New Zealand

The financial reporting framework in New Zealand is established under the Companies Act 1993, the Financial Market Conduct Act 2013, the Financial Reporting Act 2013, and the Financial Reporting (Amendments and Other Enactments) Act 2013.

The abovementioned legislation requires all companies to prepare financial statements in accordance with accounting standards issued by the External Reporting Board (XRB), an independent Crown Entity. The XRB has developed a multi-sector, multi-tiered approach and sets out the full range of standards for both for-profit and public benefit entities (PBEs). The XRB delegates the responsibility of developing, approving, and promulgating financial reporting standards in the jurisdiction to the New Zealand Accounting Standards Board (NZASB).

There are two tiers of reporting requirements with regards to preparing general purpose financial statements of for-profit entities: (i) Tier 1: New Zealand IFRS (NZ IFRS), which are fully converged with International Financial Reporting Standards (IFRS), applicable for public accountable entities—listed companies, banks and financial institutions—and large for-profit entity’s with total expenses exceeding NZD 30 million; and (ii) Tier 2: NZ IFRS Reduced Disclosure Regime (NZ IFRS RDR), applicable for no publicly accountable entities and entities with total expenses lower than NZD 30 million and that elect to be categorized as a Tier 2 entity. NZ IFRS RDR adopts the full recognition and measurement of NZ IFRS, but with less disclosure, and are based on the IFRS for Small- and Medium-sized Entities (SMEs) standard as issued by the IASB. SMEs that do not meet the abovementioned criteria, are not required to prepare special purpose financial statements for tax purposes, using standards set by the Inland Revenue Department.

The abovementioned Acts also define mandatory requirements for audits in the jurisdiction. Audits are mandatory for: (i) all Financial Market Conduct (FMC) reporting entities, which include listed companies, banks, financial institutions, building societies, and credit unions; (ii) large (total assets greater than NZD 60 million or revenue exceeding NZD 30 million) companies with less than 25% overseas ownership; (iii) large (total assets greater than NZD 60 million or revenue exceeding NZD 30 million) company with more than 25% overseas ownership, but not a subsidiary of an overseas company; (iv) large (total assets greater than NZD 20 million or revenue exceeding NZD 10 million) company that is a subsidiary of a overseas company; (v) large (total assets greater than NZD 20 million or revenue exceeding NZD 10 million) overseas company; (vi) every other company with 10 or more shareholders; (vii) large (total assets greater than NZD 60 million or revenue exceeding NZD 30 million) limited partnership.

Auditing standards to be applied in statutory audits are established by the XRB, which has delegated the responsibility of developing, approving, and promulgating auditing and assurance standards to the New Zealand Auditing and Assurance Board ( HYPERLINK "https://www.xrb.govt.nz/about-xrb/nzauasb/" NZAuASB). The NZAuASB has adopted New Zealand Auditing and Assurance Standards ( HYPERLINK "https://www.xrb.govt.nz/assurance-standards/auditing-standards/" NZAuAS) which are fully converged with the International Standards on Auditing (ISA).

Prior to 2011, the accountancy profession in New Zealand was self-regulated by the New Zealand Institute of Chartered Accountants (NZICA) Act 1996. With the adoption of the Auditor Regulation Act 2011, the responsibility for the regulation of auditors was assigned to Financial Market Authority (FMA).

The FMA, as the oversight authority for the audit profession, has the following responsibilities:(i) maintaining a registry of auditors and audit firms; (ii) monitoring audit regulatory systems of accredited bodies; (iii) establishing a quality assurance (QA) system; (iv) setting CPD requirements; and (v) developing an investigative and disciplinary system. All auditors must be registered with the FMA to practice.

The FMA recognizes the Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia as accredited bodies, which are in turn required by the Auditor Regulation Act for: (i) licensing domestic auditors and registering domestic audit firms; (ii) monitoring registered auditors and audit firms; (iii) promoting and monitoring the competence of their members; and (iv) developing an investigative and disciplinary system. The FMA requires auditors to complete at least 120 hours of CPD activities over a three-year period.

The accredited bodies offer two professional designations to practice as an auditor. CA ANZ offers the Chartered Accountant (CA) designation and CPA Australia the CPA designation. To obtain the CA designation, individuals must fulfill the following requirements: (i) complete four years of approved degree-level study at an approved tertiary university; (ii) complete and approve the professional competency program; (iii) complete three years of practical experience, two of which are under the supervision of a mentor in an accredited training organization; and (iv) pass the professional ethics course. A CA must obtain a Certificate of Public Practice (CPP) if the individual plans to provide services to the public. All holders of the CPP are given the title of “Qualified Statutory Accountant” for the purposes of the Financial Reporting Act 2013.

