The Auditor Regulation Act 2011 established a co-regulatory oversight regime to regulate auditors and audit firms that undertake issuer audits.
The purpose of the Act
The Auditor Regulation Act 2011(external link) (the Act) came into force on 1 July 2012 and introduced a new regulatory regime for the audit industry.
The Act regulates auditors and audit firms that undertake issuer audits to promote quality, expertise and integrity in the audit profession.
Generally it requires all:
- auditors who carry out issuer audits to be licensed
- audit firms that have at least one licensed auditor to be registered.
Under the Act, the term “issuers” encompasses:
- all those who raise money by way of investments from the public
- all those who hold money from the public on deposit or hold assets on trust for broad groups of people.
This includes banks, insurance companies, finance companies, listed companies and KiwiSaver providers.
Application of the Act
The Act established the following obligations:
- auditors and audit firms who act in respect of issuer audits must be listed on a public register
- New Zealand auditors and audit firms who wish to act in respect of an issuer audit must be licensed and registered by an accredited professional accounting body
- overseas auditors and audit firms who wish to act in respect of audits of New Zealand issuers must be licensed and registered by the Financial Markets Authority
- licensed auditors and registered audit firms must meet on-going competence requirements, prescribed by the Financial Markets Authority
- registered audit firms are subject to regular quality reviews by the Financial Markets Authority to ensure that each firm’s systems, policies, and procedures are satisfactory in terms of auditing and assurance standards and that they promote auditor reasonable care, diligence and skill in the carrying out of issuer audits.
More information on compliance with the regime can be found on the Financial Markets Authority website(external link).
The Auditor Regulations 2012
- provide further detail on the application of the licensing criteria contained in the Act
- set out the content of periodic reports to be provided by accredited professional accounting bodies to the Financial Markets Authority
- establish licensing and registration fees
- recognise the overseas jurisdictions whose auditors may apply to the Financial Markets Authority seeking licensing and registration under the Act.