Compliance Responses and Action Plans

  • Compliance Responses and Action Plans

    IFAC members and associates have provided self-assessment information about the regulatory and standard-setting framework in their countries (Part 1) and their organizations' activities in addressing IFAC's membership requirements (Part 2) as described in the Statements of Membership Obligations. Based on an analysis of this information, they are developing SMO Action Plans for continuous development and improvement.

    Some organizations have qualified to submit SMO Action Plans on a biennial basis by meeting eligibility criteria. These organizations are indicated with an asterisk (*).

    In the interest of transparency and providing information to the profession, regulators, and other stakeholders, all responses and SMO Action Plans are accessible below.

    New Zealand Institute of Chartered Accountants

     

    Introduction

    The information below has been submitted as part of the IFAC Member Body Compliance program. The Program has two components:

    Part 1: Assessment of the Regulatory and Standard-Setting Framework (provides information about regulatory requirements and standard-setting processes in member body countries); and
    Part 2: Assessment of Compliance (provides information on compliance by member bodies with the Statements of Membership Obligations). Part 2 of the Compliance Program will begin later this year, and the results will also be posted to the website.

    The responses to Part 1 are provided below. IFAC staff has reviewed the responses and, where necessary, validated them with external knowledgeable parties. A list of key terms is available to assist readers in understanding the responses.

    The purpose of this Part 1 Assessment is to collect information on the roles of IFAC member bodies and other organizations (including government, regulatory or other appointed authorities) with respect to:

    1. Setting auditing, accounting, ethics, public sector and education standards; and
    2. Regulating the accountancy profession.

    Sections 1 and 2 of Part 1 contain an introduction and instructions for member body respondents. For this reason, they are not included here, and the responses begin with Section 3.

    Questions or comments may be sent to complianceassessment@ifac.org.


    Section 3 -- Member Body General Information

    1. Country:

      New Zealand


    2. Name of member body:

      Or please specify name:
      New Zealand Institute of Chartered Accountants NOTE: The New Zealand Institute of Chartered Accountants is the operating name of the legal entity established under the Institute of Chartered Accountants of New Zealand 1996: the Institute of Chartered Accountants of New Zealand. In the responses given in this survey questionnaire, all references to the New Zealand Institute of Chartered Accountants, or to the Institute, mean the Institute of Chartered Accountants of New Zealand.



    3. Individual responsible for preparation:
      Joanne Moores, Director, Professional Standards, Simon Lee, Director, Accounting Standards, Beth Steele, Senior Policy Analyst, Government Relations and Strategic Projects


    4. Date member body became a member of IFAC:
      Note: Please enter a numeric date (e.g., 12/2001, Month/Year)

      10 / 1978



    Questions 5 - 22 are for internal use only


    Section 3G -- Affiliations


    23. Please list those regional organizations to which your organization belongs (e.g., FEE, CAPA, ECSAFA, IAA, etc.):
      CAPA



    Section 4 -- Statutory Framework


    Responses to this section will provide a description of the legal framework governing the commercial aspects of auditing and financial reporting in your country.

    Section 4A -- The Companies Act or Commercial Code


    The following questions concern the Companies Act (the Act) or Commercial Code (the Code) or similar Legal authority in your country. If no Legal authority exists, or the Legal authority does not address particular questions, please indicate "N/A" for Not Applicable.

    24. What is the full name of:
      a). the Act or the Code: The Companies Act 1993, Financial Reporting Act 1993, Securities Act 1978, Securities Markets Act 1988, Public Audit Act 2001
      b). the Enacting body: New Zealand Parliament (drafting process is administered by the Ministry of Economic Development)
      c). date the Act or Code came into force: 07 / 1994


    25. How can IFAC obtain a copy of the Act or Code?
      All NZ legislation available free online at www.legislation.govt.nz


    26. Is the Act or Code available in English?
      Yes   No


    27. What are the types of entities covered by the Act or the Code?
      Please check all that apply.
      Listed entities   Other (please specify): NOTE: Companies Act applies to all entities that are companies, Securities Act applies to all entities that issue securities to the public; Other Acts apply according to activity, activity and kind of entity.
      Private companies   Other (please specify):
      Governmental   Other (please specify):
      Not-for-profit   Other (please specify):


    28. Is there a requirement for the following entities to prepare annual statutory financial statements? If YES, please describe the financial reporting requirements including the accounting standards to be followed.
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities The board of every company (listed and non listed) must, within 5 months after the balance date of the company, prepare an annual report on the affairs of the company during the accounting period ending on that date (Section 208 (1)). Section 211 of the Companies Act sets out what the annual report must contain, and requires the annual report to be completed in accordance with the Financial Reporting Act 1993 , which in turn requires compliance with NZ GAAP. The Financial Reporting Act sets out reporting requirements for issuers of securities, which in general require that they comply with generally accepted accounting practice and give a true and fair view of their affairs. In addition, see section 10B of Survey on Stock Exchange requirements. The Securities Act Regulations set out information disclosure requirements, including requirements concerning financial statements, to be contained in the disclosure documents of entities that are issuers (all listed entities are issuers).
      Private companies The board of every company must, within 5 months after the balance date of the company, prepare an annual report on the affairs of the company during the accounting period ending on that date (Section 208 (1)). Section 211 of the Companies Act sets out what the annual report must contain, and requires the annual report to be completed in accordance with the Financial Reporting Act 1993, which in turn requires compliance with NZ GAAP. Some small and medium companies are exempt from reporting requirements under the Financial Reporting Act, based on size of assets and turnover. (See Attachment to the Questionnaire)
      Governmental Crown Entities must report in accordance with the Public Finance Act. State Owned Enterprises (i.e. for profit Crown companies) must report according to the State Owned Enterprises Act 1986.
      Not-for-profit Entities' financial reporting requirements are dictated by the type of entity rather than whether they are not-for-profit or not. For example, if it is a company, it must comply with the Companies Act, and the Financial Reporting Act unless it meets the criteria for exempt companies. A Bill is currently before Parliament that would require charities to report some basic financial information.
      Other (please describe)
      Other (please describe)


    29. Is there a statutory requirement for the following entities to be audited? If YES, describe the requirement including the auditing standards to be followed:
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities NZX Limited, the New Zealand Stock Exchange, requires listed entities to prepare annual reports in accordance with the law, and which must be audited. The Securities Act 1978 requires every issuer or securities to ensure that its financial statements are audited (not all issuers are listed entities).
      Private companies Companies must appoint an auditor at its Annual General Meeting, unless all Shareholders unanimously agree not to (section 196). The auditor must report to shareholders and state the matters that are required to be reported under the Financial Reporting Act 1993 (section 205). The auditor must be a Chartered Accountant (and therefore is subject to the Institute’s auditing standards) or member of an approved overseas body (and therefore subject to standards set by those bodies) (section 199). As of June 2004, the Registrar of Companies had approved the following bodies: The Institute of Chartered Accountants in Australia; Australian Society of Certified Practicing Accountants; The Institute of Chartered Accountants in England and Wales; The Chartered Association of Certified Accountants (UK); The Institute of Chartered Accountants of Scotland; American Institute of Certified Public Accountants; The Canadian Institute of Chartered Accountants. There is a statutory requirement for auditors to ensure that their judgement is not impaired by a conflict of interest (section 204).
      Governmental Under the Public Audit Act 2001, public entities are required to be audited by the Auditor-General.
      Not-for-profit Audit requirements are dependant on the type of entity (e.g. company requirements).
      Other (please describe)
      Other (please describe)


    30. Are the auditors ("statutory auditors") that are appointed for audits required by the Act or Code ("statutory audits") appointed for a specific period?
      Yes   No
      If YES, please indicate the term of appointment: 1 Year(s)


    31. Who appoints the statutory auditors?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify): Government agency (in the case of public entities, under the Public Audit Act 2001.)
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    32. Does the Act or Code require joint auditors for the statutory audit?
      Yes   No
      If yes, please describe the requirement:


    33. Does the Act or Code require the rotation of the auditors or audit firms performing statutory audits?
      Yes   No
      If yes, please describe the requirement:
      The Institute’s Code of Ethics: Independence for Assurance Engagements requires auditor rotation in certain circumstances for entities that are issuers, where the auditor is a member of the Institute. A similar provision is contained in the Auditor-General’s Standards which require rotation of the appointed auditor every five years.

