New auditor regulations need to align with Australia, says ICA
By Paul McBeth
Oct. 23 (BusinessWire) – The government’s new auditor regulations need to align New Zealand with Australia, according to the Institute of Chartered Accountants, which will have its oversight responsibilities stripped under the new regime.
The changes will remove the ICA from its dual role of regulating and promoting the profession and give auditor oversight to a beefed up Accounting Standards Review Board to be called the External Reporting Board. They are necessary to bring the country into line with global standards, according to chief executive Terry McLaughlin.
“We would have the expectation that New Zealand officials would be developing the regime to achieve” trans-Tasman alignment, he told BusinessWire. Commerce Minister Simon Power “has been very keen on building this relationship, but the devil will be in the detail.”
The ICA has been working with the government to develop a new regime since the collapse of Enron at the end of 2001 and resulting in the dissolution of accounting firm Arthur Andersen, sparked concerns around the oversight of auditing processes.
Under current regulations New Zealand chartered accountants can’t obtain registration as company auditors in Australia, meaning they are unable to accept Australian company audit engagements. This may be extended to other offshore jurisdictions, according to a cabinet document posted on the Ministry of Economic Development’s website.
Power pushed the timeframe out to 2012 to implement the new regime, from 2011 initially indicated in the cabinet paper.
“Self-regulation is no longer acceptable internationally,” Power said in a statement. “We need to introduce independent oversight to ensure that New Zealand auditors are able to practise overseas.”
Power cited a damning report by companies’ registrar Neville Harris into the failure of finance companies as one reason why tougher regulation was needed. The Harris report said the auditing of the sector “lacked the rigour and analytical depth one would expect for entities managing substantial public investments.”
The ICA will continue to regulate auditors as a specialist profession rather than as chartered accountants, and the new entity will monitor and report on the way the institute does so.