• “(b) an overseas limited partnership within the meaning of the Limited Partnerships Act 2008”.

“overseas audit firm means an audit firm that is—

• “(a) a partnership where a majority of the partners are ordinarily resident in a country, state, or territory outside New Zealand; or

• “(b) an overseas company”.

“company has the same meaning as in section 2(1) of the Companies Act 1993

“overseas company means a body corporate that is incorporated outside New Zealand”.

• “(2) If an audit firm is engaged or appointed to act as the auditor in respect of an FMC audit, the audit firm must ensure that each engagement partner or director is a licensed auditor whose licence authorises him or her to act as the auditor in respect of that kind of FMC audit.

• “(2A) If an audit firm that is a partnership is engaged or appointed to act as the auditor in respect of an FMC audit, each partner of the audit firm, from time to time, who is a licensed auditor and whose licence authorises him or her to act as the auditor in respect of that kind of FMC audit must, for the purposes of this Act, be treated as acting as the auditor in respect of the FMC audit.

• “(2B) If an audit firm that is a company or an overseas company is engaged or appointed to act as the auditor in respect of an FMC audit, the company or overseas company must, for the purposes of this Act, be treated as acting as the auditor in respect of the FMC audit.

• “(2C) Nothing in this section or section 10 limits the power of the Institute or any other accredited body to make, maintain, and enforce any rules relating to the investigation and hearing of complaints against, and disciplining of, a member or former member in connection with the carrying out of an audit (for example, if a company is treated as acting as the auditor, a director or an employee of that company may be subject to disciplinary action in respect of the audit).”

• “(3) For the purposes of subsection (2), sections 20(1)(c) and 21(1)(b) apply as if the FMC audit is carried out by the partner or director to which subsection (2)(a), (b), or (c) applies.”

• “(1)  An accredited body may, on an application made by an audit firm that is a partnership or a company, authorise the Registrar to register the audit firm if the accredited body is satisfied that,—

  • “(a) in the case of a partnership,—

    • “(i) 1 or more of the partners of the firm are licensed auditors; and

    • “(ii) the firm meets the prescribed minimum standards:

  • “(b) in the case of a company,—

    • “(i) 1 or more of the directors of the firm are licensed auditors; and

    • “(ii) the firm meets the prescribed minimum standards; and

    • “(iii) the firm satisfies the requirements prescribed for the purposes of this subparagraph.”

• “(a) in the case of a partnership, 1 or more of the partners of the firm are licensed auditors; and

• “(ab) in the case of an overseas company,—

  • “(i) 1 or more of the directors of the firm are licensed auditors; and

  • “(ii) the firm is eligible to act as an auditor in the country, State, or territory in which it is incorporated; and

  • “(iii) the firm is required, under the law or the regulatory requirements of the country, State, or territory in which it is incorporated, to comply with requirements for maintaining the firm's independence as an auditor, and that those requirements are equivalent to, or as satisfactory as, the requirements that apply to New Zealand auditors; and

  • “(iv) the firm satisfies the requirements prescribed for the purposes of this subparagraph; and”.

• “(a) no longer has at least 1 partner or director who is a licensed auditor; or”.

• “(ca) no longer satisfies the requirements prescribed for the purposes of section 25(1)(b)(iii) or 26(1)(ab)(iv); or

• “(cb) no longer satisfies the requirements of section 26(1)(ab)(ii) or (iii) (in the case of an overseas company); or”.

• “(2) A suspension under subsection (1) is for the period that the relevant body thinks fit or until the audit firm satisfies any requirements specified by the relevant body (and that period or those requirements must be specified in the notice given under subsection (1)).

• “(3) After receiving a notification under subsection (1), the Registrar must—

  • “(a) cancel or suspend the registration of the audit firm; and

  • “(b) give written notice of the cancellation or suspension to the audit firm.

• “(4) The Registrar must, after receiving notification of an order under subpart 7 of the cancellation or suspension of the registration of an audit firm, cancel or suspend the registration of the audit firm.

• “(5) The registration of an audit firm may also be treated as cancelled or suspended under section 61(6).”

• “(3) Nothing in regulations made under section 84(1)(ca) limits the FMA's power to prescribe minimum standards for the registration of an audit firm.”

• “(6) If A was the relevant body under subpart 2 in respect of a registered audit firm,—

  • “(a) the registration of the audit firm must be treated as cancelled if A's accreditation is cancelled under section 59; and

  • “(b) the registration of the audit firm must be treated as suspended during the period in which A's accreditation is suspended (if A's accreditation is suspended under section 59); but

  • “(c) the FMA may order that paragraph (a) or (b) does not apply in respect of 1 or more classes of audit firm.