In order to use the CPA designation, CPA Australia members must obtain an undergraduate degree accredited by CPA Australia, complete the CPA Program and three years’ practical experience, and then fulfill CPD requirements to renew and maintain their qualification. CA ANZ and CPA Australia have established a pathway for individuals to become a member of each other’s member organization.

Technical standards to be applied by the profession are established by the External Reporting Board (XRB), an independent Crown Entity, in accordance with the Financial Reporting Act 2013, and the Financial Reporting (Amendments and Other Enactments) Act 2013.

Professionals accountants, other than auditors, may voluntary join a professional accountancy organization (PAO) and be self-regulated through the membership requirements of the PAO. In accordance with the New Zealand Institute of Chartered Accountants (NZICA) Act 1996, CA ANZ carries out the following self-regulatory activities: (i) maintaining the registry of its members; (ii) establishing IPD and CPD requirements and professional conduct requirements for its members; (iii) establishing ethical requirements for its members; (iv) developing a QA system for its members; (v) developing an investigative and disciplinary system; and (vi) representing, promoting, defending, and developing the accountancy profession.

In addition to the CA designation, CA ANZ offers the Associated Chartered Accountant (ACA) and Accounting Technician (AT) designations. To be eligible for the CA ANZ issued ACA or AT designations, individuals must: (i) complete four years of approved degree-level study at an approved tertiary university; (ii) complete and approve the professional competency program; (iii) complete two years of practical experience, one of which is under the supervision of a mentor in an accredited training organization; and (iv) pass the professional ethics course.

The Financial Market Authority (FMA), is the oversight authority for the audit profession in New Zealand. Under the Auditor Regulation Act 2011, the FMA responsibilities include: (i) maintaining a registry of auditors and audit firms; (ii) monitoring audit regulatory systems of accredited bodies; (iii) establishing a quality assurance (QA) system; (iv) setting continuing professional development (CPD) requirements; and (v) developing an investigative and disciplinary system.

The FMA recognizes the Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia as accredited bodies, which are in turn required by the Auditor Regulation Act for: (i) licensing domestic auditors and registering domestic audit firms; (ii) monitoring registered auditors and audit firms; (iii) promoting and monitoring the competence of their members; and (iv) developing an investigative and disciplinary system.

The FMA is a member of the International Forum of Independent Audit Regulators.

Chartered Accountants Australia and New Zealand (CA ANZ)

Effective December 31, 2014, the Institute of Chartered Accountants in Australia (ICAA) and the New Zealand Institute of Chartered Accountants (NZICA) amalgamated to become one body—Chartered Accountants Australia and New Zealand (CA ANZ). CA ANZ has members in both Australia and New Zealand and the organization's strategic vision is to shape the profession of the future by developing opportunities for its members that build value for themselves, their clients and the communities in which they live in.

In addition to being an IFAC Member, CA ANZ is a member of the Confederation of Asian and Pacific Accountants (CAPA) and an associate member of the ASEAN Federation of Accountants (AFA).

CPA Australia

CPA Australia aims to provide members with education, training, technical support and advocacy as a part of its core services. CPA Australia also works with its members, and local and international bodies to represent the views and concerns of the profession to government, regulators, industries, academia and the general public. CPA Australia offers three levels of membership including Associate (ASA), CPA, and Fellow (FCPA).

In addition to being an IFAC Member, CA ANZ is a member of CAPA and an associate member of AFA.

In New Zealand, a mandatory quality assurance (QA) review system is required for all statutory audits. Under the Auditor Regulation Act 2011, the Financial Market Authority (FMA) has the responsibility for carrying out QA reviews for public accountable entities—listed companies, banks, and financial institutions. The FMA reports that audit firms are inspected at least once every four years and larger network firms are reviewed approximately every two years.

Based on available information on the QA review systems being carried out by the FMA, it appears that the system is aligned with SMO 1 best practices; however, additional information has been requested to finalize the adoption status.

In addition, as delegated by the FMA, Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia operate QA review systems for their members in New Zealand. CPA Australia implements a Quality Review Program to ensure that its members in public practice maintain high professional standards. CA ANZ has a Quality Review Program to uphold and improve the standard of professional services of CA ANZ members. Both CA ANZ and CPA Australia report that their QA review systems are aligned with the requirements of SMO 1.

