All auditors and audit firms who perform issuer audits will need to comply with the Auditor Regulation Act 2011 when it comes fully into force 1 July 2012.
From 1 July 2012 individuals who perform issuer audits will need to hold a licence.
Audit firms who perform issuer audits must be registered, and must ensure that for each issuer audit:
- the engagement partner holds a licence
- an individual who carries out the quality control review of key decisions and judgements (before the report is issued) also holds a licence. (This person might be known as the concurring partner, or quality review partner.)
Issuer audits is defined in the Auditor Regulation Act and includes audits of the financial statements of issuers as defined in the Financial Reporting Act 1993 as well as the financial statements of schemes and funds whose securities have been offered to the public, and retirement villages where they are required to produce financial statements under that Act.
Issuer audits also includes any review or audit engagements required to be carried out under the Securities Act 1978.
The purpose of the auditor regulation regime is to promote the quality, expertise and integrity in the profession of auditors. The regime will also promote recognition of the professional status of New Zealand auditors in overseas jurisdictions.
New Zealand auditors and audit firms
Accredited bodies have primary responsibility for regulating affected New Zealand based auditors and audit firms.
FMA has the role of granting accreditation to accredited bodies and supervising them on an ongoing basis.
Overseas auditors and audit firms
FMA has the primary responsibility of regulating affected overseas auditors and audit firms.
An 'overseas auditor' is an individual who is entitled to act as an auditor in a jurisdiction outside New Zealand that is included in a prescribed list. Regulations have prescribed:
- Any country, state or territory in the European Union
- Hong Kong
- The United States of America.
Auditors not based in New Zealand or licensed or authorised to act as an auditor in a prescribed jurisdiction may contact FMA to discuss how they will comply with the law.
An 'overseas audit firm' is a partnership, where the majority of its partners are ordinarily resident outside New Zealand. Entities other than partnerships are not permitted to carry out audits of New Zealand issuers. A limited partnership cannot become a registered firm.