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Public Benefit Entities (PBE)

This page contains information and guidance on Public Benefit Entities.

Public benefit entities are defined in each standard as:

“reporting entities whose primary objective is to provide goods or services for community or social benefit and where any equity has been provided with a view to supporting that primary objective rather than for a financial return to equity holders”.

Guidance for determining when an entity is a public benefit entity is soon to be issued by the Financial Reporting Standards Board (FRSB). An exposure draft of the guidance was issued in March 2005.

This guidance indicates that:

  • The Government reporting entity is a public benefit entity.
  • Departments and Offices of Parliament are public benefit entities.
  • State-owned enterprises are not public benefit entities.
  • Whether individual Crown entities are public benefit entities requires case-by-case consideration in accordance with the guidance criteria.

NZ IAS 1 Presentation of Financial Statements requires entities to disclose in their financial statements whether they are designated as a profit-oriented or a public benefit entity.

PBE Policies

Where an NZ IFRS contains additional material for public benefit entities, this material is clearly identified in the standard. There will be changes to PBE insertions as standards are updated or new standards introduced.

Key PBE guidance in NZ IFRS includes:

  • Inventories: guidance is provided on inventories held-for-distribution and inventories acquired at nil or nominal cost.
  • Segment reporting: PBEs do not need to comply with NZ IAS 14 Segment Reporting.
  • Property, plant and equipment: PBEs retain ability to revalue assets by class of asset. Current guidance on depreciated replacement cost is replicated in NZ IAS 16 as is the treatment of assets acquired at nil or nominal cost.
  • Government grants: PBEs only need to apply some of the disclosures required in NZ IAS 20 Accounting for Government Grants and Disclosure of Government Assistance.
  • Related party disclosures: disclosures required in NZ IAS 24 do not apply to arms-length transactions between entities subject to common control or significant influence by the Crown.
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