NZAuASB Meeting 13 February 2019

Event Date 13 February

Date And Time

Location:
Level 7
50 Manners Street
Wellington

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Here is a summary of the main matters considered at the public session:

NZ AS 1, The Audit of Service Performance Information

The Board approved New Zealand Auditing Standard (NZ AS) 1, The Audit of Service Performance Information. NZ AS 1 becomes effective for audits of service performance information included in the general purpose financial report for periods beginning on or after 1 January 2021.

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The Board intends to perform a post implementation review two years after implementation to determine if the standard needs to be amended or if further guidance is required.

NZ SRE 2410, Review of Financial Statements Performed by the Independent Auditor of the Entity

The Board approved the exposure draft New Zealand Standard on Review Engagements (NZ SRE) 2410, Review of Financial Statements Performed by the Independent Auditor of the Entity, subject to the Australian Auditing and Assurance Standards Board’s (AUASB) approval of an exposure draft of the equivalent standard at its meeting on 6 March. The two staff teams have worked closely together to ensure that these trans-tasman standards are harmonised.

The key changes in the proposed revision are to update the review standard to:

  • Reflect the auditor reporting changes, excluding the requirements to report on key audit matters; and
  • Include the same requirements for dealing with non-compliance with laws and regulations as for audits.

Alternative Assurance Engagement

The Board considered the recommendation from a working group, consisting of nominated Board members and staff, on a possible approach for an alternative engagement (other than an audit or review) for small not-for-profit entities.  

The working group’s recommendation is to investigate using a similar approach /model as that of the Independent Examination regime in the United Kingdom to develop the engagement, by engaging with relevant stakeholders and considering the results of the NZAuASB’s previous research on user needs of small New Zealand charities.

The Board noted its support for the recommended approach, with the need to be very clear that the alternative engagement is not an audit or review, and to engage with expected users of this service to ensure it will meet their needs. Other matters to consider will be the required independence and qualifications of assurance practitioners performing such an engagement.

IAASB’s Exposure Drafts on Quality Management Standards

The International Auditing and Assurance Standards Board (IAASB) in February issued three interrelated standards that address quality management:

  • A covering explanatory memorandum provides background on each proposed standard and the possible effective dates.
  • ISQM 1 (previously ISQC 1) addresses a firm’s responsibility to establish a system of quality management to support quality engagements.
  • ISQM 2 is a new proposed standard to address engagement quality reviews.
  • ISA 220 (Revised) addresses the engagement quality for audit engagements

The Board received a high level overview of ISQM 1 and the planned outreach activities.

A key question the NZAuASB (and the IAASB) want to explore, is the scalability of the standards.

So, in addition to planned roundtables and a webinar, the NZAuASB is planning half-day workshops during April in various centres in New Zealand to assist small and medium practices in working through the proposed new approach to quality management, and to obtain feedback to inform its submission to the IAASB about any foreseeable implementation difficulties.

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Meeting with the Auditor-General

The Board met with the new Auditor-General, John Ryan, to discuss areas of mutual interest.

The Treasury’s Living Standards Framework

The Board received a presentation from Tim Ng, Deputy Secretary, Chief Economic Advisor, Treasury, on the Treasury’s Living Standards Framework.