      Where the auditor is required to be a Chartered Accountant (for example under s.199 Companies Act 1993), the New Zealand Institute of Chartered Accountants’ Code of Ethics and Professional Standards apply. The Institute's Code of Ethics: Independence for Assurance Engagements requires, for audits of entities that are issuers (as defined under the Financial Reporting Act 1993), that:
      (a) the lead engagement partner must be rotated after a pre-defined period, normally no longer than seven years.
      (b) A partner rotating after a pre-defined period must not resume the lead engagement partner role until a further period of time, normally two years, has elapsed. During the period the partner concerned must not be involved with the audit client in any other capacity.

      For audits of entities that are not issuers, where the same personnel in an assurance engagement over a long period of time may create a familiarity threat, the significance of the threat must be evaluated and consideration given to rotating the senior personnel of the assurance team or involving an additional member to review the work done by the senior personnel or otherwise advise as necessary, or consider independent internal quality reviews.

      (Note: Members of overseas bodies that are approved by the Registrar of Companies to perform audits in New Zealand must comply with the standards of their own bodies, which may also have rotation requirements).



    Section 4B -- Securities Market Regulations


    Responses to this section will provide a description of the financial reporting and auditing requirements for listed entities in your country.

    34. What are (a) the major items of Legal authority for such requirements, (b) the Enacting body(ies) and (c) the latest amendment date? Please identify the specific articles or sections that pertain to auditing and financial reporting:
    1. the major items of Legal authority for such requirements

      The Securities Act 1978; The Securities Markets Act 1988; The Financial Reporting Act 1993.

    2. the Enacting body(ies)

      The New Zealand Parliament

    3. the latest amendment date?

      The Securities Act and 1978, the Securities Market Act 1988 and The Financial Reporting Act were amended in 2004.


    35. How can IFAC obtain a copy of the Legal authority?
      Available free online at www.legislation.govt.nz


    36. Is the Legal authority available in English?
      Yes   No


    37. Are there any additional or alternative financial statement reporting requirements for listed entities that are not described in your answer to Question 28?
      Yes   No
      If YES, please describe the requirement:
      The Securities Act Regulations (and Schedules to those Regulations) contain financial reporting requirements that must be included in offer documents of issuers (for example in clauses 23 – 38 of the First Schedule). Those requirements do not apply if the issuer’s latest financial statements registered under the Financial Reporting Act 1993 contain the information required to be contained in the registered prospectus under the Securities Act Regulations.
      The Securities Markets Act (under s.36B) states that securities markets must be registered under the Act, and (under 36G) registered exchanges must operate securities markets with conduct rules that include matters required by statute. The rules must be approved by the relevant Minister of the Crown.
      The sole registered exchange in New Zealand is the New Zealand Exchange Limited (trading as NZX). The NZX operates three markets. Under the listing rules, which have effect by way of a listing agreement between the listed party and NZX, listed entities must comply with financial reporting requirements required by law, including the Financial Reporting Act 1993. Additional requirements are:
      • A requirement to publish preliminary reports (which need not be audited) prior to the release of each half-yearly report or annual report, and within 60 days after the end of the listed entity’s financial half year, or financial year.
      • A half-yearly report within 3 months after the end of the first 6 months of the financial year of the listed entity.
      • Audited Annual reports must be published within 3 months of the balance date at end of the financial year, which is less than the Companies Act requirement of 5 months.


    38. Are there any additional auditing requirements that apply to listed entities other than those described in your answer to Question 29 (e.g., additional GAAS requirements, additional independence requirements, requirements to report to those charged with governance, etc.)?
      Yes   No
      If YES, please describe the requirement:
      The listing rules require a statement on whether, and if so how, the corporate governance principles adopted or followed by the issuer materially differ from the Corporate Governance Best Practice Code (the Code). The NZX Code sets out principles to enhance investor confidence through corporate governance and accountability. The code is comprised of flexible principles which recognise differences in corporate size and culture. Under the Code, issuers should have an audit committee comprised of non-executive directors. Amongst its responsibilities should be to address issues of auditor independence as set out in the Code. With regard to auditors, the Code requires that:
      • The Board should establish a formal and transparent procedure for sustaining communication with the Issuer’s independent and internal auditors.
      • The Board should establish a formal and transparent framework for the Issuer’s relationship with its auditors, including: (a) to ensure that the ability and independence of the auditors to carry out their statutory audit role is not impaired, or could reasonably be perceived to be impaired; (b) to address what, if any, services (whether by type or level) other than in their statutory audit role may be provided by the auditors to the Issuer; and (c) to provide for the monitoring and approval by the Issuer’s Audit Committee of any service provided by the auditors to the Issuer other than in their statutory audit role.

      The Institute’s Code of Ethics: Independence in Assurance Engagements contains requirements pertaining to maintaining independence in relation to auditors of entities that are issuers (including listed entities).


    39. Who appoints the statutory auditors of listed entities?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify): There are a small number of listed entities that are also public entities under the Public.
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    40. Are auditors who perform audits of listed entities appointed for a specified period?
      Yes   No
      If YES, please indicate the term of appointment: 1 Year(s)


    41. Are joint auditors required for audits of listed entities?
      Yes   No
      If YES, please describe the requirement:


    42. Is rotation of the auditor or audit firm for audits of listed entities required?
      Yes   No
      If YES, please describe the requirement:
      The NZX Listing Rules (3.6.3 (f) state that the Audit Committee must ensure that the external auditor or lead audit partner is changed at least every five years. The Institute’s Code of Ethics: Independence for Assurance Engagements requires a member of the Institute who acts as the lead engagement partner for an entity that is an issuer (including a listed entity) to rotate after a pre-defined period, normally no longer than seven years.



    Section 5 -- Auditing Standards


    Responses to this section will provide a description of the legal and professional framework governing audit and other assurance standards in your country. The section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 5A -- Statutory Framework


    43. Please provide the name of the Legal authority and/or self-regulatory rules that establish audit and other assurance standards in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting audit and other assurance standards. If the standards are different for different entities (e.g., listed entities, private companies, governmental bodies, not-for-profit organizations, etc.), please specify the details that apply to each:
      Type of entity Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting audit and
      other assurance standards
      Listed entity The Code of Ethics and the Code of Ethics: Independence in Assurance Engagements established under the Institute of Chartered Accountants Act 1996; The Codified Auditing Standards 07 & 09/2003 The Council of the Institute/The Professional Practices Board of the New Zealand Institute of Chartered Accountants
      Other (please describe) Listed entity Public Audit Act 2001 The Auditor-General of New Zealand
      Other (please describe) All entities See note below
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      The Institute’s Code of Ethics can be obtained at www.nzica.co.nz. The Professional Standards can be obtained in hard copy on request from the Institute at PO Box 11-342 Wellington, New Zealand.
      The Auditor-General’s Auditing Standards can be obtained at: http://www.oag.govt.nz/HomePageFolders/Publications/auditing-standards/audit-standards.htm.

      NOTE:
      Above applies to all entities, because the standards are sector neutral. Auditor-General’s Auditing Standards supplement the requirements of Institute’s Code of Ethics and Auditing Standards in the case of audits of public entities.


      b. Are the documents available in English?
      Yes   No


    Section 5B -- Standard-Setting (The Council of the Institute/The Professional Practices Board of the New Zealand Institute of Chartered Accountants)


    44. For The Council of the Institute/The Professional Practices Board of the New Zealand Institute of Chartered Accountants, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      The New Zealand Institute of Chartered Accountants is a self-regulating body established in 1996 with statutory authority to regulate the accounting profession in New Zealand with regard to its members. The Council of the Institute is the body with the authority to approve the Institute’s Code of Ethics and Professional Standards (including Auditing Standards) that have mandatory application to the Institute’s members.

      The Council of the Institute of Chartered Accountants currently has 41 members, elected on a regional basis.