• “(7) If 1 or more classes of audit firm continue to be registered as the result of an order under subsection (6)(c), the FMA may order, on the terms and conditions that it thinks fit, that another accredited body may act as the relevant body under subpart 2 (and that other accredited body may be the FMA acting under section 91).”

• “(e) to decline to make an order under section 61(2) or (6)(c) in respect of the person's licence or registration.”

• “(3) In this subpart, an investigation is an investigation into the conduct of either or both of the following:

  • “(a) a licensed auditor in respect of 1 or more FMC audits (whether he or she holds a licence issued under section 11 or 12):

  • “(b) a registered audit firm in respect of 1 or more FMC audits (whether the firm's registration is authorised under section 25 or 26).”

• “(1) An accredited body must, in respect of the following kinds of investigation, give all reasonable assistance to the FMA to enable the investigation to be carried out:

  • “(a) an investigation by the FMA involving a member of the accredited body:

  • “(b) an investigation by the FMA involving a registered audit firm that has 1 or more partners, directors, or employees who are members of the accredited body.”

• “(1) The FMA may, after acting under section 75, make 1 or more of the orders specified in subsection (2) if it is satisfied on reasonable grounds that 1 or more FMC audits carried out by the licensed auditor (A) or registered audit firm (B) (or both) are not being, or have not been, carried out—

  • “(a) in accordance with—

    • “(i) the requirements imposed by or under this Act or any other enactments that relate to the conduct of FMC audits; or

    • “(ii) auditing and assurance standards; or

  • “(b) with reasonable care, diligence, and skill.

• “(2) The orders are—

  • “(a) an order that A's licence be cancelled:

  • “(b) an order that B's registration be cancelled:

  • “(c) an order that the person whose licence or registration is cancelled may not apply to be relicensed or reregistered, whether with the same or a different accredited body, before the expiry of a specified period:

  • “(d) an order that A's licence be suspended for the period that the FMA thinks fit:

  • “(e) an order that B's registration be suspended for the period that the FMA thinks fit:

  • “(f) an order prohibiting A or B (or both) from acting in respect of a specified FMC audit, or a specified class or classes of FMC audit,—

    • “(i) permanently; or

    • “(ii) for any period that the FMA thinks fit:

  • “(g) an order that A or B (or both) pay to the FMA any sum that the FMA considers just and reasonable towards the costs and expenses of, and incidental to, the FMA's investigation and the proceedings.

• “(3) The FMA must not exercise a power referred to in this section in relation to A or B unless—

  • “(a) the FMA gives A or B at least 10 working days' written notice of the following matters before it exercises the power:

    • “(i) that the FMA may exercise a power under this section; and

    • “(ii) the reasons why it is considering exercising that power; and

  • “(b) the FMA gives A or B or his, her, or its representative an opportunity to make written submissions and to be heard on the matter within that notice period.”

• “(a) the licensed auditor or audit firm against which the order is made; and

• “(b) the accredited body that issued the licence to that licensed auditor or authorised the registration of that audit firm; and”.

• “(a) the accredited body asks the FMA to act in that manner in relation to—

  • “(i) a class of its members; or

  • “(ii) a class of audit firms that the accredited body has authorised the registration of under section 25; and”.

• “(ca) prescribing requirements for the purposes of section 25(1)(b)(iii) or 26(1)(ab)(iv), including (without limitation) requirements relating to a company's or an overseas company's—

  • “(i) ownership, including requirements relating to who may be a shareholder or member and who may exercise voting rights (for example, requiring all or a majority of voting rights to be held by members of the Institute or an accredited body):

  • “(ii) governance, including requirements relating to who may be a director or senior manager (for example, requiring all or a majority of directors to be members of the Institute or an accredited body):

  • “(iii) legal structure:

  • “(iv) systems, policies, and procedures that relate to any of the following:

    • “(A) promoting compliance with the requirements imposed by or under any enactment that relates to the conduct of FMC audits:

    • “(B) promoting compliance with auditing and assurance standards:

    • “(C) otherwise promoting reasonable care, diligence, and skill in the carrying out of FMC audits:

  • “(v) professional indemnity insurance:”.

