Preparing for and completing an annual audit now typically requires 85–140 hours, more than double the time required 10 years ago.
Current reporting can be difficult for the average reader to understand without some form of accounting knowledge.

education.govt.nz

[UNCLASSIFIED]

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We asked your thoughts on an idea

More than 600 people attended the information sessions, resulting in 134 pieces of feedback.
There was strong overall support for simplifying school financial reporting.
One message came through clearly: you all dislike cyclical maintenance - a lot!
We also heard concerns about:

Timing and preparedness
Realisation of savings
Accountability and transparency

[UNCLASSIFIED]

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So which direction is the wind blowing?

Subject to final approvals, the proposed way forward is:

A school-specific financial reporting standard, maintained by the Ministry and based on Tier 3 principles.
Removal of reporting on centrally provided services (excluding teacher salaries), supported by additional contextual information for non-financial readers.
Removal of low-value and duplicative disclosures, including budget information and the cash flow statement.Simplify the treatment of cyclical maintenance, while continuing to recognise schools’ obligations and responsibilities for building maintenance.
Simplified cyclical maintenance reporting, while continuing to recognise schools' maintenance obligations.
Plain-English accounting policies, aligned to the relevant disclosure notes.

A more proportionate assurance approach for smaller schools, while retaining annual assurance across the sector.

education.govt.nz

[UNCLASSIFIED]

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A school‑specific financial reporting standard

Schools need a clear and consistent basis for preparing financial statements.
Currently, schools are required to comply with Generally Accepted Accounting Practice (GAAP).
The unique relationship between schools and the Crown means existing reporting frameworks often require significant interpretation and additional guidance.
Some of the proposed changes would mean school financial statements would no longer be fully GAAP-compliant.
To address this, a school-specific financial reporting standard is proposed:

Be maintained by the Ministry.
Be based on Tier 3 (Public Benefit Entity) principles.
Be tailored to the school environment.
Enable future reporting changes to be incorporated efficiently.
Reduce the risk of inconsistent accounting treatment across schools.
Reduces the risk of inconsistent interpretation of accounting treatment.

education.govt.nz

[UNCLASSIFIED]

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Reporting on centrally provided services

The initial proposal considered removing some notional transactions from school financial statements.
Feedback showed that removing teacher salary revenue and expenditure would significantly reduce audit materiality thresholds, likely increasing audit effort and costs.
We also heard that, while teacher salary information is often misunderstood, it remains an important part of the overall financial picture of a school.
Greater value can be achieved by providing more context about what this funding supports, for example:

Number of teaching positions funded
Teaching resources available to the school
What the teacher salary funding is delivering

As schools are the employer of teachers and have responsibility for staffing decisions, it remains appropriate to recognise teacher salary costs in school financial statements, even though salaries are paid directly by the Ministry.
Bottom line: Teacher salaries stay, but we want to better explain what that funding provides and why it matters.

education.govt.nz

[UNCLASSIFIED]

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Remove low‑value or duplicative disclosures from annual financial statements

Budget information

Not audited.
Often prepared in a different format from annual financial statements.
No requirement to report budget variances.
Schools would still be required to prepare budgets.

Statement of Cashflow

One of the least understood parts of the financial statements.
Provides limited additional value for many readers.
Removal would reduce preparation and audit effort.

Remove the requirement for schools to include budget information and a statement of cash flows in annual financial statements.
Feedback indicated that both disclosures provide limited value for many users.
Result: Simpler financial statements that focus on information people actually use.

education.govt.nz

[UNCLASSIFIED]

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Simplify the treatment of cyclical maintenance

Under the proposed approach, schools would no longer recognise a formal cyclical maintenance liability. Instead, schools would disclose:

The existence of the maintenance obligation.
The level of reserves set aside to meet that obligation.

The current provision is highly judgemental, complex to calculate, and not well understood across the sector.
It is also a frequent source of audit delays and additional audit costs.
Moving from recognition to disclosure would simplify financial reporting while continuing to support sound financial management and active property maintenance.
This approach continues to acknowledge schools' responsibility for maintaining their buildings.
The same approach would apply to state-integrated schools.
Outcome: Simpler reporting, reduced audit effort, and continued visibility of schools' maintenance obligations.

education.govt.nz

[UNCLASSIFIED]

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Use of plain‑English accounting policies

Who actually reads the accounting policies as they currently stand?
Now be honest about it!
Current accounting policies are often highly technical, lengthy, and difficult for non-financial users to understand.
We propose rewriting them in plain English and placing them alongside the relevant notes.
This would help users understand how transactions are treated at the point the information is presented.
Result: Financial statements that are easier for boards, whānau, and communities to understand, without losing technical accuracy.

education.govt.nz

[UNCLASSIFIED]

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A proportionate assurance approach for smaller schools

For schools with annual expenditure below $1.1 million, a more proportionate assurance approach is proposed, aligning with approaches already used elsewhere in the public sector.
While simpler financial reporting will reduce preparation effort, audit requirements remain a key driver of compliance costs.

The $1.1 million threshold recognises the assurance already provided over payroll.
School-level assurance would focus on areas within a school's direct control.
Approximately 520 schools would qualify.
The estimated impact on the school sector consolidation is $418 million (around 3.7% of total school expenditure).
Additional support would be provided to help maintain strong financial management practices.
What this means:

Lower compliance costs for smaller schools.
Assurance focused on the areas schools can directly influence.
Continued confidence in the overall integrity of school financial reporting.

education.govt.nz

[UNCLASSIFIED]

Under current not‑for‑profit assurance requirements, entities with annual expenditure below $550,000 are not required to obtain assurance, and audits are required only where expenditure exceeds $1.1 million. However, a position of no assurance is not considered appropriate for schools, given their Crown entity status.

A middle‑ground approach is therefore proposed, providing limited assurance for schools with total expenditure below $1.1 million. This would provide assurance over key risk areas without requiring a full audit opinion.

Under this approach, all schools would continue to receive some form of annual assurance. Final assurance arrangements would be agreed with the Audit Office.

Indicative assurance focus areas for smaller schools include:

review of expenditure, including sensitive expenditure;

accurate reporting of personnel costs;

confirmation of bank accounts, term deposits, and investments;

confirmation of working capital position; and

confirmation of board commitments.

Potential audit fee savings are estimated at approximately 50 percent, equating to around $1.858 million per year based on 2024 costs.

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Charting the course ahead

First reporting date: 31 December 2027

What you wont see

Now to March 2027

Developing the reporting model and accounting standard.
Stress testing and refining the approach.
Workshops to test, challenge and improve the design.
Preparing guidance and support materials.
And yes, plenty of spell-checking...

What you will see

April 2027

Release of KiwiPark 2.0.
Guidance materials and supporting resources.

July–September 2027 (and possibly beyond)

Getting Ready roadshows and workshops.
Q&A sessions around the country.

A couple of things to note

The April 2027 release is intended to avoid confusion with the 31 December 2026 annual reporting process.
KiwiPark 2026 will be unchanged from KiwiPark 2025 — it will be a simple rollover year.

education.govt.nz

[UNCLASSIFIED]

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