      The Professional Practices Board (the PPB) is a Board of the Institute established under the authority of the Institute’s Executive Board. It has responsibility for developing the Institute’s Code of Ethics and Professional Standards, along with various other types of professional pronouncements. The PPB comprises twelve members appointed by the Executive Board, who act as members on a part-time, voluntary basis. Its standards development and standard setting activities contribute to the Institute's statutory function to promote quality, expertise, and integrity in the profession of accountancy by its members in New Zealand; and to promote, control, and regulate the profession of accountancy by its members in New Zealand. The PPB is supported by Institute staff.


      b. Name of standards

      Professional Standards and Guidance Notes; Professional Engagement Standards and Guidelines issued by the New Zealand Institute of Chartered Accountants (incorporating the Codified Auditing Standards and Audit Guidance Statements)


    45. How many voting members does the standard-setting body have?
      Council - 41, PPB - 12


    46. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    47. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      The primary emphasis is on the professional qualities of appointees, particularly their technical knowledge, experience and skills as members of the Institute and practitioners. Representative considerations are also taken into account. The guidelines established for the composition of the PPB are that members should include members both from public practice and not in public practice; academia; the public sector. The ‘practitioner’ element of the PPB is targeted at a maximum of 60% of the total PPB composition. Members of the PPB are not required to be members of the Institute (however currently all the members of the PPB are members of the Institute).


    48. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      The Executive Board of the Institute


    49. What is the term of appointment for members?
      3 Year(s)


    50. For how many years has the standard-setting body been in existence?
      12 Year(s)


    51. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      87,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      0.706



    52. To what entity is the standard-setting body accountable?
      The PPB is responsible to the Institute's Council.


    53. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Relevant committees and boards of the Institute are consulted. Proposed standards are then issued as Exposure Drafts for public comment. This is usually for a period of 3 months. The PPB considers all submissions received prior to finalising and giving its approval to a proposed standard.
      The PPB currently has policy of harmonising its standards with the International Standards issued by the IAASB. Its work programme is aligned with the IAASB work programme and it has, up until recently, issued the IAASB’s Exposure Drafts as New Zealand Exposure Drafts on a contemporaneous basis. For this reason, the exposure period for a New Zealand Exposure Draft based on an international Exposure Draft may on occasion be less than the usual three month period. This is to ensure that the exposure period in New Zealand aligns with the international due dates for receipt of submissions on Exposure Drafts.
      The PPB currently has under consideration a proposal to adopt the IAASB’s International Standards, for which it has issued a Consultation Paper for public comment. The outcomes of this proposal are currently being assessed, and it is likely that these will include changes to the Institute’s approach to international convergence with respect to the IAASB’s International Standards on Auditing (and IAPSs), and International Standards on Quality Control.
      Exposure Drafts are all posted on the Institute’s web site, and external parties are notified of the release of all exposure drafts by email. Members are also notified about Exposure Drafts in the Institute’s monthly Journal.


    2. accessibility of meetings (i.e., public or private)

      Meetings are held in private, but observers may be authorised to attend by the PPB Chairman.

    3. approval process for final standards (i.e., majority required to approve final standards)

      To approve a final standard which will have mandatory effect on the Institute’s members requires a vote in favour by two thirds of the appointed PPB members. The Standards approved by the PPB must then be submitted to the Institute's Council for final approval in order to take effect.

    4. other relevant due process activities

      The Institute's Council has the responsibility and authority for final approval of the Code of Ethics and all standards that have mandatory effect for members of the Institute. As part of its approval process, Council will consider the due process followed for the development and finalisation of a proposed standard by the PPB. Proposed standards are also checked for consistency with IFAC standards.


    54. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      10 Day(s)


    Section 5B -- Standard-Setting (The Auditor-General of New Zealand)


    44. For The Auditor-General of New Zealand, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      For information about Auditor General, please refer to the website: http://www.oag.govt.nz

      b. Name of standards

      Public Audit Act 2001

      http://www.oag.govt.nz/HomePageFolders/Publications/auditing-standards/audit-standards.htm


    45. How many voting members does the standard-setting body have?


    46. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    47. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?


    48. Who appoints these members (e.g., member body, government, user, regulator, etc.)?


    49. What is the term of appointment for members?
      Year(s)


    50. For how many years has the standard-setting body been in existence?
      Year(s)


    51. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)



    52. To what entity is the standard-setting body accountable?


    53. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards



    2. accessibility of meetings (i.e., public or private)



    3. approval process for final standards (i.e., majority required to approve final standards)



    4. other relevant due process activities



    54. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      Day(s)



    Section 6 -- Ethics


    Responses to questions in this section will provide a description of the legal and professional framework governing ethics standards for accountants in your country. This section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 6A -- Statutory Framework


    55. For each of the following types of professionals, please indicate the name of the Legal authority and/or self-regulatory rules establishing ethics standards for accountants and auditors in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting the ethics standards.
      Type of professional covered Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting ethics standards
      Professional Accountants in Public Practice The Code of Ethics and the Code of Ethics: Independence in Assurance Engagements, established under the Institute of Chartered Accountants Act 1996 07, 09/2003 The Institute Council/Professional Practices Board of the New Zealand Institute of Chartered Accountants
      Professional Accountants in Business See note 1 below
      Professional Accountants in the Public Sector See note 2 below
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      NZICA Code of Ethics: www.nzica.com
      Auditor-General’s Auditing Standards: http://www.oag.govt.nz/HomePageFolders/CorporateDocs/CorporateDocs.htm

      NOTE 1:
      The Code applies to all members of the Institute. Certain parts of the Code apply only to members who perform audits, or audits of issuers.
      NOTE 2:
      Auditing Standards established by the Auditor-General extend the ethical requirements for audits of public entities performed under the Public Audit Act 2001, particularly in relation to independence requirements.


      b. Are the documents available in English?
      Yes   No


    Section 6B -- Standard-Setting (The Institute Council/Professional Practices Board of the New Zealand Institute of Chartered Accountants)


    56. For The Institute Council/Professional Practices Board of the New Zealand Institute of Chartered Accountants, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Same as for Section 5B. Question 44

      b. Name of standards

      The Code of Ethics and the Code of Ethics: Independence for Assurance Engagements of the New Zealand Institute of Chartered Accountants;
      Ethical Guidelines;
      Professional Standards & Guidance Notes; Professional Engagement Standards and Guidelines issued by the New Zealand Institute of Chartered Accountants.


    57. How many voting members does the standard-setting body have?
      12


    58. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    59. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      See Q. 47


    60. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      The Institute's Executive Board


    61. What is the term of appointment for members?
      3 Year(s)


    62. For how many years has the standard-setting body been in existence?
      12 Year(s)


    63. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      45.000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      0.706



    64. To what entity is the standard-setting body accountable?
      The Institute's Council


    65. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Relevant committees and boards of the Institute are consulted. The proposed Code of Ethics/amendments to the Code are then issued as Exposure Drafts for public comment. This is usually for a period of 3 months. The PPB considers all submissions received prior to finalising and giving its approval to a proposed amendment.

    2. accessibility of meetings (i.e., public or private)

      Meetings held in private.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Two thirds of PPB members must vote in favour, then proposed standards are submitted to the Institute's Council for final approval.

    4. other relevant due process activities

      The Institute's Council has the responsibility and authority for final approval of the Code of Ethics and all standards that have mandatory effect for members of the Institute. As part of its approval process, Council will consider the due process followed for the development and finalisation of a proposed standard by the PPB. Proposed standards are also checked for consistency with IFAC standards.

      The Code of Ethics has the status of ‘deemed regulations’ under the Regulations (Disallowance) Act 1989, and is required to be submitted to the Regulations Review Committee of Parliament within 14 days of its approval/approval of amendments by Council. The Code of Ethics and any amendments of the Code are also required to be forwarded to the Registrar of Companies for registration (under the Institute of Chartered Accountants of New Zealand Act 1996).


    66. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      10 Day(s)



    Section 7 -- Education


    Responses to questions in this section will provide a description of how education requirements for the profession are established. Please indicate the role your organization plays within this process.

    Section 7A -- Education Requirements


    67. Please describe in general terms the education system in your country including the different stages of education from early childhood education through to tertiary level study. Please indicate which aspects / levels are compulsory as part of the national education system:
      A wide range of non-compulsory early childhood education. Primary and secondary education is compulsory from ages 6-16, but full primary/secondary education runs from 5 years old to 18 years old (13 years). Primary and secondary is mostly provided by the Government, although there are a number of private schools. A Government entity, the New Zealand Qualifications Authority, sets a National Qualifications Framework, which may apply from year 10 through to tertiary study. New Zealand has a range of tertiary education institutions, offering both academic and vocational education. Some of these are within the national qualifications framework. NZ's eight Universities are established by statute and confer their own degrees and diplomas. Polytechs, Wananga's (Maori Tertiary Institution)and Private Tertiary Institutions are regulated by statute.


