New Zealand has proposed a new bill to
strengthen auditor regulation for the first time.

The Auditor Regulation and External Reporting
Bill will require New Zealand’s accounting institute to regulate
auditors as a specialist profession, rather than chartered
accountants.

Currently, any chartered accountant holding a
Certificate of Public Practice can carry out audits provided they
comply with the New Zealand Institute of Chartered Accountant’s
(NZICA) code of ethics.

The new licensing system would apply to
auditors of issuers and would require such auditors to be
registered. However, it would not impact on audits of
non-issuers.

The Bill, which was introduced to parliament
this month by Commerce Minister Simon Power, also requires the
proposed Financial Markets Authority (FMA) to be responsible for
auditor oversight monitoring and reporting on the adequacy and
effectiveness of NZICA’s regulatory systems.

As part of the proposals accounting and
auditing standard setting will be consolidated and the duty of a
newly created External Reporting Board (XRB).

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By GlobalData

Power’s Bill will bring New Zealand in line
with international regulatory norms, help ensure international
recognition of New Zealand auditors overseas and allow them to work
in other jurisdictions.

NZICA expects the Bill to be enacted by May
2011 and for the XRB to commence operations on 1 July 2011. A
date for auditor regulation changes is yet to be agreed by the FMA
and NZICA.