• “(1A) Regulations Any regulations made under subsection (1)(ca)(v) relating to professional indemnity insurance may, without limitation,—

  • “(a) specify the terms and conditions upon which insurance is to be available, and any circumstances in which insurance cover may be excluded or modified:

  • “(b) specify the minimum terms and conditions that an insurance policy must satisfy:

  • “(c) specify circumstances in which a body corporate or any class of bodies corporate is exempt from the requirements:

  • “(d) require a body corporate to have arrangements in place that ensure that an accredited body can ascertain whether the insurance is being maintained in accordance with the regulations.”

“6A Transitional, savings, and related provisions

• The transitional, savings, and related provisions set out in Schedule 1AA have effect according to their terms.”

“42C When financial statements must be audited or reviewed

• “(1) This section applies to—

  • “(a) every charitable entity that is large; and

  • “(b) every charitable entity that is of medium size.

  “(2) Every charitable entity to which this section applies (A) must ensure that the financial statements of A that accompany an annual return under section 41 are—

  • “(a) audited by a qualified auditor if A is large in respect of the accounting period to which the financial statements relate:

  • “(b) audited or reviewed by a qualified auditor if A is of medium size in respect of the accounting period to which the financial statements relate.

  “(3) If financial statements are prepared on a consolidated basis in respect of a single entity under section 46(1A)(a),—

  • “(a) the parent entity must ensure that the financial statements of the single entity that accompany an annual return under section 41 are—

    • “(i) audited by a qualified auditor if the single entity is large in respect of the accounting period to which the financial statements relate:

    • “(ii) audited or reviewed by a qualified auditor if the single entity is of medium size in respect of the accounting period to which the financial statements relate; and

  • “(b) for the purposes of paragraph (a), the references to a charitable entity in subsection (1) and in sections 42D(1) and 42F must be treated as references to the single entity.

“42D Meaning of large and medium size

• “(1) In section 42C,—

  • “(a) a charitable entity is large in respect of an accounting period if, in each of the 2 preceding accounting periods of the entity, the total operating expenditure of the entity is $1 million or more:

  • “(b) a charitable entity is of medium size in respect of an accounting period if—

    • “(i) it is not large under paragraph (a); and

    • “(ii) in each of the 2 preceding accounting periods of the entity, the total operating expenditure of the entity is $500,000 or more:

  • “(c) qualified auditor has the same meaning as in section 35 of the Financial Reporting Act 2013.

  “(2) A financial reporting standard (within the meaning of the Financial Reporting Act 2013), or a part of such a standard, that is expressed as applying for the purposes of subsection (1)(a) or (b) must be applied in determining whether that provision applies (for example, the standard may define operating expenditure).

“42E Offence relating to audit or review

• If a charitable entity fails to comply with section 42C, the charitable entity commits an offence and is liable on conviction to a fine not exceeding $50,000.

“42F Audit or review must be carried out in accordance with auditing and assurance standards

• “(1) An auditor must, in carrying out an audit or a review of the financial statements of a charitable entity, comply with all applicable auditing and assurance standards.

  “(2) The auditor's report must comply with the requirements of all applicable auditing and assurance standards.

  “(3) This section does not apply in respect of a charitable entity that is a public entity (within the meaning of the Public Audit Act 2001).

  “(4) In this section, applicable auditing and assurance standards has the same meaning as in section 5 of the Financial Reporting Act 2013.”

• “(1C) If terms and conditions referred to in subsection (1A) relate to the financial statements of an entity, those terms and conditions must be treated as including a requirement for the financial statements to disclose, in the statement of accounting policies section, a brief description of the terms and conditions that apply under subsection (1A).”

“accredited body means a person that is granted accreditation, or is treated as having been granted accreditation, under subpart 5 of Part 2 of the Auditor Regulation Act 2011

“approved association means an association of accountants that is approved for the time being by the Registrar of Companies under section 36(1)(c)

“Institute means the New Zealand Institute of Chartered Accountants constituted under the New Zealand Institute of Chartered Accountants Act 1996

“qualified statutory accountant means a person who is—

• “(a) a chartered accountant (within the meaning of section 19 of the New Zealand Institute of Chartered Accountants Act 1996); or

• “(b) a member of an accredited body (other than the Institute) who holds the full professional designation of that body (for example, a certified practising accountant); or

• “(c) recognised under section 36N

“Registrar means the Registrar of Companies appointed in accordance with section 357(1) of the Companies Act 1993”.

“10A Transitional and savings provisions relating to amendments to this Act

• The Schedule contains transitional and savings provisions (relating to amendments made to this Act) that affect other provisions of this Act (see section 62).

