Date posted: 22/03/2019 3 min read

"Serious consequences" warning for unqualified NZ members completing audits

Warning issued following “at least the fifth case” involving a member doing a statutory assurance engagement when not qualified.

In brief

  • The NZICA Disciplinary Tribunal delivers a decision on “at least the fifth case” involving a member doing a statutory assurance engagement when not qualified
  • The cases all have similar features, including a lack of compliance with assurance standards and in some cases audits being undertaken after members being told they could not
  • Warning given of “more serious consequences” for those who appear before the Tribunal in the future

A recent decision by the Disciplinary Tribunal of the New Zealand Institute of Chartered Accountants draws attention to Chartered Accountants Australia and New Zealand members conducting statutory assurance engagements when they were not qualified to do so.

The Tribunal has warned of “more serious consequences” for unqualified members who appear before it in the future.

The member in the latest case was censured, ordered to pay $5000 and $17,000 in costs and told not to undertake audit or any other assurance engagements for five years.

In its decision, the Tribunal said the case was “at least the fifth case involving members conducting statutory assurance engagements when they were not qualified to do so.

“In all cases the relevant conduct predated the first decision of the Tribunal in this area [in March 2018]."

“Members can expect that any future cases involving signing audit reports after 31 March 2019, when not qualified to do so, may result in more serious consequences than for those unqualified members who have come before the Tribunal to date.”

It said the cases had very similar features:

  • Undertaking statutory audits when the member is not qualified to do so
  • Continuing to undertake an audit after being told they could not without complying with requirements
  • Lack of professional competence and
  • Failure to document compliance with the firm’s quality control policy and procedures on monitoring assurance engagements.

Regarding the latest case, the Tribunal said “the member’s failure to perform an audit and a review engagement in compliance with the relevant standards, his failure to maintain professional competence and the extent of his shortcomings in those areas demonstrate a lack of care and skill, and conduct which falls well below the standards expected of an auditor.

“It constitutes negligence and incompetence (the inability to perform to expected standards) in a professional capacity."

“It constitutes negligence and incompetence (the inability to perform to expected standards) in a professional capacity."
Determination of the Disciplinary Tribunal of the New Zealand Institute of Chartered Accountants

“The nature of the Member’s shortcomings is such as to bring the profession into disrepute - for example, signing audit reports for charities in the wrong form which are then placed on a public register.”

Disciplinary decisions register

The disciplinary decisions register shows how complaints against members have been resolved.

Read the full decision

Audit regulation in NZ

What you need to know before performing a regulated audit in New Zealand

Read the requirements

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