- Registered Company Auditors (RCAs) can carry out Corporations Act audits in Australia.
- Australian members must meet minimum competency requirements to perform review engagements if they are not RCAs.
- Auditor rotation requirements have changed for reporting periods beginning on or after 1 January 2019.
- Licenced auditors at registered audit firms can audit FMC reporting entities in New Zealand.
- People recognised as qualified auditors can perform other NZ statutory assurance engagements.
- Auditor rotation requirements have changed for reporting periods beginning on or after 15 December 2018.
Australia: Corporations Act audits
Only RCAs can perform Corporations Act audits. To become an RCA, you need to show the Australian Securities & Investments Commission (ASIC) that you meet the requirements of section 1280 of the Corporations Act 2001 (the Act). You need to:
- have the qualifications listed in the Act, or equivalent qualifications and experience; and
- have the skills contained in an ASIC-approved competency standard, or have an equivalent number of hours of practical experience; and
- be capable, and be considered a fit and proper person to be registered as an auditor.
ASIC provides guidance on what you must do to obtain and maintain your registration in Regulatory Guide 180: Auditor Registration (RG 180). The guide also covers Authorised Audit Company registration.
In 2016, ASIC approved a revised competency standard for RCAs that was prepared by Chartered Accountants ANZ, CPA Australia and the Institute of Public Accountants. RG 180 includes the log book you must use to document your compliance with the standard. As of 1 July 2017, ASIC only accepts applications made under the revised 2016 standard.
For more information on using the competency standard to meet the Act’s skills requirement, read our guidance document in the downloads section below.
Visit ASIC online
Read Regulatory Guide 180: Auditor RegistrationLearn more
Competency requirements for Australian members performing review engagements
The Joint Accounting Bodies in Australia have agreed minimum competency requirements for members who are not RCAs who wish to perform review engagements. The competency requirements are available in the downloads section below.
New Zealand: Audits of FMC reporting entities
To perform audits of Financial Markets Conduct (FMC) reporting entities, the Auditor Regulation Act 2011 requires:
- auditors, including engagement partners and engagement quality control reviewers, to hold a license; and
- audit firms to be registered
Section 451 of the Financial Markets Conduct Act 2013 provides a full list of the types of entities considered to be FMC reporting entities, including issuers of regulated products, registered banks, licensed insurers, credit unions and building societies.
The Financial Markets Authority (FMA) sets the prescribed minimum standards that auditors must meet to obtain licenses and audit firms must meet to become registered.
For New Zealand auditors and audit firms, licensing and registration are handled by the New Zealand Institute of Chartered Accountants (NZICA). NZICA has powers to add conditions to licenses, and to suspend and cancel licenses.
For overseas auditors and audit firms, the FMA is responsible for licensing and registration.
All licensed auditors are subject to regular quality review by the FMA.
New Zealand: Other statutory assurance engagements
In New Zealand, you need to be recognised as a qualified auditor to undertake statutory assurance engagements other than audits of Financial Markets Conduct (FMC) reporting entities. There are a number of pathways to recognition:
- If you hold a licence under the Auditor Regulation Act 2011, you are automatically recognised as a qualified auditor.
- If you meet the requirements in section 36 of the Financial Reporting Act 2013, the New Zealand Institute of Chartered Accountants (NZICA) can grant you recognition.
- If you operate through a limited company, it may apply to NZICA to be registered as a qualified auditor. There is no provision for recognition of partnership firms, but an auditor can sign auditor reports in the name of the partnership if the engagement partner is a qualified auditor.
- If you are not a resident of New Zealand, you can apply to the Companies Office to be recognised as a qualified auditor. However, the Companies Office is not able to recognise an overseas company as a qualified auditor.
Auditor rotation requirements in Australia and New Zealand have changed
Over the last several years, there has been a series of consultations in relation to changing the long association requirements in the IESBA’s Code of Ethics for Professional Accountants. The IESBA issued the final version of the amended Code in April 2018. The APESB and the NZAuASB have made the same changes to the Australian and New Zealand Codes through amending standards which can be accessed below.
As the changes will take effect for reporting periods beginning on or after 15 December 2018 in New Zealand and 1 January 2019 in Australia, both the APESB and the NZAuASB have issued material to assist practitioners to implement the changes. The APESB has issued technical staff Q&As and the NZAuASB has also issued a set of FAQs which can be accessed below.
The code distinguishes between engagement partners, engagement quality control review (EQCR) partners and “other key audit partners”. There are no changes to the time on periods for any type of partner.
The most significant changes are to the cooling-off period for engagement partners and EQCR partners of public interest entities (PIEs).
Where a PIE has rotation requirements prescribed in legislation that allow a cooling-off period shorter than that prescribed in the code (such as Australian listed Corporations Act entities and APRA regulated entities which have a two year cooling-off period), the changes are:
- The cooling-off period for engagement partners will increase from two to three years for reporting periods beginning on or after 1 January 2019* but before 31 December 2023.
- The cooling-off period for engagement partners will then increase from three to five years from 31 December 2023.
- The cooling-off period for EQCR partners will increase from two to three years for reporting periods beginning on or after 1 January 2019.
*Australian application date as we do not
believe any NZ PIEs meet the requirements of the transitional provisions
Where a PIE does not have rotation requirements prescribed in legislation the changes are:
- The cooling-off period for engagement partners will increase from two to five years on 15 December 2018 (NZ)/1 January 2019 (AUS).
- The cooling-off period for EQCR partners will increase from two to three years on 15 December 2018 (NZ)/1 January 2019 (AUS).
There are no rotation requirements in the Code of Ethics for audit partners on non-PIE entities and individuals on assurance engagements, but the matters to consider in relation to familiarity and self-interest threats have been amended and in some circumstances, rotation may be considered the only way to safeguard such a threat. In these circumstances firms will be required to determine an appropriate cooling-off period to eliminate or reduce the threat to an acceptable level.
It is important that members familiarise themselves with the new requirements and consider the impact on their current rotation plans to ensure compliance with the new requirements from the effective date (15 December 2019 (NZ) or 1 January 2019 (AUS)).
APESB amending standard
Amendments to Long Association of Personnel with an Audit or Assurance Client requirements in APES 110 Code of Ethics for Professional AccountantsRead here
APESB Technical Staff Q&A
Audit Partner rotation requirements in Australia Technical Staff Questions & AnswersRead here