“9A Transitional, savings, and related provisions

• The transitional, savings, and related provisions set out in the Schedule have effect according to their terms.”

• “(c) offences for an unqualified person to act as an auditor or to hold himself, herself, or itself out as being a qualified auditor.”

• “(a) the person is—

  • “(i) a chartered accountant (within the meaning of section 19 of the New Zealand Institute of Chartered Accountants Act 1996); and

  • “(ii) recognised by the Institute, in accordance with the rules of that body, as being eligible to act as an auditor in respect of entities of the same kind as the specified entity; or

• “(ab) the person is—

  • “(i) a member of an accredited body; and

  • “(ii) recognised by the accredited body, in accordance with the rules of that body, as being eligible to act as an auditor in respect of entities of the same kind as the specified entity; or”.

• “(ia) the person is recognised by the association, in accordance with the rules of that association, as being eligible to act as an auditor in respect of entities of the same kind as the specified entity; and”.

• “(e) the person is a company, or an overseas company, that is a registered audit firm; or

• “(f) the person is a company that is recognised, in accordance with section 36A, as being eligible to act as an auditor in respect of entities of the same kind as the specified entity; or

• “(g) the person is an overseas company that—

  • “(i) is recognised, in accordance with section 36A, as being eligible to act as an auditor in respect of entities of the same kind as the specified entity; and

  • “(ii) is incorporated or constituted in a country, State, or territory that is approved for the time being under section 36B; and

  • “(iii) has a legal structure that is approved for the time being under section 36B.”

• “(d) a body corporate (unless the body corporate is a registered audit firm or recognised as referred to in subsection (1)(f) or (g)):”.

• “(6) A notice in the Gazette referred to in this section or section 36B is neither a legislative instrument nor a disallowable instrument for the purposes of the Legislation Act 2012 and does not have to be presented to the House of Representatives under section 41 of that Act.”

“36AA Power of Registrar of Companies to approve associations and auditors

• “(1) The Registrar may, after receiving an application from an association of accountants, approve the association under section 36(1)(c)(i) if, after taking into account the prescribed matters (if any), the Registrar is satisfied that the association satisfies the requirements that are prescribed for the purposes of this subsection.

  “(2) The Registrar may, after receiving an application from a natural person, approve the person under section 36(1)(d)(ii) if, after taking into account the prescribed matters (if any), the Registrar is satisfied that the person—

  • “(a) satisfies the requirements that are prescribed for the purposes of this paragraph; and

  • “(b) satisfies the minimum standards that are prescribed for the purposes of this paragraph.

  “(3) An application under subsection (1) or (2) must be accompanied by the prescribed fee.

  “(4) The Registrar may, by written notice given to an association or other person,—

  • “(a) impose conditions on the approval of that association or person under section 36(1)(c)(i) or (d)(ii); and

  • “(b) vary, revoke, add to, or substitute any such conditions at any time.

  “(5) The Registrar may impose any conditions that the Registrar thinks fit (for example, conditions that impose limits or restrictions on the ability of an approved association to recognise its members or conditions that impose limits or restrictions on the types of audits that a person approved under section 36(1)(d) may carry out).

“36AB Approved associations and persons must report to Registrar

• “(1) Every approved association and every person who is approved under section 36(1)(d) must, at the prescribed times or on the occurrence of the prescribed events and otherwise in the prescribed manner, send to the Registrar reports that contain the prescribed information (together with a prescribed fee).

  “(2) If an approved association (A) becomes aware that it does not comply, or no longer complies, with the requirements for approval under section 36AA(1), A—

  • “(a) must, as soon as practicable, give written notice of that non-compliance to the Registrar; and

  • “(b) must cease to give recognition under section 36(1)(c)(ia) to any person who applies for or requests recognition after A becomes so aware.

  “(3) If a person who is approved under section 36(1)(d) (B) becomes aware that he or she does not comply, or no longer complies, with the requirements or minimum standards for approval under section 36AA(2), B—

  • “(a) must, as soon as practicable, give written notice of that non-compliance to the Registrar; and

  • “(b) must not act as the auditor of a specified entity or of its financial statements.

  “(4) If an approved association or a person who is approved under section 36(1)(d) fails to comply with this section, the approval of that association or person is treated as suspended until—

  • “(a) a date specified in a notice given by the Registrar to the association or person; or

  • “(b) the approval is cancelled under section 36G.

