Individuals who perform FMC audits need to hold a licence. Audit firms who perform FMC audits must be registered, and must ensure that for each FMC audit:

• the engagement partner holds a licence.
• an individual who carries out the engagement quality control review of key decisions and judgements (before the report is issued) also holds a licence.

• Accredited bodies have the front-line responsibility for regulating affected New Zealand auditors and audit firms. 
• The FMA has the role of granting accreditation to accredited bodies and supervising them on an ongoing basis.

We have the 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:

• Australia
• Any country, state or territory in the European Union
• Hong Kong
• Singapore
• 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 us to discuss how they will comply with the law.

• Overseas auditors need to apply to the FMA for a standard licence 

• An 'overseas audit firm' is a partnership, where the majority of its partners are ordinarily resident outside New Zealand, or an overseas company.
• A limited partnership cannot become a registered firm.

Overseas audit firms are registered on the Auditors Register held at the New Zealand Companies Office, following approval by the FMA.

• Accredited bodies are organisations permitted under the Act to license auditors and register audit firms. Accredited bodies also have responsibilities for supervising the auditors and audit firms they license and register, and for disciplining those auditors and audit firms if they breach their obligations.
• CPA Australia Limited (CPA Australia) and Chartered Accountants Australia and New Zealand (CA ANZ) have been granted accreditation by the FMA under the Auditor Regulation Act. ¹
• The FMA can grant accreditation to any other body which meets the required standard.  
• Accredited bodies must have adequate and effective systems and processes for performing their regulatory functions under the Act.
• The FMA has prescribed minimum standards an accredited body must meet.
• Accredited bodies are required to comply with conditions attached to their accreditation.
• We have published policy on how it will assess applications for accreditation and how it will impose, vary, add or remove conditions of accreditation. Individual accredited bodies will be notified in writing of the conditions applied to their accreditation.

¹ NZICA and the Institute of Chartered Accountants of Australia (ICAA) formally amalgamated on 1 January 2015 to form Chartered Accountants Australia and New Zealand (Chartered Accountants ANZ). NZICA continues to regulate the accountancy profession for Chartered Accountants ANZ members who remain resident in New Zealand (and by virtue of their residence continue to be NZICA members) according to the NZICA Act 1996, and the terms of the amalgamation agreement. For the purpose of the audit oversight regime, NZICA continues to be the accredited body.

CPA Australia and CA ANZ are currently the only accredited bodies. They are the front line regulators and have the primary responsibility for licencing auditors and the registration of audit firms based in New Zealand. New Zealand auditors and audit firms should contact the following accredited bodies for more information about licencing and audit firm registration.

• CA ANZ: see CA ANZ website for further details about how to apply for a standard licence and audit firm registration
• CPA Australia: see CPA Australia website for further details about how to apply for a standard licence and audit firm registration
• View the Auditors Register

Application Guide: Licensing and registration of overseas auditors and audit firms

It explains how an overseas audit firm can apply for authorisation of its registration and overseas auditors can apply for licences. It explains how FMA will assess applications.

FMA may authorise the Registrar to register an overseas audit firm where it has met the requirements and conditions for registration. Please complete the following steps:

1. Download the application guide and application forms

• Application Guide: Licensing and registration of overseas auditors and audit firms.
• Overseas Audit Firm Application Form (OAF1.1)
• Overseas Audit Firm Application Form Cover Sheet Pack
• Statutory Declaration Fit and Proper, Firms (SDFP1.1)
• Statutory Declaration Fit and Proper, Audit /Management Partner (SDFP2.1)
• Adverse Matter Template (AMT1.1)
• Partners and Auditor Firm spreadsheet (PAF1.1)

2. Gather the evidence of meeting requirements

• The evidence you need to provide is summarised in the application packs. The application pack also has full details of the requirements as well as information about how the FMA assesses the evidence provided.
• Please carefully check you provide the expected evidence from both the 'all countries' section of the guide and the section relevant to your home jurisdiction, and that the evidence meets the requirements set out in the application pack.
• Incomplete forms or answers which do not take account of the guidance are likely to result in queries and delays in processing your application, as well as additional costs.

3. Submission instructions

You must submit your forms electronically and in paper form.