    68. Is there a legal authority or regulation that specifies the requirements for an individual to operate as an accountant or auditor in your country?
      Yes   No

      If YES, please provide the name and describe the requirements, including any relating to education, experience or qualifications.

      The Institute of Chartered Accountants of New Zealand Act 1996 states that every person commits an offence who describes himself or herself or holds himself or herself out publicly as an accountant or auditor unless that person is suitably qualified. A person is suitably qualified if that person holds a certificate, degree, diploma, registration, or similar qualification, whether obtained in New Zealand or elsewhere, that is relevant to the practices of accounting and auditing.

      Under the Companies Act 1993 auditors of companies must be Chartered Accountants as described in Section 19 of the Institute of Chartered Accountants of New Zealand Act 1996

      Some Public Sector bodies established by their own statute specify that audits can only be performed by persons authorised to audit companies, that is Chartered Accountants holding certificates of public practice.

      Public entities are required, under the Public Audit Act, to be audited by the Auditor-General, who in many cases delegates this to auditors appointed by the Auditor-General. Auditors appointed by the Auditor-General are CAs holding Certificates of Public Practice.

      The Institute of Chartered Accountants of New Zealand Act also prohibits non-members of the Institute from using terms that infer membership of the Institute, including Chartered Accountant, 'CA' and AT.


    69. Please select from below all the relevant key levels of requirements to obtain certification from your member body (i.e. to qualify as a certified or chartered accountant) and provide a general description of the requirement.
      Academic requirements
      Four years of degree level study, including completion of a bachelor's degree, required accounting and business related topics and specified percentages of accounting (35%), business (35%) and liberal (20%) studies.
      Professional examinations
      Professional Competence Examination 1; and Professional Accounting School (Administered and assessed by ABEL, a wholly owned subsidiary of the Institute)
      Practical experience
      One year of general practical experience followed by two years of specified practical experience (in an approved training organisation with a registered mentor).
      Final qualifying examination
      Professional Competence Examination 2 (Administered and assessed by ABEL, a wholly owned subsidiary of the Institute)
      Other (please describe) Attend a Course for New Practitioners approved by the Admissions Board. 2) Other non-education requirements: a) A fit and proper person) A member of the CA College c) Ordinarily resident in NZ d) intend to offer services to the public.
      Must demonstrate good character. Three references are required.


    70. Which of the following arrangements best describes who establishes the education requirements for the accounting profession in your country? Please select one option.
      A government ministry, department or agency establishes education requirements for the accounting profession with no additional requirements set by the member body(ies).
      A government ministry, department or agency establishes minimum education requirements for the accounting profession, and member body(ies) supplement these requirements.
      Member body(ies) establishes the education requirements for the accounting profession.
      Other (please describe)


    71. Please provide the name(s) of the relevant body in the government ministry, department, agency and / or member body who establishes the education requirements.
      The New Zealand Institute of Chartered Accountants, in accordance with the Institute of Chartered Accountants of New Zealand Act 1996

    1. A general description of the role of the relevant body(ies) including how it operates and its due process in establishing the education requirements.

      Education requirements for admission for the Institute are set by the Institute's Council, a representative body comprising 41 members. An Admissions Board develops policy and recommendations to Council on policy around education, admissions and quality assurance of education and training partners (e.g. tertiaries, employers, approved training organisations) policy. The Admissions Board is assisted by technical sub-committees and Institute staff.

    2. How many voting members does the relevant body(ies) have

      Admissions Board - 12
      Council - 41

    3. Are the members of the relevant body(ies) involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:

    4. For how many years has the body been in existence?

      Year(s)


    72. How would you describe the authority that the education requirements have?
      Requirements are legally-based
      Requirements are set in the constitution, by-laws or other rules of the relevant body(ies).
      Requirements are set in member body(ies) policy document(s).
      Other (please describe)

    72 a. How can IFAC obtain copies of these documents?
      Visit the Institute’s website www.nzica.com

    72 b. Are these documents available in English?
      Yes   No


    73. Are the education requirements for accountants and auditors the same throughout your country, or do they differ among regions, provinces or states?
      Same   Different
      If different, please briefly describe the main differences:


    74. Please indicate the scenario that best describes who delivers the education and examination process for members of the profession. Please only select one option.
      The education program and final examination are delivered by the member body.
      The education program and final examination are delivered by the member body and other education institutions (e.g., universities, colleges, and others).
      The education program and final examination are delivered by education institutions (e.g., universities, colleges, and others).
      Other (please explain)


    75. Once qualified as a member of your professional body, can members offer their services directly to the public?
      Yes   No



    Section 7B -- Licensing


    76. Are there licensing requirements for auditors in your country?
      Yes (continue with Question 77)   No (proceed to Section 8)


    77. Who sets the requirements to obtain a license?
      In New Zealand certain types of audit engagements are regulated by statutes which require the auditor to have membership of a particular professional body, or be permitted to perform audits under the rules of a particular professional body. For example, the Companies Act requires auditors of companies to be members of the New Zealand Institute of Chartered Accountants or members of overseas professional bodies who are approved by the Registrar of Companies to act as the auditor of a company. The Institute sets ethical and professional requirements for its members who perform audits, and approved overseas bodies set similar requirements for their members.


    78. What are the requirements to obtain a license (please select all relevant requirements.)?
      Academic study specific for obtaining a license
      Practical experience
      Licensing examination
      Final qualifying examination
      Other (please describe)


    79. Are there ongoing requirements to retain a license?
      Yes   No

      If YES, please select all relevant requirements.
      Continuing professional development
      Re-examination
      Other (please specify): Practice Review - A quality assurance review of all public practices (on a 3-5 year cycle).


    80. What entity grants the license?
      New Zealand Institute of Chartered Accountants in respect of members of the Institute who are holders of CPPs and so are entitled to perform audits, and Registrar of Companies under the provisions of the Companies Act.


    81. Describe any additional licensing requirements for auditors of listed entities (e.g., additional education requirements, registration, etc.).
      N/A



    Section 8 -- Public Sector Accounting Standards


    Responses to this section will provide a description of the legal and professional framework governing public sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate, where appropriate, the role of your organization within this framework.

    Section 8A -- Statutory Framework


    82. Please provide the name of the Legal authority and/or self-regulatory rules establishing public sector accounting standards in your country, the date of last amendment and the name of the body responsible for setting public sector accounting standards. If the standards are different for different entities (e.g., whole of government, ministry/department, statutory authority/agency, profit entity owned by government, state governments, local governments, other [please specify]), please specify the details that apply to each.
      Type of entity Name of
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting public sector
      accounting standards
      Whole of government The Public Finance Act 1989, The Financial Reporting Act 1993, the Institute of Chartered Accountants Act 1996 (Respectively) 2000, 2004, 1996 The Accounting Standards Review Board/Financial Reporting Standards Board
      Ministry/department The Public Finance Act 1989, The Financial Reporting Act 1993, the Institute of Chartered Accountants Act 1996 (Respectively) 2000, 2004, 1996 The Accounting Standards Review Board/Financial Reporting Standards Board
      Statutory authority/agency The Public Finance Act 1989, The Financial Reporting Act 1993, the Institute of Chartered Accountants Act 1996 (Respectively) 2000, 2004, 1996 The Accounting Standards Review Board/Financial Reporting Standards Board
      Profit entity owned by government The Financial Reporting Act 1993, the Institute of Chartered Accountants Act 1996, State Owned Enterprises Act 1986 (Respectively) 2004, 1996, 1999 The Accounting Standards Review Board/Financial Reporting Standards Board
      State governments N/A
      Local governments Local Government Act 2002 12/2002 The Accounting Standards Review Board/Financial Reporting Standards Board
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      www.legislation.govt.nz; www.nzica.com

      NOTE: Please note that accounting standards in New Zealand are sector neutral and apply both to public sector entities and private entities. Answers given to questions in Section 8 also apply to Section 9.


      b. Are the documents available in English?
      Yes   No


    Section 8B -- Standard-Setting (The Accounting Standards Review Board/Financial Reporting Standards Board)


    83. For The Accounting Standards Review Board/Financial Reporting Standards Board, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      ASRB is an independent statutory body. FRSB is a Board of the New Zealand Institute of Chartered Accountants.

      b. Name of standards

      ASRB - Approved Financial Reporting Standards (AFRS)
      FRSB - Financial Reporting Standards.(FRS)


    84. How many voting members does the standard-setting body have?
      12


    85. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    86. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      ASRB - Members must be qualified for appointment by reason of his or her knowledge of, or experience in, business, accounting, finance, economics, or law (Financial Reporting Act s.23).