“36A Institute, accredited bodies, and approved associations may recognise body corporate as eligible to act as auditor

• “(1) The Institute, any other accredited body, or an approved association may recognise a company or an overseas company for the purposes of section 36(1)(f) or (g) if, after taking into account the prescribed matters, the Institute, accredited body, or approved association is satisfied that the company or overseas company—

  • “(a) satisfies the requirements that are prescribed for the purposes of this paragraph; and

  • “(b) satisfies the minimum standards that are prescribed for the purposes of this paragraph; and

  • “(c) has at least 1 director who is—

    • “(i) a member of the Institute, accredited body, or approved association; and

    • “(ii) a qualified auditor under any of paragraphs (a) to (d) of section 36(1)(a) to (d) (in respect of all specified entities or 1 or more kinds of specified entities).

  “(2) Recognition may relate to all specified entities or to 1 or more kinds of specified entities.

“36B Registrar of Companies may approve overseas countries and legal structures

• “(1) The Registrar of Companies may, by notice in the Gazette, approve, for the purposes of section 36(1)(g),—

  • “(a) a country, State, or territory; and

  • “(b) a specified legal structure of that country, State, or territory (for example, a company incorporated under the law of a particular overseas country).

  “(2) The Registrar must, before approving a country, State, or territory and a legal structure, be satisfied that—

  • “(a) the law or the regulatory requirements of that country, State, or territory impose requirements relating to auditor independence that are equivalent to, or as satisfactory as, the requirements that apply to New Zealand auditors; and

  • “(b) entities that have that legal structure are eligible to act as an auditor in that country, State, or territory.

  “(3) The Registrar may not approve as a legal structure any kind of overseas limited partnership (within the meaning of section 4 of the Limited Partnerships Act 2008).

“36C Institute, accredited bodies, and approved associations must keep recognition under review

• “(1) The Institute, any other accredited body, or an approved association that recognises any person for the purposes of section 36(1) must maintain adequate and effective systems for keeping under review the recognition of those persons.

  “(2) The purpose of the review is to provide reasonable assurance that the requirements and minimum standards for recognition continue to be satisfied.

  “(3) The systems must include an annual review of each person who is recognised (for example, by requiring the person to verify that the requirements and any minimum standards for recognition continue to be satisfied).

“36D Body corporate must ensure that engagement director is qualified auditor

• “(1) If a body corporate (A) referred to in section 36(1)(e), (f), or (g) is appointed or is acting as the auditor of a specified entity or of its financial statements, A must ensure that each engagement director is a qualified auditor under any of paragraphs (a) to (d) of section 36(1)(a) to (d).

  “(2) In this section, engagement director, in respect of an audit where A is appointed or is acting, means the director or other person in A who is responsible for the audit and the performance of the audit and for the audit report that is issued on behalf of A.

“36E Recognised body corporate must not act if requirements no longer met

• If a body corporate (A) that is recognised for the purposes of section 36(1)(f) or (g) becomes aware that A does not comply, or no longer complies, with the requirements or minimum standards for recognition under section 36A, A—

  • “(a) must not act as the auditor of a specified entity or of its financial statements; and

  • “(b) must, as soon as practicable, give written notice of that non-compliance to the Institute, the accredited body, or the approved association that recognised A.

“36F Offence relating to section 36D or 36E

• “(1) If a body corporate (A) fails to comply with section 36D or 36E,—

  • “(a) A commits an offence and is liable on conviction to a fine not exceeding $150,000; and

  • “(b) every director of A also commits an offence and is liable on conviction to a fine not exceeding $50,000.

  “(2) It is a defence to a director charged with an offence in relation to the duty imposed under section 36D or 36E if the director proves that—

  • “(a) A took all reasonable and proper steps to ensure that the duty would be complied with; or

  • “(b) he or she took all reasonable steps to ensure that A complied with the duty; or

  • “(c) in the circumstances, he or she could not reasonably have been expected to take steps to ensure that A complied with the duty.

“36G Cancellation or suspension of recognition or approval

• “(1) The Institute or, any other accredited body, or an approved association must may, in accordance with its rules, cancel or suspend its recognition of a person for the purposes of section 36(1)(a) or (ab) or (c)(ia) if the Institute or, body, or association considers that the grounds for cancellation or suspension specified in its rules are satisfied.

  “(1A) The Institute or any other accredited body may cancel or suspend the recognition of a person for the purposes of section 36(1)(a) or (ab) if—

  • “(a) the person is or was subject to an arrangement referred to in section 36O; and

  • “(b) the Institute or body is satisfied that—

    • “(i) the person has failed to comply with that arrangement in any material respect; or

    • “(ii) the term of the arrangement has ended.

