Standards and Quality Assurance
The Institute is a self-governing body bound by its own Act of Parliament (the Institute of Chartered Accountants of New Zealand Act 1996). Standards and Quality Assurance carries out statutory functions required by the Act. This includes setting financial reporting and professional standards, reviewing practices that provide accountancy services to the public, and investigating professional conduct issues.
This divisional report outlines:
Progress on last year's goals
- The Revised Professional Standard No 2 Client Monies.
We issued Client Monies and Framework for Assurance Engagements based on the International Framework for Assurance Engagements, and the revised Explanatory Foreword to Engagement Standards. - Development of further International Standards on Auditing (New Zealand) and International Standards on Review Engagements (NZ).
We made further progress with adoption of International Standards of the International Auditing and Assurance Standards Board (IAASB). We contributed to the work of IFAC to develop a guide for implementation of International Standards on Quality Control by SMPs (initiative of the IFAC Small and Medium Practices Committee). We contributed to development of a consultation paper on engagements to review financial statements. - Delivery of courses to assist members to understand and keep abreast of changes occurring in the Institute’s Professional Standards.
National CPD courses were offered countrywide in September and scheduled throughout 2008. - Development of proposals on changes to New Zealand’s financial reporting regime, especially with regard to SMEs.
We instigated and are currently supporting a review of the Financial Reporting Act 1993 and the consequential delay of mandatory adoption of International Financial Reporting Standards for many SMEs. - External review of the disciplinary processes.
The external review of the Institute’s disciplinary processes received from David Goddard was both positive and complimentary; however, as expected, the report included recommendations which will further improve our processes.
Other highlights
- Contributed to the successful conclusion of the International Accounting Standards Board's project on the treatment of redeemable shares.
- Dealt with the Institute’s first complaint about the auditors of a high-profile collapsed finance company, National Finance 2000 Limited. The matter was referred to the Disciplinary Tribunal who censured the members and awarded costs.
- Engagement with regulators with the aim of ensuring that reporting requirements applicable to auditors are appropriately aligned with the Institute’s professional standards.
- Published “Sustainability Reporting: An Idea Whose Time Has Come”.
- Registration and monitoring of members’ Associated Finance Entities, as defined in PS2.
- Undertook 567 practice reviews, including Big 4 and Audit NZ.
Coming year
- Complete special file reviews on audits of selected public interest entities.
- Initiate processes to register and monitor those of our members providing financial planning to the public.
- Plan for the implementation of the external review recommendations through rule changes.
- Establish a process to address technical breaches of accounting and professional standards.
- Keep a close watch on the outcome of auditor regulation proposals regarding any impact they may have on our processes.
- Work with the Ministry of Economic Development on proposals for a revised financial reporting regime, potentially providing further relief for SMEs.
- Development of further New Zealand equivalents to the International Standards of the IAASB.
- Finalise guidance for members who act as financial/investment advisors.
- Sustainable Development Reporting website to go live.