Current Status: Adopted

Educational requirements for the accountancy profession in New Zealand are established by the Auditor Regulation Act 2011 and at the professional level. Universities, the Financial Market Authority (FMA), the Chartered Accountants Australia and New Zealand (CA ANZ), and CPA Australia have a role in setting and implementing initial and continuing professional development requirements (IPD and CPD, respectively) for professional accountants.

The FMA, as the oversight authority for the audit profession, in accordance Auditor Regulation Act 2011 sets CPD requirements for all auditors. The FMA only recognizes CA ANZ and CPA Australia as accredited bodies and requires auditors to complete at least 120 hours of CPD activities over a three-year period.

Under the New Zealand Institute of Chartered Accountants Act 1996, CA ANZ offers three professional designations: Chartered Accountants (CA), Associated Chartered Accountants (ACA) and Accounting Technicians (AT). The designations require individuals to:

• Have an approved university degree;
• Complete the CA; ACA or AT Program, respectively;
• Complete three years’ (CA) or two years (ACA and AT) of practical experience; and
• Fulfill CPD requirements which are set at 120 hours over a three-year period.

In order to use the CPA designation, CPA Australia member must obtain an undergraduate degree accredited by CPA Australia, complete the CPA Program and three years’ practical experience, and fulfill CPD requirements to renew and maintain their qualification. CA ANZ and CPA Australia have established a pathway to become a member of each other’s organization.

The IES were significantly revised in 2015 to emphasize learning-outcomes based approaches and each of the PAOs has addressed this with revisions to their respective educational programming. Further details can be found within the individual member organizations’ profiles.

Current Status: Adopted

The Financial Reporting Act 2013 designates the External Reporting Board (XRB), an independent Crown Entity, as the organization responsible for setting auditing standards for all auditors. The XRB has delegated the responsibility for developing, approving and promulgating auditing and assurance standards to be applied in New Zealand to the New Zealand Auditing and Assurance Board ( HYPERLINK "https://www.xrb.govt.nz/about-xrb/nzauasb/" NZAuASB) The NZAuASB has adopted New Zealand Auditing and Assurance Standards ( HYPERLINK "https://www.xrb.govt.nz/assurance-standards/auditing-standards/" NZAuAS) which are fully converged with the 2018 ISA.

Current Status: Adopted

Ethical requirements for professional accountants in New Zealand are established by the External Reporting Board (XRB) for auditors, and Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia, , the two accredited bodies by the FMA, for their members.

The Financial Reporting Act 2013 empowers the XRB, to establish ethical requirements for auditors. The XRB has delegated the responsibility of developing, approving and promulgating auditing and assurance standards to be applied in New Zealand to the New Zealand Auditing and Assurance Board ( HYPERLINK "https://www.xrb.govt.nz/about-xrb/nzauasb/" NZAuASB), and in turn, the NZAuASB has adopted the PES 1 (Code of Ethics for Assurance Practitioners) that is fully aligned with the 2018 IESBA Code of Ethics.

Professionals accountants, other than auditors, may voluntary join a professional accountancy organization (PAO) and be self-regulated through the membership requirements of the PAO.

Under the New Zealand Institute of Chartered Accountants Act 1996, CA ANZ is responsible for establishing ethical requirements for its members. CA ANZ has issued a Code of Ethics that is aligned with the 2018 IESBA Code of Ethics.

CPA Australia members are subject to the Accounting Professional & Ethical Standard (APES) 110 Code of Ethics for Professional Accountants, which is based on the 2016 IESBA Code of Ethics, issued by the Australian Accounting Professional & Ethical Standard Board (APESB).

Current Status: Adopted

The Financial Reporting Act 2013 designates the External Reporting Board (XRB), an independent Crown Entity, as the organization responsible for adopting public sector accounting standards. The XRB delegates the responsibility to the New Zealand Accounting Standards Board (NZASB) to develop, approve and promulgate Public Benefit Entity Accounting Standards (PBE Standards) for the public sector.

The NZASB has adopted national accounting standards for public benefit entities (PBEs) based on the IPSAS, which are modified to make them appropriate for application in New Zealand.

Current Status: Adopted

Investigative and disciplinary (I&D) procedures for professional accountants in New Zealand are carried out by the Financial Market Authority (FMA) and Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia, the two accredited bodies by the FMA.

Under the Auditor Regulation Act 2011, the FMA has the responsibility for carrying out I&D of auditors. The FMA delegates the I&D processes to the accredited body that issued the license of the auditor. Accredited bodies can investigate suspected breaches of auditing and assurance standards, the Act, conditions of an auditor's license or audit firm's registration, or their conduct rules or code of ethics. The FMA can assist an accredited body in an investigation, where requested by the accredited body or where the accredited body has decided not to investigate.