  “(1B) The Registrar may—

  • “(a) cancel or suspend his or her approval of an association for the purposes of section 36(1)(c) if the Registrar considers that the association does not satisfy, or no longer satisfies, the requirements prescribed for the purposes of section 36AA(1):

  • “(b) cancel or suspend his or her approval of a person for the purposes of section 36(1)(d) if the Registrar considers that the person does not satisfy, or no longer satisfies, the requirements or minimum standards prescribed for the purposes of section 36AA(2)(a) or (b):

  • “(c) cancel or suspend his or her approval of an association or a person for the purposes of section 36(1)(c) or (d) if the Registrar considers that the association or person has failed to comply with any conditions under section 36AA(4):

  • “(d) cancel his or her approval of an association or a person for the purposes of section 36(1)(c) or (d) on the written request of the association or person.

  “(2) The Institute, any other accredited body, or an approved association may—

  • “(a) must cancel or suspend its recognition of a person for the purposes of section 36(1)(f) or (g) if the Institute, body, or association considers that the person does not satisfy, or no longer satisfies, satisfies the requirements or minimum standards prescribed for the purposes of section 36A(1)(a) or (b):

  • “(b) may also cancel its recognition of a person for the purposes of section 36(1) on the written request of the person.

  “(3) A suspension is for the period that the Institute, accredited body, or approved association thinks fit or until the person satisfies any requirements specified by the Institute, body, or association.

  “(3) A suspension under—

  • “(a) subsection (1), (1A), or (2) is for the period that the Institute, accredited body, or approved association thinks fit or until the person satisfies any requirements specified by the Institute, body, or association:

  • “(b) subsection (1B) is for the period that the Registrar thinks fit or until the association or person satisfies any requirements specified by the Registrar.

  “(4) If a person that has been recognised for the purposes of section 36(1)(f) or (g) no longer has at least 1 director of the kind referred to in section 36A(1)(c), the recognition is treated as suspended until the person again has at least 1 director of that kind (or the recognition is sooner cancelled).

  “(5) If the Institute, an accredited body, an approved association, or the Registrar cancels the recognition or approval of a person (A), the Institute, body, association, or Registrar (as the case may be) may give a written notice to A stating that A may not apply to be re-recognised or re-approved before the expiry of a specified period (and that notice is binding on A).

“36H Effect of cancellation or suspension of accreditation or approval on recognition under section 36

• “(1) If the accreditation of the Institute or of an accredited body (A) is—

  • “(a) cancelled under section 59 of the Auditor Regulation Act 2011, any recognition given by A and referred to in section 36(1) is treated as cancelled:

  • “(b) suspended under section 59 of that Act, any recognition given by A and referred to in section 36(1) is treated as suspended during the period in which A's accreditation is suspended.

  “(2) If the approval of a person (A) as an approved association is cancelled by the Registrar of Companies (by notice in the Gazette) any recognition given by A and referred to in section 36(1)(f) or (g) is treated as cancelled.

  “(2) If the approval of an association (A) as an approved association is—

  • “(a) cancelled by the Registrar, any recognition given by A and referred to in section 36(1)(c), (f), or (g) is treated as cancelled:

  • “(b) suspended by the Registrar, any recognition given by A and referred to in section 36(1)(c), (f), or (g) is treated as suspended.

  “(3) Subsection (1) or (2) does not apply if the person who is recognised by A is also recognised by another accredited body or approved association for the purposes of section 36(1).

“36I Registrar of Companies may authorise person to continue to act in respect of audit despite cancellation or suspension under section 36H

• “(1) This section applies if—

  • “(a) a person's recognition is cancelled or suspended under section 36H; and

  • “(b) the person is acting, or has been appointed to act, as the auditor in respect of an audit at the time that the recognition is cancelled or suspended.

  “(2) The Registrar of Companies may authorise the person to act, or to continue to act, as the auditor in respect of the audit on the terms and conditions that the Registrar thinks fit.

  “(3) The person may act, or continue to act, as the auditor in respect of the audit in accordance with the terms and conditions of the authorisation (and, for the purposes of that audit, the person's recognition must be treated as continuing).

“36IA Notification of recognised and approved persons

• “(1) The Institute, any other accredited body, or an approved association must,—

  • “(a) as soon as practicable after recognising a person (A) for the purposes of section 36(1), give A written notice of the recognition:

  • “(b) as soon as practicable after cancelling or suspending such recognition, give A written notice of the cancellation or suspension.

