Date posted: 13/12/2018 3 min read

NZ audit regulatory functions get tick from FMA

Strong financial markets depend on effective frontline regulators who consider policies and processes along with how culture and conduct reflect the best interests of customers.

In Brief

  • The Financial Markets Authority (FMA) approves NZICA (CA ANZ’s audit regulation arm in New Zealand) audit regulator functions and considers them effective
  • FMA says NZICA has appropriate systems, policies and procedures to assess audit applications
  • Appropriate systems are also in place to monitor licensed auditors and registered audit firms

The Financial Markets Authority’s latest report on New Zealand’s audit regulatory systems and processes used by accredited bodies gives Chartered Accountants Australia and New Zealand’s (CA ANZ’s) audit regulation arm in New Zealand a clean bill of health.

The report shows the New Zealand Institute of Chartered Accountants (NZICA) has effective systems, policies and procedures in place to perform its regulatory functions. NZICA continues to be responsible for regulating CA ANZ’s New Zealand resident members. 

“As an audit regulator, NZICA plays a crucial role in maintaining confidence in New Zealand’s financial markets.”
Peter Vial, Group Executive – Advocacy and Professional Standing, NZ and the Pacific

"That confidence is based on transparency, accountability and the provision of clear and accessible business results"

The Financial Markets Authority (FMA) report covers the 12 months to 30 June 2018. It says that one of the FMA’s strategic priorities is to ensure that frontline regulators such as NZICA and CPA Australia are effective in their role.

Frontline regulators are “responsible for overseeing domestic licensed auditors and registered audit firms."Strong financial markets depend on effective frontline regulators who consider not only the policies, processes and procedures of businesses and professionals, but also their culture, conduct and activities and how these reflect the best interests of their customers."

Peter Vial

Peter Vial

NZICA's functions include:

  • licensing domestic auditors and registering domestic audit firms
  • monitoring those auditors and audit firms registered by NZICA
  • promoting and monitoring the competence of these members and
  • taking action against misconduct.

FMA’s findings

  • Licensing domestic auditors and registering domestic audit firms: “All licences we reviewed were issued according to the prescribed minimum standards. NZICA has, and follows, the appropriate systems, policies and procedures to assess applications for auditor licences and firm registrations.”
  • Review of NZICA’s systems, policies and procedures for monitoring licensed auditors and registered audit firms. “NZICA has the appropriate systems, policies and procedures in place to monitor its licensed auditors and registered audit firms and to mitigate any issues of non-compliance identified through its complaints process.”
  • Promoting and monitoring competence: “NZICA meets the requirements… The training provided to the licensed population is sufficient to maintain and extend their knowledge of auditing and accounting standards.”

The FMA has made recommendations to ensure improvements are made by licensed auditors in the area of their CPD requirements and compliance with their licence conditions. “We asked NZICA to consider if the current learning opportunities match developments and trends in New Zealand and internationally.” NZICA acknowledges the importance of maintaining the excellence and relevance of the learning opportunities for auditors.

  • Taking action against misconduct: “NZICA has appropriate systems, policies and procedures in place to discipline its members and its systems, policies and procedures meet the requirements.”

NZICA has agreed to more regular reporting cycle for updating FMA on progress of its investigations into auditors’ conduct on FMC audits. NZICA is also enhancing its policies and processes in this area.

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