      FRSB - The primary emphasis is on the professional qualities of appointees but the Board must be reasonably representative of the users, preparers and auditors of financial reports.


    87. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      ASRB - The Governor-General (Head of State), on recommendation of the relevant Minister.

      FRSB - appointed by the Institute's Executive Board


    88. What is the term of appointment for members?
      Year(s)


    89. For how many years has the standard-setting body been in existence?
      11 Year(s)


    90. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      240,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      0.706



    91. To what entity is the standard-setting body accountable?
      ASRB - to the Minister
      FRSB - to the Institute Council, and to the ASRB through a statement of service performance.


    92. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Proposed standards are released as Exposure Drafts. Under the Financial Reporting act: The ASRB (the Board) shall not approve a financial reporting standard or an amendment to an approved financial reporting standard unless the standard or the amendment is based on a standard or an amendment adopted by the New Zealand Institute of Chartered Accountants or the organisation or person by whom it was submitted to the Board and the Board is satisfied that, before it was so adopted, the Institute or organisation or person, as the case may be, took reasonable steps to consult with persons or organisations or representatives of persons or organisations who, in the opinion of the Institute or organisation or person, would be affected by the adoption of the standard or the amendment; or

      The standard or the amendment is based on a standard or amendment that was not adopted by the New Zealand Institute of Chartered Accountants ] or organisation or person by whom it was submitted to the Board and the Board is satisfied that, before the standard or amendment was submitted to the Board, the Institute or organisation or person, as the case may be, took reasonable steps to consult with persons or organisations who, in the opinion of the Institute or organisation or person, would be affected by the approval of the standard or the amendment by the Board.


    2. accessibility of meetings (i.e., public or private)

      Private meetings

    3. approval process for final standards (i.e., majority required to approve final standards)

      ASRB must only pass standards by a majority or more.
      FRSB must only pass standards by 75% or more.


    4. other relevant due process activities

      Before draft standards are submitted to the ASRB for approval, they must go through a robust development process, which includes the following steps:

      • preparation of an exposure draft;
      • releasing the exposure draft for public comment, identifying the major issues;
      • distributing copies to interested parties, allowing, normally, 3 months for comment;
      • consideration of all expressed views; and
      • the draft standard, when submitted, must be accompanied by a report on the consultation process and a summary of all significant issues raised.

      The report must include an indication of whether IASB or IFAC PSC has a similar standard and if so, whether the proposed standard is consistent with, or differs from that standard. The report must also provide a summary of the principle differences between the draft standard and the equivalent Australian standard (if any). Further, the report must include a justification of the need of the standard, and, wherever appropriate, an impact analysis and assessment of the anticipated effects of the standard on financial statements of New Zealand entities, including costs and benefits.

      Other steps undertaken by the FRSB include: Consultation with various interest groups, working groups. Commentary to IASB and PSC pronouncements. Participation in IASB and PSC working groups.

      The Institute is also currently involved in the international standard setting process as follows.

      The Institute receives public funds from the ASRB to contribute to and participate in the international standard setting process

      The Institute has a service agreement with the ASRB. The agreement establishes expectations of performance for the outputs to be provided by the Institute to the ASRB in consideration for part funding of international liaison activities towards the harmonisation of reporting standards. The role of the Institute in delivering these outputs is acknowledged in the agreement between the ASRB and the Minister of Commerce.

      The Agreement sets out the understanding of the ASRB and the Institute on:

      the outputs to be supplied by the Institute;
      the quantity, quality, timeliness and cost of these outputs;
      the level of funding that the ASRB will provide to the Institute;
      the ways in which the ASRB will monitor the activities of the Institute in generating those outputs; and
      other matters relevant to the relationship between the ASRB and the Institute.

      Basic Elements of Due Process:
      • Issue is raised
      • FRSB Research/analysis (which may involve discussion with relevant industry or sector groups)
      • FRSB issues exposure draft issue
      • Comments analyzed
      • Submission to IASB/IPSASB
      • Standard amended as appropriate and finalized or IASB issues final standard
      • FRSB submits to ASRB for approval
      • Once approved by ASRB – standards become deemed regulation.


    93. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      15 Day(s)



    Section 9 -- Private Sector Accounting Standards


    Responses to the questions in this section will provide a description of the legal, statutory and professional framework governing private-sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate what role your organization plays within this framework.

    Section 9A -- Statutory Framework


    94. Please provide the name of the Legal authority and/or self-regulatory rules that establish private-sector accounting standards in your country, the date of last amendment, and the name of the body responsible for setting private sector accounting standards. If the standards are different for different entities (for example, listed entities, private companies, governmental organization, not for profit organizations, etc.), please specify the requirements that apply to each.
      Type of entity Name of legal
      authority or
      applicable
      rules
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting private sector
      accounting standards
      Listed entity The Financial Reporting Act 1993; The Institute of Chartered Accountants of new Zealand Act 1996 (Respectively) 2004, 1996, Accounting Standards Review Board/Financial Reporting Standards Board
      Other (please describe)
      Other (please describe)
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      www.legislation.govt.nz
      www.nzica.com

      NOTE: Please note that accounting standards in New Zealand are sector neutral and apply both to public sector entities and private entities. Answers given to questions in Section 8 also apply to Section 9.


      b. Are the documents available in English?
      Yes   No


    Section 9B -- Standard-Setting (Accounting Standards Review Board/Financial Reporting Standards Board)


    95. For Accounting Standards Review Board/Financial Reporting Standards Board, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Please refer to equivalent answer in section 8.

      b. Name of standards

      Please refer to equivalent answer in section 8.


    96. How many voting members does the standard-setting body have?
      Please refer to equivalent answer in section 8.


    97. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    98. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Please refer to equivalent answer in section 8.


    99. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Please refer to equivalent answer in section 8.


    100. What is the term of appointment for members?
      Year(s)


    101. For how many years has the standard-setting body been in existence?
      12 Year(s)


    102. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      240,000.

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      0.706



    103. To what entity is the standard-setting body accountable?
      Please refer to equivalent answer in section 8.


    104. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Please refer to equivalent answer in section 8.

    2. accessibility of meetings (i.e., public or private)

      Please refer to equivalent answer in section 8.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Please refer to equivalent answer in section 8.

    4. other relevant due process activities

      Please refer to equivalent answer in section 8.


    105. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      15 Day(s)



    Section 10 -- Monitoring (Quality Assurance) and Enforcement


    Responses to the questions in this section will provide a description of the legal and professional framework governing regulation of the profession in your country. Please indicate what role your organization plays within this framework.

    Section 10A -- Securities Market Regulatory Authority


    106. Name the authority that regulates the securities market:
      The Securities Commission
      The NZX under an MOU established with the Securities Commission


    107. What responsibilities does this organization have for monitoring and enforcing compliance with accounting, reporting or auditing requirements? Please identify the Legal authority that establishes that responsibility:
      The Securities Markets Act 1988 and Securities Act 1978 set out the responsibilities and powers of the Securities Commission. The Securities Commission monitors compliance with these Acts, and has some powers to enforce those Acts.
      In relation to monitoring and enforcing compliance with accounting, reporting and auditing requirements under both the Securities Act 1978 and the Securities Markets Act 1988 (Both most recently amended in 2004)the Securities Commission has a number of responsibilities for Securities Act 1978, including:
      • To keep under review practices relating to securities, and to comment thereon to any appropriate body (s.10)
      • to keep under review activities on securities markets, and to comment on those activities to the appropriate body (s.10)
      • To promote public understanding of the law and practice relating to securities (s.10)
      • Monitoring compliance with regulations for investment statements and prospectuses (ss. 38C-F; 39-44)

      • Powers to inspect any document (s.67) and to request other authorities (for example the Registrar of Companies) to inspect any document (s.67A) for the purposes of the Securities Acts, the Financial Reporting Act and a number of other Acts.
      • Powers to receive other types of evidence and to summon witnesses (ss. 69B and 69D, and to receive undertakings enforceable by the courts.
      • Power to act on any matter at the request of an overseas regulator (69F).
      Securities Markets Act 1988:
      • Powers to order disclosure or corrective statements, and it is an offence not to comply with such orders. (s19G-19J).