  “(2) The Registrar must,—

  • “(a) as soon as practicable after approving a person (B) for the purposes of section 36(1)(c) or (d), give B written notice of the approval:

  • “(b) as soon as practicable after cancelling or suspending such approval, give B written notice of the cancellation or suspension.

  “(3) Every notice of suspension given under subsection (1)(b) or (2)(b) must specify the period of suspension or the requirements that must be satisfied before the suspension ends.

“36J Notification and records Records of recognised persons

• “(1) The Institute, any other accredited body, or an approved association must,—

  • “(a) as soon as practicable after recognising a person (A) for the purposes of section 36(1), give A written notice of the recognition:

  • “(b) as soon as practicable after cancelling or suspending such recognition, give A written notice of the cancellation or suspension.

  “(2) The Institute, any other accredited body, or an approved association must—

  • “(a) keep a record of all persons that the Institute, accredited body, or approved association (as the case may be) has recognised for the purposes of section 36(1) and of all cancellations or suspensions of such recognition; and

  • “(b) keep available a record of the persons recognised by it, at all reasonable times, on an Internet site maintained by or on behalf of the Institute, body, or association.

  “(3) The purpose of subsection (2)(b) is to enable any person to determine whether a person is recognised for the purposes of section 36 and, if so, to obtain relevant information relating to the recognition.

  “(4) For the purposes of subsection (2)(b),—

  • “(a) the record must include the following information about each recognised person:

    • “(i) the full name of the person:

    • “(ii) the town or city in which the person's principal place of business in New Zealand is located (unless subparagraph (iia) applies):

    • “(iia) in the case of recognition under section 36(1)(c)(ia), the town or city in which the person's principal place of business is located:

    • “(iii) the conditions or limitations on the recognition (if any); and

  • “(b) the record must be reasonably prominent on the Internet site or the Internet site must contain a reasonably prominent link to the record.

  “(5) A record under subsection (2) is required to include information relating to a suspension under section 36G(4) only if the Institute, accredited body, or approved association is aware of the suspension.

  “(6) A person that fails to comply with subsection (2) or (4) commits an offence and is liable on conviction to a fine not exceeding $50,000.

“36JA Register of approved persons

• “(1) The Registrar must keep a register of all persons that the Registrar has approved for the purposes of section 36(1)(c) or (d).

  “(2) The purpose of the register is to enable any person to determine whether a person is approved for the purposes of section 36(1) and, if so, to obtain relevant information relating to the approval.

  “(3) The register may—

  • “(a) be an electronic register; or

  • “(b) be kept in any other manner that the Registrar thinks fit.

  “(4) The register must contain the following information about each approved person:

  • “(a) the full name of the person:

  • “(b) the town or city in which the person's principal place of business is located:

  • “(c) the conditions or limitations on the approval (if any):

  • “(d) any other prescribed information.

“36JB Search of register

• “(1) A person may search the register kept under section 36JA in accordance with this Act or the regulations.

  “(2) The register may be searched only by reference to the contents of the register required by section 36JA or any other prescribed criteria.

  “(3) A search of the register may be carried out only by the following persons for the following purposes:

  • “(a) a person, for a purpose referred to in section 36JA(2):

  • “(b) a person, for the purpose of advising another person in connection with any of the purposes referred to in this subsection:

  • “(c) an individual, or a person with the consent of the individual, for the purpose of searching for information about that individual.

“36K Appeals in respect of recognition or approval matters

• “(1) A person may appeal to a District Court against any decision of the Institute, an accredited body, or an approved association, or the Registrar—

  • “(a) to decline to recognise a person for the purposes of section 36(1); or

  • “(ab) to decline to approve the person for the purposes of section 36(1)(c) or (d); or

  • “(b) to cancel or suspend that recognition or approval.

  “(2) Subsection (1) does not apply to a decision if the rules of the Institute, the accredited body, or the approved association provide for an appeal against the decision to a body established to hear appeals against the decision (for example, the Appeals Council referred to in section 6(1)(h) of the New Zealand Institute of Chartered Accountants Act 1996).

  “(2A) Subsection (1) does not apply to a decision under sections 36M to 36O.

  “(3) An appeal to a District Court under this section must be brought—

  • “(a) in accordance with the rules of court; and

  • “(b) within 20 working days after notice of the decision is communicated to the appellant, or within any further time a District Court Judge allows on application made before or after the period expires.

