Auditor regulation Bill changes welcomed

Wednesday, 30 March 2011

Commerce Minister Simon Power has welcomed the Commerce Select Committee report on the Auditor Regulation and External Reporting Bill, which will establish a new licensing regime for major audits.

The Bill strengthens auditor regulation by consolidating all accounting and auditing standards-setting into a reconstituted Accounting Standards Review Board, to be called the External Reporting Board (XRB).

The new regime will not impact on the audits for small and medium-sized companies, or non-profit entities, applying only to major audits at the likes of banks, insurance companies and those listed on the stock exchange.

The Bill will also require the New Zealand Institute of Chartered Accountants (NZICA) to license auditors, and the Financial Markets Authority (FMA) to oversee the NZICA and be responsible for quality reviews.

"This Bill is an integral part of the Government's reform programme to restore investor confidence in our financial markets and to strengthen investor protection," Power said.

"I welcome the Select Committee's recommendation that auditing firms be registered, because it recognises that audit quality is not just about an individual auditor's skills, knowledge and experience, but is also about their firm's systems and processes."

"The Registrar of companies identified that audit failure was a contributing factor in the collapse of finance companies, so it's important we introduce independent oversight," he said.

Power also said he agreed with the Committee recommendation against making it an offence for auditors not to comply with auditing standards, saying the Crimes Act provided sufficient coverage for fraud and deception offences.

"Once the Bill is enacted, New Zealand will have an effective auditor oversight regime that is consistent with international standards."

Subject to the legislation being enacted, the XRB will begin operating on July 1, while the new auditor regulation provisions will come into force once the NZICA and FMA have established new regulatory systems.

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