    108. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      The Securities Commission may refer matters to the Institute of Chartered Accountants if members of the Institute have been involved in matters it is investigating.
      Commentary on law and practice.


    2. accounting and auditing standard-setting

      No direct role, apart from commentary.

    3. review of financial statements prepared by listed entities, and monitoring of their compliance with the accounting and disclosure requirements

      Monitoring of compliance with accounting and disclosure requirements that apply to listed entities under the Securities Act, Securities Markets Act and Financial Reporting Act. Securities Exchanges must inform the Commission of disciplinary action against entities listed on their exchange, which might include failures to comply with accounting and reporting standards.



    Section 10B -- Stock Exchange


    109. Name the four largest stock exchangers (by market capitalization) and whether it is organized as a profit or not-for-profit organization:
      Profit Not
      for
      profit
      Stock Exchange
      NZX (New Zealand Exchange Limited)



    Section 10B -- Stock Exchange
    NZX (New Zealand Exchange Limited) Details


    110. For NZX (New Zealand Exchange Limited), is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      • supervising listed issuers' compliance with NZX Listing Rules • supervising market participants such as NZX Firms and NZX Advisors • assisting the Securities Commission as a co-regulator as required under the Securities Markets Act 1988. Enforcement is through a disciplinary body called NZX Discipline.

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      Depending on the severity of the breach and other factors, NZX Discipline may impose a range of penalties, including: private reprimands, public statements and censures, delisting and orders for remedial action, penalties and reparations.

    3. How enforcement actions are administered.

      Enforcement is administered through the disciplinary body NZX Discipline, by way of summary or full hearing.



    Section 10C -- Regulatory Oversight of the Accounting Profession


    111. Has an audit profession oversight body been established (e.g., to oversee the external quality assurance review process, etc.)?
      Yes   No

      If NO, proceed to the next section.

      If YES, please describe :

    1. What are the name and duties of the oversight body?

      NOTE: Although there is no public oversight body in New Zealand, Ministry of Economic Development is currently reviewing Financial Reporting Act, including the role and regulation of auditors and audit standard setting in relation to financial reporting.

      Other elements of regulatory oversight include:
      The Institute of Chartered Accountant’s responsible Minister is the Minister of Finance.

      The Institute’s disciplinary decisions can be appealed to the courts for judicial review.

      Certain of the Institute’s rules have the status of ‘deemed regulations’ under the Regulations (Disallowance) Act 1989, are filed with the Registrar of Companies, and are made available to Parliament (Regulations Review Committee).

      The Securities Commission has a close interest in the way the Institute regulates its members (and has advised the government on this area of the Institute’s activities).
      The Ministry of Economic Development reviews and advises government on the regulation of the capital markets. To this end, the Ministry has a close interest in the efficiency and effectiveness of Institute’s regulation of its members.

      The Accounting Standards Review Board (a statutory body) reviews financial reporting standards submitted to it by the Institute to ensure, among other things, the standards were developed using appropriate process, and have been justified on a cost benefit basis. The Board also contributes to the costs the Institute incurs in developing financial reporting standards. The Institute is accountable to the Board for the way it spends that money.


    2. The number of members on the oversight body



    3. Its powers



    4. How the oversight body conducts or oversees a program of inspections to assess the degree of compliance of each audit firm/auditor with applicable auditing standards and regulations



    5. The sanctions the oversight body may impose in the event of non-compliance



    6. How the oversight body is accountable to any public institution or body



    Section 10D -- Banks Regulatory Authority


    112. Name the authority that regulates the banks and similar financial institutions. Discuss how this authority differentiates between accounting requirements for regulatory reporting and general purpose external financial reporting:
      The Reserve Bank of New Zealand regulates registered banks in relation to financial/systemic stability. The Securities Commission regulates other financial institutions (in relation to offer documents and advertisements to ensure misleading information is not given to the public). The Reserve Bank sets regulatory requirements and where appropriate aligns these with requirements for general purpose external financial reporting. The Reserve Bank requires Registered Banks to, amongst other things, produce General Disclosure Statements, which must include Financial Statements that comply with the Financial Reporting Act 1993.


    113. Discuss briefly the legal requirements with respect to monitoring and enforcement by the regulatory authority of accounting and auditing standards that apply to the banks and similar financial institutions:
      The Reserve Bank Document "Audit Obligations" (October 1998) states that: Under the Reserve Bank of New Zealand Act 1989 (the “Act”), the Reserve Bank of New Zealand (the “Bank”) is empowered to register and supervise banks for the purposes of: (a) promoting the maintenance of a sound and efficient financial system; (b) avoiding significant damage to the financial system that could result from the failure of registered bank. 2. To assist in achieving these objectives, the Act permits the Bank to recommend the establishment, by way of Order in Council, of disclosure arrangements for registered banks. Disclosure requirements for registered banks were first introduced on 1 January 1996. They have since been revised to reflect the experience gained with the regime since its inception, and in order to cross-reference the disclosure regime to the accounting standard FRS-33: Disclosure of Information by Financial Institutions issued by the Institute of Chartered Accountants of New Zealand. FRS-33 was approved by the Accounting Standards Review Board in April 1997. Orders in Council (signed by the Governor-General (Head of State) on recommendation of the Minister) require certain types of disclosures which must be audited by an external auditor according to specific requirements. Details can be found at: http://www.rbnz.govt.nz/banking/Regulation/bs4.pdf


    114. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      The Securities Commission may refer matters to the Institute of Chartered Accountants if members of the Institute have been involved in matters it is investigating in relation to enforcing compliance with the Securities Act and the Securities Markets Act. The Reserve Bank monitors auditing requirements for registered banks.

    2. accounting and auditing standard-setting

      The Reserve Bank and Securities Commission may make submissions providing comment and feedback to the Institute on exposure drafts issued for proposed accounting and auditing standards.

    3. review of financial statements prepared by listed entities

      Reserve Bank - none. Securities Commission - see section 10A

    4. enforcement of accounting, reporting and auditing requirements

      Securities Commission - see section 10A Reserve Bank - none.



    Section 10E -- Non-Banking Financial Institutions Regulatory Authority


    115. Name the regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on non-banking institutions.
      Registrar of Companies (annual reports for companies, Registrar of Building Societies, Registrar of Friendly Societies and Credit Unions) Securities Commission (public issuer/securities requirements) New Zealand Institute of Chartered Accountants (reporting and audit standards) Ministry of Economic Development (supervision of superannuation schemes and life insurers, Supervision of Unit Trusts) The Government Actuary A range of Private Sector Associations including: Financial Services Association, Investment Savings and Insurance Association, Association of Superannuation Funds of New Zealand, New Zealand Association of Credit Unions, Office of the Insurance and Savings Ombudsman.


    116. What is the source of Legal authority of the regulatory authority(ies)?
      The Institute of Chartered Accountants of New Zealand Act, 1996; Securities Act 1978 and Securities Markets Act 1988; Superannuation Schemes Act 1989; Insurance Companies (Ratings and Inspections) Act 1994 and Insurance Companies' Deposits Act 1953; Building Societies Act 1965; Friendly Societies and Credit Unions Act 1982; Unit Trusts Act 1960; Commerce Act 1986 Fair Trading Act 1986


    117. Briefly describe the role of the regulatory authority(ies) as it relates to the following:
    1. regulation of the audit profession

      The New Zealand Institute of Chartered Accountants has the primary responsibility for regulating the audit profession in New Zealand, on a self-regulating basis. Where entities are required to be audited by statute or by regulation, the relevant administering regulatory authority may also have an involvement in monitoring whether auditing requirements are complied with. Concerns relating to the performance of an audit can be referred to the Institute or the relevant other professional accounting body.

    2. accounting and auditing standard-setting

      Accounting standards are approved by the Accounting Standards Review Board (ASRB), in accordance with the Financial Reporting Act 1993. Anyone may submit standards to the ASRB. To date, only standards submitted by the Institute of Chartered Accountants have been approved. Auditing standards are developed and approved by the New Zealand Institute of Chartered Accountants. The Institute has a policy of harmonising its Auditing Standards with those issued by the IAASB. The ability to undertake audits in New Zealand is not restricted to members of the Institute, so auditors who are not members of the New Zealand Institute of Chartered Accountants will be subject to the requirements contained in the auditing standards specified by other professional bodies to which they may belong.