Physical copies of all your application material should be addressed to:

Licensing Team
Financial Markets Authority
Level 2, 1 Grey Street
Wellington 6140
New Zealand

In addition, your application forms and supporting evidence must be emailed to us at: auditorregulation@fma.govt.nz

Each application will need to be accompanied by the appropriate fee (covering all applicable bank fees) detailed in the section below’

Application Guide: Licensing and registration of overseas auditors and audit firms

It explains how an overseas audit firm can apply for authorisation of its registration and overseas auditors can apply for licences. It explains how FMA will assess applications.

FMA may issue an overseas auditor an auditor licence if you meet certain requirements and conditions. Please complete the following steps:

1. Download the application guide and application forms

• Application Guide: Licensing and registration of overseas auditors and audit firms
• Overseas Auditor Application Form (AUD1.1)
• Overseas Auditor Cover Sheet Pack
• Adverse Matter Template (AMT1.1)
• UK Auditor supplementary question pack
• USA Auditor supplementary question pack
• Australian auditor supplementary question pack
• Overseas Auditor Cover Sheet Pack for applications under the Trans-Tasman Mutual Recognition Act 1997
• Application for an Overseas Auditor Licence under the Trans-Tasman Mutual Recognition Act 1997

2. Gather the evidence of meeting requirements

• The evidence you need to provide is summarised in the application packs. The application pack also has full details of the requirements as well as information about how the FMA assesses the evidence provided.
• Please carefully check you provide the expected evidence from both the 'all countries' section of the guide and the section relevant to your home jurisdiction, and that the evidence meets the requirements set out in the application pack.
• Incomplete forms or answers which do not take account of the guidance are likely to result in queries and delays in processing your application, as well as additional costs.

3. Submission instructions

You must submit your forms electronically and in paper form.

Physical copies of all your application material should be addressed to:

Licensing Team
Financial Markets Authority
Level 2, 1 Grey Street
Wellington 6140
New Zealand

In addition, your application forms and supporting evidence must be emailed to us at auditorregulation@fma.govt.nz

Each application will need to be accompanied by the appropriate fee (covering all applicable bank fees) detailed in the section below.

FMA approved professional courses in auditing

• Audit & Assurance (AAA) in the Chartered Accountants Program by CA ANZ
• Advanced Audit & Assurance by CPA Australia
• International Standards on Auditing (ISAs) program if the final assessment is set under supervision of an accredited body
• Link to Notice

FMA approved professional courses in commercial law and taxation

Overseas auditors wishing to be licensed in New Zealand are required to complete an approved course in New Zealand commercial law and taxation. This is to ensure that all licensed auditors have knowledge of the New Zealand commercial environment. 

The following table sets out the degree level papers the FMA has approved in both commercial law and taxation that currently meet this requirement at 14 tertiary institutions:

* indicates institutions that offer courses by correspondence or distance learning.

Contact information for each tertiary institution is available here.

If you have completed another course in New Zealand commercial law and taxation which you believe meets the requirements for auditor licensing, we are happy to consider whether that course is equivalent to the approved courses. You will need to provide a detailed description of the topics covered and the learning outcomes for the course you have completed.

New Zealand auditors and audit firms
New Zealand auditors and audit firms should contact accredited bodies CA ANZ or CPA Australia for information about licensing, audit firm registration and associated fees.

Overseas auditors and audit firms

* Please refer to Auditor Regulations 2012 (Part 2) for a specific hourly fee

The above fees are payable to the FMA when you apply for a standard licence (auditors) or registration (audit firms). Firms may pay fees for multiple individuals’ applications together.
You will also be charged an additional fee at the FMA hourly rate based on how much time is spent assessing your application. We will invoice you for the additional assessment fee. We may also invoice you for any costs of external advice or assistance.

Registered audit firms, and New Zealand auditors who are not a partner or employee of a registered audit firm, are subject to a quality review at least once every four years.

We will invoice you for your quality review fee, which will be based on the FMA hourly rate. We may also invoice you for any costs of external advice or assistance.

For more information see the Auditor Regulations 2012.

The Financial Markets Authority (Levies) Regulations 2012 (the Regulations), as amended in 2017, set out the levies payable by industry. The levies are set by the Ministry of Business, Innovation, and Employment (MBIE).

