The new financial reporting standards set by the External Reporting Board require some registered charities to disclose the salary details of individual staff members, as part of the requirements to include information about related party transactions.
For those charities reporting using the Tier 3 or Tier 4 standards, related parties include people who are closely associated with the charity and have the ability to influence the charity (for instance, committee members, officeholders and those involved in the strategic management of the charity) AND their close family members. So if a staff member is a son or daughter of a Board member, for example, details of that staff member’s salary will need to be disclosed where the salary is significant to the charity, or it is not on normal terms and conditions (for example, the salary is significantly higher or lower than the market rate).
Understandably, charities are concerned about the privacy implications of this requirement. There is a short answer to the privacy issue – the Financial Reporting Act 2013 provides that the disclosure of personal information (such as salary details) is not a breach of the relevant privacy principles in the Privacy Act 1993 if the disclosure is required for compliance with a standard issued by the External Reporting Board. And there is no requirement to name the staff member concerned. The standards set out what must be disclosed, including a description of the related party relationship, and a description and amount of the transaction(s). We have some useful guidance on our website about these requirements.
But we appreciate that salary information is generally viewed in New Zealand as being highly sensitive. While it is not necessary to name the individual concerned, in many cases it will be easy for those involved in the charity to know who the individual is. Charities in these situations can request, when submitting their annual returns and performance reports or financial statements to us, that this information be withheld from the publicly-accessible Charities Register. We can restrict access to information on the register where it is in the public interest to do so. While we consider each request on a case-by-case basis, protecting the privacy of individuals employed by charities is likely to be a public interest that justifies restricting public access to the information. Further details about restricting access to information on the register is available
on our website.