The New Zealand Regulatory Board of New Zealand Institute of Chartered Accountants (NZICA) has issued NZICA professional and ethical standard PS-3:  Terms of Engagement (PS-3).¹

PS-3 will apply to all members of CA ANZ in public practice in New Zealand and all other practitioners subject to NZICA’s jurisdiction² from 1 January 2024.   

PS-3 is a new overarching professional standard for terms of engagement that is intended to:   

• Clarify the professional and ethical standards for the terms of engagement established by members in public practice in respect to their professional services including a requirement for written terms of engagement for all professional services performed by members in public practice. 
• Be consistent, as far as practicable, with the requirements applicable to Australian members of CA ANZ as set by APES 305:  Terms of Engagement and relevant paragraphs in CA ANZ regulation CR-3:  Public Practice Regulations. 

_{1. NZICA regulates the conduct of CA ANZ members that reside in New Zealand. This includes maintaining, monitoring compliance with and enforcing professional and ethical standards as required by the NZICA Act 1996.} 

_{2. Other practitioners subject to NZICA jurisdiction include:  Licensed Insolvency Practitioners (who are not otherwise a member of CA ANZ); Qualified Statutory Accountants recognised by NZICA in accordance with sections 36S and 36T of the Financial Reporting Act 2013; Non-member principals; and a member of CA ANZ who does not reside in New Zealand but who practices the profession of accountancy in New Zealand.} 

Overview of key features 

PS-3 has been drafted in a format consistent with recent updates to NZICA standards. 

It is also drafted to be consistent with NZICA’s current professional and ethical expectations for terms of engagement and to work alongside existing individual professional (engagement) standards (including XRB standards).  Accordingly, it is envisaged that most practices who currently comply with these expectations and standards will not need to take much (if any) action to comply with  PS-3. 

The key features include: 

• Overarching requirements that clarify that members in public practice must, in writing:
  • Document, communicate to and agree with the client the terms of engagement (including basis of fees and billing arrangements) prior to the provision of all professional services, and
  • Document, communicate to and agree with the client any subsequent changes to previously agreed terms of engagement (including basis of fees and billing arrangements),
• Requirement to review terms of engagement on a cyclical basis,
• Requirements regarding disclosure of professional obligations, confidentiality and service providers,
• Requirement for a statement regarding the ownership of documents,
• Requirement for a description of the firm’s complaints policy,

together with guidance material to assist members to determine the other terms of engagement that should be included in their terms of engagement. 

CA ANZ Tools and Resources 

CA ANZ tools and resources that might assist members to comply with PS-3 include:

• CA ANZ Engagement Letter Tool (New Zealand).³
• Helpsheet:  Books and Records  (ownership; possession (including possessory liens) and disclosure.   

_{3. Members are under no obligation to use this Tool to draft their terms of engagement. This tool is provided to members on a general basis only and must not be relied on by members or any other persons as a substitute for appropriate professional and other advice tailored to their specific circumstances.  Members should seek independent legal advice to confirm any proposed terms of engagement are suitable.} 

Submissions / approval process