The FMA receives funding from the Crown and a proportion of our costs is recouped from industry through levies.

Licensed auditors and registered audit firms are required to continue to meet the prescribed minimum standards.

• Both licensed auditors and registered audit firms will be subject to conditions.
• For auditors, the kinds of conditions that licences may be subject to are prescribed by the FMA.
• The exact conditions which an auditor or audit firm is subject to will be set by the accredited body that issues the licence for New Zealand auditors and audit firms, or by the FMA for overseas auditors and audit firms.
• Conditions will be published on the register of auditors and audit firms, and notified to the auditor or audit firm.
• For overseas auditors, the FMA will generally apply our standard licence conditions and for overseas audit firms and our standard conditions of registration. However, in some circumstances, we may vary these conditions or attach additional conditions.

We have prescribed requirements for ongoing competence. 

We assess an audit firm’s compliance with the standards and the requirements of the AR Act by:

• looking at the firm’s overall quality control systems for performing compliant FMC audits
• reviewing a selection of individual FMC audit engagement files to see if a file complies with the above systems and the Auditing and Assurance Standards issued by the XRB.

We review the ’Big Four’ firms every two years, and all other firms every three years. As a result of our Memorandum of Understanding (MOU) with the Auditor-General, we may review audits of FMC reporting entities carried out by private audit firms on behalf of the Auditor-General. The results of these reviews are included in this report and our findings are communicated directly to the Auditor-General.

All of our reviews undergo a robust moderation process. Each audit quality review assessment report is peer-reviewed by a reviewer not involved in the initial review. Our final report goes to the Auditor Oversight Committee (AOC) for consideration. The AOC provides an independent forum to review the consistency and fairness of all quality review reports. The AOC comprises a diverse group of professionals including exauditors, company directors, and others with relevant experience who are independent of the audit profession.

The requirement of a quality control system is set out in the Professional and Ethical Standards, and Auditing Standards. Our assessment of an audit firm’s quality control system focuses on whether:

• the system complies with the relevant standards
• the system’s policies and procedures are followed
• the system contributes to high quality FMC audits.

We also evaluate whether the firm’s internal monitoring of its audit quality control system is effective. This internal monitoring includes the firm performing an internal engagement quality control review (EQCR) on each FMC audit file.

The EQCR is a process designed to provide an objective evaluation of the significant judgements the audit team has made and the conclusions reached in the auditor’s report.

We have prescribed additional requirements⁷ for this EQCR given its importance to the audit process. We expect the EQCR partner to be suitably qualified and have relevant experience to enable them to give an objective evaluation. They should also be involved in key decision-making to make sure the audit has an effective process.

⁷ Paragraph 8(1)(f) of the Auditor Regulation Act (Prescribed Minimum Standards and Conditions for Licensed Auditors and Registered Audit Firms) Notice 2012

We carry out individual audit file reviews to check the auditor has complied with Auditing and Assurance Standards, and exercised reasonable care, diligence and skill in carrying out the audit.

Key attributes of audit quality are:

• an independent audit is carried out by a licensed auditor
• the auditor demonstrates appropriate levels of professional scepticism
• adequate and appropriate audit evidence is obtained
• the auditing and assurance standards are followed
• an appropriate audit opinion is issued.

The number of audit files we select for each audit firm is determined by the number of licensed auditors at the firm, the number of FMC audits completed and the results of the firm’s previous review.

In selecting specific files for review, we take into account:

• businesses of significant public interest given the value of financial products issued to the public (such as KiwiSaver schemes, banks, insurance companies and businesses listed on the NZX)
• businesses and industries that are more vulnerable to risks from existing and emerging market conditions, such as newly listed businesses, or businesses that experienced significant growth
• other businesses considered higher-risk, for example finance companies, or businesses that have non-compliance issues such as qualified audit reports, or non-compliance with laws and regulations
• a cross-section of different licensed auditors in each registered firm.

If a previous review found an audit file did not meet the required standards, it is likely we would review that auditor or audit file again.

When we complete a file review, the reviewer gives each individual finding on that file a rating from low to high, and proposes a final overall file rating from the following categories:

Good
We either had no findings or the findings relate to improving some documentation or minor non-compliance with the auditing standards. The reviewer is satisfied that all audit procedures have been performed around key risk areas and sufficient audit evidence was obtained.

