The Regulatory Board of New Zealand Institute of Chartered Accountants (NZICA) has approved changes to NZICA professional and ethical standard PS-2: Client Monies ¹.

Updated PS-2 will apply to all members of CA ANZ in New Zealand and all other practitioners subject to NZICA's jurisdiction² from 1 January 2026.

The changes update existing PS-2: Client Monies so that it is consistent:

• with the most recent version of the NZICA Code of Ethics
• with modern banking practices including the removal of cheques by New Zealand banks
• with New Zealand laws and regulations including the Anti-money Laundering and Counter Financing of Terrorism Act 2009 and new regimes introduced by amendments to the Financial Market Conduct Act 2013 by the Financial Services Legislation Amendment Act 2019
• as far as practicable, with the requirements for members of CA ANZ resident outside New Zealand as set by APES 310: Client Monies issued by the Australian Accounting Professional & Ethical Standards Board (APESB).

^{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 matters

This section provides a high level overview of the finalised standard and changes from existing PS-2.  Members should note, however, that when finalising the standard, the Regulatory Board made changes to the proposals that were outlined in the invitation to comment in response to submissions received.  Members will be provided with a summary of the key changes to these proposals via e-mail on 21 February 2025.  All changes to the proposals are discussed in the Management Report and highlighted as tracked changes in Appendix D.  Members who wish to review this information can download copy of the Management Report below.

Updated PS-2 has been drafted in a format consistent with recent updates to NZICA standards.

Many of the core requirements addressed in existing PS-2 remain in proposed PS-2 – merely in a revised form. These include requiring members in public practice to:

• Be strictly accountable for all client monies and any activities relating to client bank accounts (collectively client monies activities)
• Comply with all laws and regulations relevant to client monies activities
• Keep all client monies separate from all other monies of the member or firm
• Conduct all client monies activities exclusively for the client in accordance with their instructions (and not conducting them for any other purpose)
• Advise NZICA immediately if any deficiencies occur in a trust account.

View a copy of the final mapping table of updated PS-2 to existing PS-2.

The key changes include:

• A new overarching requirement that expressly requires all members who control the money of others to safeguard that money, use that money only for the purpose for which the money was provided, and be ready to account for that money.
• A new requirement that members whose activities do not come within the scope of PS-2, but who otherwise control the money of others comply, as far as practicable, with the spirit and intent of the standard (elevated from guidance material in existing PS-2).
• Defined terms that have been modernised and future proofed including:
  • adding of an overarching definition of “client monies activities” that specifically includes situations where a member in public practice controls client monies but does not receive or hold the money themselves (excluding tax transfers and tax pooling, with members instead required to continue to address these activities in their system of quality management).
  • removing the exclusion for situations where members are joint signatory with the client.
  • clarifying that direct debit authorities come within the ambit of PS-2 (we note that as clarified in the Management report, that most agreed fixed payment schedules paid via direct debit will be practically unaffected).
• A new requirement that reflects members’ responsibility to act in the public interest, consistent with the Code of Ethics.
• A new requirement that members consider whether there are any practical alternatives to the proposed client monies activities before agreeing to perform those activities, and, if so, document and discuss them with the client.
• A new requirement that, in all situations (excluding tax transfers and tax pooling) not involving the member’s trust account or a client’s bank account, the member must comply “as far as practicable” with the standard as if the member in public practice is transacting the client monies through a client bank account.
• Addressing the operation of trust accounts and client bank accounts in separate sections.
• Removal of the ability to pay private or practice monies relating to real estate or investment transactions into a trust account.
• Clarification that the requirement to advise NZICA immediately of trust account deficiencies extends to deficiencies in client sub-ledgers.
• Modification of the “grace period” required prior to withdrawal of members fees (paragraphs R3.20(b) and R4.11(b)) from 15 working days to 14 calendar days.
• Additional internal control procedures, including:
  • A new requirement and application material regarding taking reasonable steps to ensure no receipt of client monies without client authority.
  • More prescriptive requirements and application material regarding client monies that are not being held electronically.
  • New requirements and application material regarding authorised signing authorities on trust accounts.
  • A modified requirement to provide access to monthly statement information unless the client specifies in writing an alternative period.
  • New requirements and application material regarding authorised signing authorities on client bank accounts.
• New requirements and application material regarding components of the firm’s system of quality management including prescribed monitoring activities and record retention timeframes.

Submissions / approval process