If the FMA starts or takes over, an investigation the accredited body may only investigate that matter or take disciplinary or other action with the FMA’s written approval. However, the FMA may not act on an investigation in respect of the conduct of a licensed auditor if the conduct is, or has been, the subject of proceedings before a disciplinary body.

Based on available information on the I&D processes being carried out by the FMA, it appears that the system is aligned with SMO 6 best practices; however, additional information has been requested to finalize the adoption status.

Both accredited bodies have established I&D procedures for their members. Professionals accountants, other than auditors, may voluntary join a professional accountancy organization (PAO) and be self-regulated through the membership requirements of the PAO.

CA ANZ has established a Professional Conduct Committee (PCC) to investigate complaints and to determine if they should be referred to a Disciplinary Tribunal. Both the PCC and Disciplinary Tribunal may issue sanctions. Disciplinary Tribunal decisions may be appealed to an Appeals Tribunal/Council. More details on CA ANZ’s procedures can be found here.

Any complaints against CPA Australia members may be submitted to the General Manager, Professional Conduct (GMPC) who will then refer the complaint for investigation to a Professional Conduct Officer (PCO). Based on the findings of the investigation, the PCO and GMPC may refer the case to the Disciplinary Tribunal which will issue sanctions if necessary. Disciplinary Tribunal decisions may be brought for an appeal to the Appeals Tribunal. More information on CPA’s Australia’s I&D process is outlined within its bylaws.

Both CA ANZ and CPA Australia report that their I&D systems are aligned with the requirements of SMO 6.

Current Status: Adopted

The Financial Reporting Act 2013 empowers the External Reporting Board (XRB), an independent Crown Entity, as the organization responsible for setting accounting standards. The XRB has delegated the responsibility for developing, approving and promulgating accounting standards that are to be applied in New Zealand to the New Zealand Accounting Standards Board (NZASB).

The XRB has developed a multi-sector, multi-tiered approach and sets out the full range of standards that apply, based on the entity sector and tier. There are two tiers of reporting requirements with regards to preparing general purpose financial statements of for-profit entities: (i) Tier 1: New Zealand IFRS (NZ IFRS), which are fully converged with International Financial Reporting Standards (IFRS), applicable for public accountable companies—listed companies, financial institutions—and large for-profit entity’s with total expenses exceeding NZD 30 million; and (ii) Tier 2: NZ IFRS Reduced Disclosure Regime (NZ IFRS RDR), applicable for no publicly accountable entities and entities with total expenses lower than NZD 30 million and that elect to be categorized as a Tier 2 entity. NZ IFRS RDR adopts the full recognition and measurement of NZ IFRS, but with less disclosures, and are based on the IFRS for Small- and Medium-sized entity Entities (SMEs) standard as issued by the IASB.

Current Status: Adopted

Relevant Organizations

• Chartered Accountants Australia and New Zealand (CA ANZ)
• CPA Australia
• External Reporting Board (XRB)
• Financial Market Authority (FMA)

Relevant Legislation

• Companies Act 1993
• Financial Market Conduct Act 2013
• Financial Reporting Act 2013
• Financial Reporting (Amendments and Other Enactments) Act 2013
• New Zealand Institute of Chartered Accountants Act 1996

Relevant Publications

• CA ANZ, Bylaws, July 2016.
• CA ANZ, Complaints, n.d.
• CA ANZ, CPD Requirements, n.d.
• CA ANZ, Dealing with a complaint, n.d.
• CA ANZ, New Zealand Regulation, n.d.
• CA ANZ, Royal Charter, November 2014.
• CA ANZ, SMO Action Plan, November 2018.
• CPA Australia, “Summary of the regulation of public accounting services in New Zealand,” July 2019.
• EY, “Financial reporting guide,” December 2017.
• FMA, “Accredited Body Report – New Zealand Institute of Chartered Accountants,” November 2018.
• FMA, “Accredited Body Report – CPA Australia,” November 2018.
• KPMG, “New Zealand financial reporting framework,” June 2014.
• IFRS Foundation, “IFRS Application Around the World, Jurisdictional Profile: New Zealand,” March 2019.
• International Forum of Independent Audit Regulators (IFIAR), IFIAR 2019 Member Profile – FMA, 2019.
• National Association of State Boards of Accountancy (NASBA), “Global Accountancy Education Recognition Study 2012,” 2013.