Date posted: 16/11/2020 4 min read

Clear themes emerge for audit plan for NZ

Senior representatives from audit firms, the NZ Shareholders Association, the Institute of Directors, the Office of the Auditor-General, internal auditors, regulators and standard setters and CA ANZ discuss a proactive plan for the future of New Zealand audit.

In Brief

  • Discussions continue on a proactive plan for the audit profession in New Zealand
  • A final plan is expected to be ready early in 2021
  • New and innovative ways need to be found to engage investors with audits

The New Zealand investment and business community met this month to continue discussions on a proactive plan for the audit profession in New Zealand, including how to make audits more relevant to investors and users.

Participants included senior representatives from audit firms, the NZ Shareholders Association, the Institute of Directors, the Office of the Auditor-General, internal auditors, regulators and standard setters and Chartered Accountants Australia and New Zealand.

It was the third such meeting organised by CA ANZ to continue to lead the conversation on the future of audit in New Zealand. A draft plan, based on key themes and recommendations from earlier meetings, was discussed.

A final plan for audit in New Zealand is expected to be released early next year.

CA ANZ Assurance and Reporting Leader Amir Ghandar FCA said those at the roundtable were keen to for the audit sector to play a proactive role, for New Zealand to get ahead of some of the issues confronting the sector in other countries.

He said three themes had emerged: 1) a desire to take shareholder engagement with audits that are there to serve their needs, to the next level, 2) an emphasis on internal controls and 3) the critical importance of audit quality and independence.

“There was a strong feeling that investors don’t engage with the audit enough and the audit sector needs to find new and innovative ways to engage investors across the board from large institutions to the mums and dads.

“Work is already underway through the NZX on this, but we are also looking to work closely with the Shareholders Association.”

CA ANZ’s latest Investor Confidence Survey showed COVID-19 was helping ensure investors were taking more notice of audits. More than half of NZ investor respondents to the survey said they were expecting ‘a great deal’ or ‘quite a bit’ of additional disclosure in financial statements in the COVID-19 environment, focusing on impacts of the pandemic on operations and results.

Regarding the second theme, Ghandar said an emphasis on internal controls was not about imposing additional costs on businesses. “The scope has to be right and should not impose disproportionate costs on small businesses, but experience around the world has proven that a strong internal control environment is the best chance we have to tackle fraud risk and improve investor confidence in financial reporting quality.”

The roundtable was united in its belief that audit independence underpinned confidence in audit.

“It is important for the profession to take further steps to earn and safeguard the trust of our stakeholders.”

Welcoming the group to the roundtable, CA ANZ CEO Ainslie van Onselen said the roundtable was an opportunity “to get ahead of the external catalysts seen elsewhere such as corporate collapses and inquiries in the UK, the Australian parliamentary inquiry and corporate scandals.

“We want to facilitate a broad and robust discussion around the future of the profession, being up front about where we need to change and also where there is strength that must be preserved.

“This conversation needs to be cognisant of what’s going on around the world, but should be firmly set within, and serving the often unique New Zealand context.”

Audit Quality Monitoring Report

This year’s report highlights key areas FMA stakeholders need to be aware of, along with expectations for directors and auditors of financial statements.

Read more

Australian audit inquiry recommendations welcomed

A deep, overall balanced investigation into the current framework and challenges in auditing.

Find out more

Search related topics