A Changing Audit Environment

AuditingOver the past couple of years there have been some major changes to the audit requirements within New Zealand.

Audit Standards

New audit standards were introduced recently. They apply to all entities and all Chartered Accountants must follow them. They are generally longer and more stringent than the prior standards and clients will notice an increased level of communication on a variety of topics. The look of the year end audit report has also changed slightly.

Regulation

Due to several high profile company collapses, the spotlight has been on auditors over the past few years. The External Reporting Board (XRB) has been set up to govern standard setting and provide a greater level of independence. On top of this the Financial Markets Authority (FMA) has been established and one of its many functions is to regulate the auditors of any issuers within New Zealand.

From 1 July 2012 the Auditor Regulation Act 2011 comes fully into force.

This new act requires that auditors and audit firms must be licensed/registered in order to carry out the audit of issuers.

If you are an issuer you can check whether your audit firm is registered by referring to the companies office website and in particular the following link to the auditors register; www.business.govt.nz/companies/auditors-register

Kennedy Allbon Tane is committed to keeping up with change and has registered both as a licensed auditor and registered audit firm.

Accounting Standards

The accounting standards that apply within New Zealand are also currently in the process of being reviewed. The changes are likely to be significant and will effect all entities from businesses right through to the not for profit sector. The implementation dates will be staggered however will start to take effect from 2013/14.

A tiered approach will apply to govern which format of reporting will apply, the level of disclosures that will be required and in some cases, whether an audit will be needed or not.

When these changes are finalised, we will provide an update of what they are and how the different entity types will be affected.