1. Compliance
  2. Auditors - our role
  3. Who needs to comply
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Page last updated: 27 Feb 2019

Who needs to comply

All auditors and audit firms who perform issuer audits need to comply with the Auditor Regulation Act 2011.

Individuals who perform issuer audits 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 2011 and includes audits of the financial statements of issuers as defined in the Financial Reporting Act 1993. FMC reporting entity audits are defined in the Financial Markets Conduct Act 2013 and must comply with the Financial Reporting Act 2013.

The purpose of the auditor regulation regime is to promote the quality, expertise and integrity in the profession of auditors. The regime also promotes recognition of the professional status of New Zealand auditors in overseas jurisdictions.

New Zealand auditors and audit firms

Accredited bodies have the primary responsibility for regulating affected New Zealand based auditors and audit firms.

The FMA has the role of granting accreditation to accredited bodies and supervising them on an ongoing basis.

Overseas auditors and audit firms

We have 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:

  • 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.

An 'overseas audit firm' is a partnership, where the majority of its partners are ordinarily resident outside New Zealand. Businesses other than partnerships are not permitted to carry out audits of New Zealand issuers. A limited partnership cannot become a registered firm.

Accredited bodies

Accredited bodies are organisations permitted under the Act to license auditors and approve the registration of 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 The New Zealand Institute of Chartered Accountants (NZICAhas been granted accreditation by FMA under the Auditor Regulation Act.

In addition, FMA can grant accreditation to any other body which meets the required standard.  

Standards and obligations

Accredited bodies must have adequate and effective systems and processes for performing their regulatory functions under the Act. In addition, FMA may prescribe further minimum standards an accredited body must meet.

Accredited bodies are required to comply with conditions attached to their accreditation. We have published a 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.

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