MR No. 2022 – 50
The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko notes the New Zealand Institute of Chartered Accountants (NZICA) has released its disciplinary decisions arising from the 2015 PwC audit of the formerly NZX-listed Wynyard Group.
The FMA complained to NZICA after developing significant concerns about PwC’s audit of Wynyard¹, following a routine audit quality review completed in August 2017. The FMA referred PwC’s two audit partners responsible for the Wynyard audit (the Engagement Lead Partner and the Engagement Quality Review Partner) to NZICA’s Professional Conduct Committee.
The FMA was concerned about:
NZICA’s Appeals Council and Disciplinary Tribunal findings include that the Lead Engagement Partner failed to:
Paul Gregory, FMA Acting Director of Capital Markets, said: “Auditor independence and the assessment of going concern are fundamental parts of the audit. Failure to perform these core functions appropriately can result in significant harm, and undermine investor confidence. So, it was important for us to test the issues we found, with NZICA’s disciplinary tribunal.”
“The decisions clarify for auditors what is required for the documentation of, and assessment of threats to independence, and the evidence and documentation required when assessing going concern. The decisions also note that the importance of the Engagement Quality Review Partner’s role in the audit should not be underestimated. We expect that auditors will learn from this case to ensure that core areas of their audits are performed to the required standards.”
The full NZICA disciplinary decisions can be found here:
Audit quality is a key priority for the FMA, as it is a cornerstone of market integrity and investor confidence. Investors rely on audited financial statements and need to have confidence that they present a true and fair reflection of a company’s financial position and performance.
Following Wynyard’s failure in October 2016, the FMA and NZX also undertook an investigation into the conduct of the company and its directors. The FMA published the findings of its investigation into Wynyard’s compliance with continuous disclosure and fair dealing obligations in November 2018.
As a frontline regulator for auditors, NZICA plays a crucial role in New Zealand’s financial markets, with responsibility for overseeing domestic licensed auditors and registered audit firms. Disciplinary actions against licensed auditors are one of NZICA’s key regulatory functions under the Auditor Regulation Act.
¹ The FMA audit quality review of PwC in 2016/2017 included the review of the 2015 audit of Wynyard completed on 21 March 2016.
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