Compliant, but improvements needed
We identified areas in the file where the audit wasn’t performed in accordance with the audit standards. However, overall the reviewer found there was sufficient and appropriate audit evidence obtained in the key risk areas.

Non-compliant
The file showed several areas where the audit wasn’t performed in accordance with the standards. The reviewer found insufficient or inappropriate audit evidence obtained in at least one key risk area of the audit, or the review showed a material misstatement that required restatement of the financial statements and/or the audit opinion.

The ratings are moderated by the AOC.

Following an audit quality review we consider if further action is required. Actions we could take include:

• Requiring an audit firm to perform additional work to address our findings
• Requiring an entity to restate the financial statements, if we find material misstatements
• Completing a follow-up review within six to 18 months of the previous review to ensure the firm has taken appropriate action to address our findings
• Issuing directions to remediate any findings
• Referring complaints to the licensed auditors’ professional body to be dealt with under its disciplinary procedures.

Mike Schubert

Chair

Mike’s executive career included 28 years as a partner at PwC, specialising in audit, assurance and corporate finance. He was also the CEO of law firm MinterEllisonRuddWatts and acting CEO of healthAlliance. Mike is currently a director and chair of the audit committees at entities including Silver Fern Farms, Abano Healthcare Group, Procare Health and Homecare Medical.

Barry Brown

LLB Hons

Barry has been a lawyer for over 45 years, specialising for most of that time in mergers and acquisitions, and general corporate and commercial law. His has advised on many of New Zealand’s largest transactions. He also has wide experience in advising boards of directors on governance matters. He is a former managing partner and chair of Chapman Tripp. 

Jackie Robertson 

Jackie has over 20 years’ experience in audit and assurance, including 12 years as an assurance partner at Deloitte. She is currently a professional director with board roles at listed and public sector organisations, including the XRB. She is a CA and Chartered Member of the IOD

Steven Fyfe

BCA, CA, CMInstD

Steven has 30 years’ experience in the accountancy and banking industries in New Zealand and offshore, including as CFO and executive director at The National Bank. Since 2011 Steven has been a company director of a wide range of commercial, public sector and community organisations.

Sylvia van Dyk

FCA

Sylvia heads the team that supports the New Zealand Auditing and Assurance Standards Board in developing and issuing auditing and assurance standards. She has worked extensively in auditing in both the private and public sectors, including the Office of the Auditor-General. She is technical advisor to the New Zealand member on the International Auditing and Assurance Standards Board (IAASB). 

Nives Botica Redmayne

PhD, MSc, BSc, AFAANZ, CA ANZ 

Nives is the academic member of the AOC. She is an Associate Professor at the Massey University School of Accountancy. Her main area of research and expertise is assurance, in particular the economics, production and regulation of assurance services. She is currently the CA ANZ Vice President. She is also a member of the New Zealand Accounting Standards Board.

Alistair Ryan

Alistair has extensive corporate and financial experience in the listed company sector. He was the Chief Financial Officer and a member of the senior executive team at SKYCITY Entertainment Group for over 16 years. Alistair is currently chair of Kingfish, Barramundi and Marlin Global, a director Kiwibank and chair of Metlifecare’s Audit & Risk Committee.

• The responsibility for conducting investigations and disciplinary proceedings sits primarily with the accredited body that issued the licence. 
• Accredited bodies are able to investigate suspected breaches of auditing and assurance standards, the Act, conditions of an auditor's licence or audit firm's registration, or their conduct rules or code of ethics.
• Where an accredited body or its disciplinary body determines an auditor or audit firm has breached an obligation, it may cancel or suspend the auditor's licence or impose any other penalty available under its rules. 
• The FMA also has jurisdiction to investigate or assist an accredited body in an investigation, where requested by the accredited body or where the accredited body has decided not to investigate.
• When we conduct an investigation and find a breach, we can take disciplinary action against the auditor or audit firm.

• We may investigate if it is in the public interest to do so.
• Where we determine an overseas auditor or audit firm has breached its obligations, we can cancel or suspend the auditor's licence or audit firm's registration, and make costs orders. 
• We will refer matters of concern regarding overseas auditors to the audit regulator and their professional body in their home jurisdiction where appropriate.