Date posted: 22/11/2019

Survey: Solid confidence in NZ capital markets

CA ANZ survey shows investors are mostly confident in audited financial reporting by public companies.

A Chartered Accountants Australia and New Zealand (CA ANZ) survey shows investors are mostly confident in audited financial reporting by public companies, a critical pillar of capital market confidence. They also trust independent auditors the most when it comes to investor protection and market integrity, followed closely by regulators, audit committees and analysts.

CA ANZ Reporting and Assurance Leader Amir Ghandar said the survey results are encouraging but show more work is required by companies, directors and auditors to further strengthen trust among investors and the public.

“As the recent focus on audit quality in New Zealand and internationally shows, trust and confidence are hard won and easily shaken.

“At the same time though, the survey results reveal there is generally solid trust among retail investors in New Zealand’s capital markets and in particular there’s recognition of the long-standing, strong contribution auditors make to safeguard these markets.” 

He said the confidence investors have in audited financial statements stems from the reputation risk accompanying any wrongdoing, the knowledge that auditing is regulated and a belief that auditors are providing honest and independent third-party scrutiny.

“With a premium increasingly being placed on trusted information by the public, auditors have to shoulder a big responsibility to preserve this trust.

“As a profession we must strike a balance between helping people understand what we do and busting the myths. We also need to listen to concerns about where auditing needs to evolve to better meet business and public needs.”

There has been a longstanding expectation that audits report on future viability, fraud and misconduct, Ghandar said. “The audit landscape is now changing in this direction to deliver more robust assessments of these areas.

“It's fair to say the public and investors want more from auditors." 

Survey highlights:

  • 30 percent of retail investors have a “great deal” or “quite a bit” of confidence in NZ capital markets; 55 percent have “some confidence” while 12 percent have “no confidence at all”.
  • 33 percent of retail investors have a “great deal” or “quite a bit” of confidence in publicly listed NZ companies; 50 percent have “some confidence” while 13 percent have “no confidence at all”.
  • 47 percent of retail investors have a “great deal” or “quite a bit” of confidence in audited financial information released by publicly listed NZ companies; 43 percent have “some confidence” while 8 percent have “no confidence at all”.
  •  Asked why they had confidence in these audited financial statements, 46 percent said it was because “companies’ reputation is at stake if they get caught in the wrong” and 45 percent because “auditing is well regulated”.
  • And asked who they had most confidence in to be effective in their roles, 55 percent said independent auditors who audit publicly listed companies followed by government regulators and oversight (37 percent) and financial analysts (35 percent).
  • Information on a company’s financial performance, debt and asset values are the most useful aspects of annual reports. Management commentary and analysis is the least.

The survey was conducted in late May 2019 by Dynata with 514 New Zealand retail investors interviewed. The survey format follows that of US’s Center for Audit Quality.

Read the survey report

85% of retail investors have some confidence in New Zealand capital markets.

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