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FMA Publishes Updated And Refreshed Auditor And Regulation Oversight Plan 2023-2026
The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – will conduct yearly audit quality reviews (AQR) of every licensed audit firm in a refreshed Auditor and Regulation Oversight Plan 2023-2026.
The plan, released today, sets out the areas the FMA will focus on when reviewing the quality of regulated audits, and contributing to the integrity and development of the audit profession.
One of the five focus areas for the upcoming cycle is to improve audit quality. Under the Auditor Regulation Act 2011, the FMA is required to perform AQRs of each licensed audit firm once every four years. Previously the FMA undertook AQRs every two years for the big four auditing firms and at least once every three years for the other registered firms.
Starting from the 2023/24, the FMA plans to review each licensed firm every year to increase the frequency of engagement and identify new developments and industry requirements. Although the FMA will review each firm every year, the overall number of files it reviews annually will be similar to prior practice and so the overall burden on firms will not increase.
The FMA will ensure its key stakeholders, including audit firms, are informed about developments in areas impacting audit quality, and highlight the processes where improvements can be made.
John Horner, FMA Director of Markets, Investment and Reporting, said: “Reviewing audit firms more regularly will enable the FMA to identify any systemic issues within the industry earlier and provide guidance to the profession so continuous improvements can be made. It will also better enable the FMA to perform thematic reviews as the information we obtain will be more current and comparable between audit firms, the industries they audit and specific auditing standards.
“The FMA will continue to review its approach to identify further improvements in efficiency and effectiveness, and to ensure the above benefits are realised, considering feedback from audit firms and other stakeholders,” Mr Horner said.
The other focus areas are ensuring auditing and accounting standards are being upheld, thematic reviews, monitoring of accredited bodies and engagement with stakeholders and overseas regulators.
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