    3. review of financial statements prepared by listed entities

      The Registrar of Companies, Securities Commission, New Zealand Stock Exchange, and the Institute of Chartered Accountants are the main regulatory bodies with an interest in the financial statements prepared by listed entities.

    4. enforcement of accounting, reporting and auditing requirements

      The New Zealand Institute of Chartered Accountants has the primary responsibility for regulating the audit profession in New Zealand, on a self-regulating basis in relation to its members. Each of the authorities and agencies above have an interest in ensuring that the entities that they oversee comply with their various financial reporting requirements. Where concerns are identified relating to Institute members or members of other professional bodies, they will be referred to the New Zealand Institute of Chartered Accountants or other relevant body. For more serious breaches, the Police and Serious Fraud Office may also have an interest.



    Section 10F -- Insurance Companies Regulatory Authority


    118. Name the regulatory authority responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on insurance companies.
      • Registrar of Companies (annual reports for companies) • Securities Commission (public issuer requirements) • Institute of Chartered Accountants of New Zealand (reporting and audit standards) • Ministry of Economic Development (actuarial standards and statutory requirements – for prudential purposes – life insurers only)


    119. What is the source of Legal authority of the regulatory authority(ies)?
      Life Insurance Act 1908, Insurance Companies Deposits Act 1953 and Insurance Companies (Ratings and Inspections) Act 1994, Companies Act 1993, Securities Act 1978, Institute of Chartered Accountants Act 1996, Financial Reporting Act 1993.


    120. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      If auditor breeches any of the statutory and non statutory requirements identified above, they can be subject to prosecution or disciplinary action by the relevant regulatory authority.

    2. accounting and auditing standard-setting

      Accounting standards are approved by the Accounting Standards Review Board (ASRB), in accordance with the Financial Reporting Act 1993. Anyone may submit standards to the ASRB. To date, only standards submitted by the Institute of Chartered Accountants have been approved. Auditing standards are developed and approved by the Institute of Chartered Accountants. They are based principally on IFAC standards. Other than Institute members may undertake audit in New Zealand. Auditors belonging to other accounting bodies must comply with the auditing standards specified by those bodies.

    3. review of financial statements prepared by listed listed entities

      The Registrar of Companies, Ministry of Economic Development, Securities Commission, New Zealand Stock Exchange (if the insurer is listed), and the Institute of Chartered Accountants are the main regulatory bodies with an interest in the financial statements prepared by listed entities. Most non-life insurers are required to obtain ratings from an approved ratings agency. A recent government decision will see this requirement extended to all non-life insurers.

    4. enforcement of accounting, reporting and auditing requirements

      The Registrar of Companies, Securities Commission, Accounting Standards Review Board and the Institute of Chartered Accountants, in particular, have an interest in accounting and reporting requirements. For more serious breaches, the Police and Serious Fraud Office may also have an interest. The Institute of Chartered Accountants enforces audit standards through its disciplinary processes. Auditors belonging to other professional accounting bodies must comply with the auditing standards specified by those bodies. For the more serious breaches of ethical standards, the Registrar of Companies, the Securities Commission, Police and Serious Fraud Office may also have an interest.



    Section 10G -- Other Regulatory Authority


    121. Name any other regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements.
      • Registrar of Companies
      • Securities Commission
      • Accounting Standards Review Board
      • New Zealand Stock Exchange
      • Institute of Chartered Accountants of New Zealand
      • Ministry of Economic Development
      • Commerce Commission
      • Police
      • Serious Fraud Office
      • Office of the Auditor-General

      This list does not include sector specific regulators, e.g. banking, insurance.


    122. What is the source of Legal authority of each regulatory authority?
      • Companies Act 1993
      • Securities Act 1978
      • Securities Markets Act 1988
      • Institute of Chartered Accountants Act 1996
      • Financial Reporting Act 1993
      • The Fair Trading Act 1986 (which prohibits misleading conduct in relation to services)
      • The Crimes Act 1961 (in particular, offences relating to fraud)
      • The Consumer Guarantees Act 1993 (to provide services with reasonable care and skill, and to provide services that are fit for purpose).
      • The Public Audit Act 2001


    123. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      The following entities must have audited financial statements:

      • Issuers;
      • Overseas incorporated companies;
      • Companies in which 25% of the voting power is held overseas;
      • All other companies, unless the company passes a unanimous resolution each year that no auditor be appointed. Where a resolution is not passed, the appointment must comply with Section 199 of the Companies Act; and
      • Most public entities.

      Section 199 of the Companies Act 1993 provides for an auditor to be a Chartered Accountant of the Institute of Chartered Accountants of New Zealand, and other than a member of the Institute if that person is a member, fellow or associate of an association of accountants outside New Zealand approved by the Registrar of Companies.

      The Institute of Chartered Accountants specifies entry requirements for its members, undertakes practice review of its members in public practice, requires continuing professional development and develops and enforces audit standards on its members.

      Auditors other than members of the New Zealand Institute, who have been approved by the Registrar of Companies to undertake audit in New Zealand, will be overseen by the accounting bodies in which they are members.

      Entities not required by statute to be audited that nonetheless choose to have an audit on a voluntary basis (for example, sports clubs and charities) are free to engage any person whom they want to perform that function. Large entities will normally engage a Chartered Accountant. Where an entity has contracted with a member of the Institute, irrespective of the type of entity, the auditor must comply with the requirements specified by the Institute.

      The Registrar of Companies and the Securities Commission (in respect of entities that are issuers of securities), in particular, have an interest in ensuring financial information provided by companies/issuers complies with legal requirements and financial reporting standards. The Accounting Standards Review Board has a particular interest in audits that have been qualified in some way. The Police and Serious Fraud Office may take an interest in an audit if fraud or other criminal offence is suspected.

      Also, auditors must meet general regulatory standards set by government, including:

      • The Fair Trading Act 1986 (which prohibits misleading conduct in relation to services) – Commerce Commission;
      • For more serious breaches of standards, the Crimes Act 1961 (in particular, offences relating to fraud) – Police, Serious Fraud Office; and
      • The Consumer Guarantees Act 1993 (to provide services with reasonable care and skill, and to provide services that are fit for purpose).


    2. accounting and auditing standard-setting

      Accounting standards are approved by the Accounting Standards Review Board (ASRB), in accordance with the Financial Reporting Act 1993. Anyone may submit standards to the ASRB. To date, only standards submitted by the Institute of Chartered Accountants have been approved.

      Auditing standards are developed and approved by the New Zealand Institute of Chartered Accountants. The Institute has a policy of harmonising its Auditing Standards with those issued by the IAASB. The ability to undertake audits in New Zealand is not restricted to members of the Institute, so auditors who are not members of the New Zealand Institute of Chartered Accountants will be subject to the requirements contained in the auditing standards specified by other professional bodies to which they may belong.


    3. review of financial statements prepared by listed listed entities

      The Registrar of Companies, Securities Commission, New Zealand Stock Exchange, and the Institute of Chartered Accountants are the main regulatory bodies with an interest in the financial statements prepared by listed entities.

    4. enforcement of accounting, reporting and auditing requirements

      The Registrar of Companies, Securities Commission (in relation to entities that are issuers), and the New Zealand Institute of Chartered Accountants, in particular, have an interest in accounting and reporting requirements. For more serious breaches, the Police and Serious Fraud Office may also have an interest.

      The New Zealand Institute of Chartered Accountants has the primary responsibility for regulating the audit profession in New Zealand, on a self-regulating basis in relation to its members.
      The New Zealand Institute of Chartered Accountants enforces audit standards through its disciplinary processes. Auditors belonging to professional accountancy bodies other than the Institute must comply with the auditing standards specified by those bodies. For more serious breaches of ethical standards, the Police and Serious Fraud Office may also have an interest.



    Section 10H -- Quality Assurance


    124. Does any organization of professional accountants/auditors organize a program of quality assurance review to monitor compliance with accounting, reporting and auditing requirements?
      Yes   No

      If NO, proceed to next Section.

      If YES, briefly describe the monitoring and enforcement mechanism.

