Audit Quality – Monitoring Report

FINANCIAL MARKETS AUTHORITY | AUDIT QUALITY – MONITORING REPORT 2016
Glossary
Accounting standards/NZIFRS
The New Zealand equivalent of International Financial Reporting Standard issued by the
External Reporting Board
Act Auditor Regulation Act 2011
AROC
AOC
Audit firm
Auditing and assurance standards
Auditing standards
Auditor
EQCR
EQCR partner
FMA
Going concern
ISA (NZ)
Audit Regulatory Advisory Group
Audit Oversight Committee
Registered audit firm as defined by the Act
The auditing and assurance standards issued by the External Reporting Board
International Standard on Auditing (New Zealand) to be applied in conducting audits of
historical financial information issued by the External Reporting Board
Licensed auditor as defined by the Act
Engagement Quality Control Review. This is a process designed to provide an objective
evaluation, on or before the date of the auditor’s report, of the significant judgments the
engagement team has made and the conclusions it has reached in formulating the auditor’s
report
Licensed auditor who performs the EQCR. This may be a licensed auditor who is not a
partner in the audit firm
Financial Markets Authority
Under the going concern assumption, a business is viewed as continuing in business for the
foreseeable future. General purpose financial statements are prepared on a going concern
basis, unless those charged with governance either plans to liquidate their business, cease
operations, or has no other alternative but to stop doing business
International Standard on Auditing (New Zealand)
FMC reporting entity Has the same meaning as in section 6 of the Auditor Regulation Act 2011
FMC audit Has the same meaning as in section 6 of the Auditor Regulation Act 2011
Four-step model
When designing and performing substantive analytical procedures the auditor shall:
• Determine the suitability of particular substantive analytical procedures for given
assertions, taking account of the assessed risks of material misstatement and tests
of details, if any, for these assertions.
• Evaluate the reliability of data from which the auditor’s expectation of recorded amounts
or ratios is developed, taking account of source, comparability, and nature
and relevance of information available, and controls over preparation.
• Develop an expectation of recorded amounts or ratios and evaluate whether the
expectation is sufficiently precise to identify a misstatement that, individually or
when aggregated with other misstatements, may cause the financial statements to be
materially misstated.
• Determine the amount of any difference of recorded amounts from expected values that
is acceptable without further investigation.
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