Audit Quality – Monitoring Report

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Purpose of this report Under the Auditor Regulation Act 2011 (the Act) we must carry out a quality review of the systems, policies and procedures of registered audit firms and licensed auditors at least once every four years. We are also required to prepare a report each year on the quality reviews we completed in the preceding financial year. This report summarises our findings from quality reviews carried out between 1 July 2015 and 30 June 2016. Our quality reviews of audit firms help improve audit quality standards and ensure that audit opinions are reliable. These reviews also help us achieve our strategic goal of ensuring that investors have access to resources which help them make better informed financial decisions. In this year’s report, we also draw attention to our expectations of directors and auditors of financial statements and the key focus areas which our stakeholders need to be aware of. This copyright work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. You are free to copy, distribute and adapt the work, as long as you attribute the work to the Financial Markets Authority and abide by the licence terms. To view a copy of this licence, visit creativecommons.org. This report is for: • Accredited bodies • Company directors • Investors • Auditors • Issuers • Chartered accountants fma.govt.nz AUCKLAND Level 5, Ernst & Young Building 2 Takutai Square, Britomart PO Box 106 672, Auckland 1143 Phone: +64 9 300 0400 Fax: +64 9 300 0499 WELLINGTON Level 2, 1 Grey Street PO Box 1179, Wellington 6140 Phone: +64 4 472 9830 Fax: +64 4 472 8076 November 2016
FINANCIAL MARKETS AUTHORITY | AUDIT QUALITY – MONITORING REPORT 2016 Contents Key trends 2 Executive summary 3 Key takeaways for directors 5 Progress made 6 Key findings 7 Audit quality control 7 Auditor independence 8 Professional scepticism 10 Audit evidence and documentation 12 Responsibilities relating to fraud 13 Other improvement areas 14 Future focus 15 Early adopters of new auditor reporting 16 Appendix 1 – Quality review framework 17 Appendix 2 – Market data 20 Glossary 21 1
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Audit Quality – Monitoring Report

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