      The New Zealand Institute of Chartered Accountants has the primary responsibility for regulating the audit profession in New Zealand, on a self-regulating basis in relation to its members.
      The Institute of Chartered Accountant's Practice Review Board (PRB) conducts Practice Review of all public practitioners on a 3-5 year cycle. Following Practice Review, if any enforcement is necessary, the PRB has some powers, and it can refer matters to the Institute's disciplinary bodies.

      Practice Review Process Outline

      Basis of Selection

      Practice review is an ongoing process rather than a discrete cycle. The selection of a practice for review is determined on a time basis principally (i.e. when the practice was last reviewed and what the result was). On occasion a review may be brought forward where circumstances warrant it. This includes a directive from either the Professional Conduct Committee (Rule 21.10) or the Disciplinary Tribunal (Rule 21.31(f)) that a review be undertaken. A review may also be organised following a referral from the Companies Office or where there has been a high profile incident where it is in the public interest to conduct a review.

      The Review

      One reviewer is usually assigned to undertake each review given that most firms (approximately 1,200 out of 1,600) are sole practitioners. For larger firms several reviewers are assigned and on occasion three may be assigned.

      The assigned reviewer will make contact with the practitioner to arrange a suitable review date. Once an appointment is made the practitioner will be sent several questionnaires to complete to enable the reviewer obtain appropriate information about the practice. These questionnaires referred to as Practice Information Questionnaire (PIQ) and Client Monies & Member’s Trust Accounts Questionnaire (Trust-1) must be completed prior to the review. In addition, there will be a number of documents and other information which you will be requested to prepare and have available for the reviewer on the day of the visit.

      At the outset of the review, the reviewer will hold an initial meeting to obtain a fuller understanding of the practice, to explain the approach and to determine what will be reviewed.

      At the conclusion of the review, the reviewer will discuss the issues identified from the review. This should ensure there are no surprises and provides an opportunity for any factual errors or misunderstanding to be resolved and for missing documentation to be provided.

      The review will on average take one day on site with a report being prepared subsequently.

      What is Reviewed?

      While technical compliance and competency remain important aspects of practice review, particularly in relation to higher risk areas such as audit, there is an increased emphasis on ethical issues including independence, reflecting the changes in the professional environment.

      The review will assess the quality of the practice’s work against the relevant legislative requirements (Financial Reporting Act, Companies Act, Securities Act) and financial reporting and professional standards. The standards include:

      • Accounting Standards (FRS and SSAPs)
      • Auditing Standards
      • Compilation Engagement Standard (CS-1)
      • Review Engagement Standard (RS-1)
      • Agreed Upon Procedures Engagement Standard (APS-1)
      • Advisory Engagement Standard No.1: Opinion on Accounting and Reporting Matters (AES-1)
      • Advisory Engagement Standard No.2: Independent Business Valuation Engagements (AES-1)
      • Performance of Insolvency Engagements (SES-1)
      • Professional Standard No.1: Quality Control (PS-1)
      • Professional Standard No.2: Client Monies and Member’s Trust Accounts (PS-2)

      Compliance with the Code of Ethics including Independence in Assurance Engagements and EG-2 (Guidelines on Ethics in Tax Practice) will also be assessed.

      A selection of files will be reviewed. Some in detail while others only certain aspects.

      Practitioners can expect the review to include (where relevant but not limited to):

      • Audit engagements, particularly issuers.
      • Valuation engagements.
      • Clients where the member has a financial involvement.
      • Finance companies/issuers.
      • Clients in financial trouble.
      • Compiled financial statements.

      Practitioners should note that the practice review work programme is constantly under revision and therefore each review visit should differ from the previous.

      Reporting

      After the completion of the review a report is prepared by the reviewer. This report is reviewed by a person other than the reviewer to ensure overall quality.

      The reports have changed significantly from previously where they consisted mainly of standard paragraphs. Now the reports are tailored specifically to the practice reviewed.

      The reports will principally identify issues arising from the review. Due to the limited nature of the review process the reports will not generally comment on matters where there are no issues.

      The report is provided as a draft and the practitioner is invited to respond to the matters raised.

      Practitioners should generally expect to receive a draft report within a month of the review visit.

      Review Finalisation

      The practitioner is required to respond to the review findings. Finalisation of the review consists of assessing the responses and overall results of the review. The reviewer will make an overall recommendation which is second reviewed by a Senior Reviewer, on behalf of the Practice Review Board. They will confirm or otherwise the reviewer's recommendation.

      All serious matters are referred to the Practice Review Board for a decision. A selection of routine files are also provided to the Practice Review Board for their concurrence with the result prior to it being provided to the practitioner.

      A final letter will be sent to the practitioner communicating the overall review result. An evaluation questionnaire will also be provided with this letter to enable practitioners to provide specific feedback on the review.

      The report of findings sent to the practitioner in draft is not reissued. Rather, it is read in conjunction with the practitioner’s response. This approach minimises the cost of the review.

      Review Results

      Most practitioners (approximately 75%) can expect to receive a three year review grade upon finalisation of the review. A further 25% receive a one year review grade, generally because of shortcomings in their audit work but also for other issues arising from non-compliance with professional standards. A very small proportion of members are referred to the Professional Conduct Committee, usually for significant audit failures or serious ethical issues. Only the Practice Review Board can refer a member to the Professional Conduct Committee.

      Recent rule changes have provided the Practice Review Board with two additional responsibilities. These are to direct a member not to undertake certain work without supervision or further training, and the ability to refer matters to a third party where it is in the public interest. These additional powers can only be exercised by the Board.



    125. Under what authority does the organization conduct the program of quality assurance review?
      Under the Institute of Chartered Accountants of New Zealand Act 1996, the Institute has a statutory function to promote quality, expertise, and integrity in the profession of accounting and to regulate the accounting profession in New Zealand in relation to its members. The Institute has statutory authority to make Rules to carry out these functions. The Practice Review Board and its powers are established under these Rules.


    126. Who performs the review (e.g., one firm reviewing another firm, staff from the national professional organization, contractors, or a combination of these)?
      A Practice Review Board, comprised of members of the Institute, who hold a certificate of public practice, and up to two lay members. The Practice Review Board can employ people to assist it. (See also Q. 124 above)



    Section 10 I -- Investigation and Discipline


    127. Is there a process for investigating and disciplining the accounting profession in your country?

    128. Which of the following best describes the responsibility for the investigatory and disciplinary function in your country?
      Government or other agencies are solely responsible for this function.
      Government or other agencies have this responsibility, but the member body or bodies participate in the process.
      Government formally delegates this function to the member body or bodies, to exercise on its behalf.
      Member body or bodies have separate and independent processes that operate alongside processes of legal authorities.
      Other (please explain) Institute has statutory responsibility


    129. Please indicate the name of the body or bodies responsible for investigation and discipline.
      The Professional Conduct Committee (PCC)
      The Disciplinary Tribunal(DT)
      The Appeals Council (AC)

      NOTE RE Q. 135:
      The Professional Conduct Committee (previously known as the Investigations Committee) has been in existence since 1909. The Disciplinary Tribunal (Disciplinary Committee) was introduced in 1959.

      NOTE RE Q. 138:
      The bodies meet in full session for the following number of days a year:
      PCC – 12
      DT – 10
      AC - 1



    Responses to the remaining questions in this Section are required if your organization has responsibility for investigation and disciplinary actions.

    130. How many voting members does the body have?
      PCC - 12, DT- 10, AC 9


    131. Are the members of the body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: All voluntary except the Chair of the Appeals Council who is a paid Barrister and the three paid lay members on the Disciplinary Tribunal.


    132. What are the criteria considered in selecting members of the body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Best person for the job, with recognised need to have a diverse representation of the membership, including profession sector and geographical representation.


    133. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      The Executive Board of the Institute


    134. What is the term of appointment for members?
      2 Year(s)


    135. For how many years has the body been in existence?
      40 Year(s)


    136. Please indicate the budget in US$ of the body for the last fiscal year.
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      $380,205 expenditure, $52,950 income

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      0.706 (specify currency)



    137. To what entity is the body accountable?
      The PCC, DT and AC must comply with the Institute's Act and Rules but are otherwise independent.


    138. Approximately how many days per year does the body meet in full session (including teleconferences)?
      20 Day(s)



     

     

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