“36L False declarations and representations

• “(1) Every person commits an offence who, for the purpose of obtaining or maintaining recognition or approval for the purposes of section 36(1) either on the person's own behalf or on behalf of any other person,—

  • “(a) either orally or in writing, makes any declaration or representation to the Institute, another accredited body, or an approved association, or the Registrar that, to the person's knowledge, is false or misleading in any material particular; or

  • “(b) provides to the Institute, another accredited body, or an approved association, or the Registrar any document knowing that the document—

    • “(i) contains any declaration or representation that is false or misleading in any material particular; or

    • “(ii) is not genuine; or

  • “(c) makes use of any document knowing that the document—

    • “(i) contains any declaration or representation that is false or misleading in any material particular; or

    • “(ii) is not genuine.

  “(2) A person who commits an offence under subsection (1) is liable on conviction to,—

  • “(a) in the case of an individual, a fine not exceeding $50,000:

  • “(b) in the case of a body corporate, a fine not exceeding $150,000.

“36M Exemption from membership requirement for certain members of religious societies or orders

• “(1) Section 36(1)(a)(i) or (ab)(i) (requirement to be a chartered accountant or member of an accredited body) does not apply to a person (A) if—

  • “(a) the relevant body is satisfied that A is a practising member of a religious society or order whose doctrines or beliefs preclude membership of any organisation or body other than the religious society or order of which A is a member; and

  • “(b) the relevant body has entered into a written arrangement with A that complies with section 36O.

  “(2) The exemption under subsection (1) ceases if—

  • “(a) the relevant body ceases to be satisfied as referred to in subsection (1)(a) and gives written notice of that fact to A; or

  • “(b) the arrangement is terminated or otherwise comes to an end (unless a subsequent arrangement that complies with section 36O is entered into).

  “(3) See also section 36G(1A), which provides for the cancellation or suspension of recognition if there has been a material failure to comply with an arrangement.

  “(4) In this section, relevant body means,—

  • “(a) in relation to section 36(1)(a)(i), the Institute; or

  • “(b) in relation to section 36(1)(ab)(i), another accredited body.

“36N Institute or other accredited body may recognise as qualified statutory accountants certain members of religious societies or orders

• “(1) Subsection (2) applies if—

  • “(a) the Institute or another accredited body is satisfied that a person (A) is a practising member of a religious society or order whose doctrines or beliefs preclude membership of any organisation or body other than the religious society or order of which A is a member; and

  • “(b) the Institute or other accredited body has entered into a written arrangement with A that complies with section 36O; and

  • “(c) the Institute or other accredited body is satisfied that A—

    • “(i) has satisfactory competence, qualifications, and experience to act as a qualified statutory accountant; and

    • “(ii) is otherwise a fit and proper person to be a qualified statutory accountant.

  “(2) The Institute or other accredited body may recognise A as a qualified statutory accountant by including a statement of that recognition in or with the arrangement under section 36O.

  “(3) The recognition under subsection (2) ceases if—

  • “(a) the Institute or other accredited body ceases to be satisfied as referred to in subsection (1)(a) and gives written notice of that fact to A; or

  • “(b) the arrangement is terminated or otherwise comes to an end (unless a subsequent arrangement that complies with section 36O is entered into).

“36O Requirements for arrangement

• “(1) For the purposes of section 36M or 36N (or both), the arrangement must—

  • “(a) state that the arrangement is entered into for the purposes of this section; and

  • “(b) include a binding agreement by A to be subject to the following:

    • “(i) the rules relating to the investigation of complaints against a member or former member of the Institute or other accredited body:

    • “(ii) the rules relating to the hearing of complaints and other matters by a disciplinary body:

    • “(iii) the rules relating to appeals from decisions of a disciplinary body:

    • “(iv) the rules relating to the kinds of conduct for which a member or former member of the Institute or other accredited body may be disciplined:

    • “(v) the rules relating to the actions that may be taken in respect of, and the penalties that may be imposed on, a member or former member of the Institute or other accredited body for such conduct:

    • “(vi) in the case of section 36M, the rules referred to in section 36(1)(a)(ii) or (ab)(ii):

    • “(vii) the code of ethics that governs the professional conduct of the members of the Institute or other accredited body.

  “(2) The arrangement may provide for any other matters that the Institute or other accredited body thinks fit, including matters—

  • “(a) relating to practice reviews:

  • “(b) relating to continuing professional development:

  • “(c) relating to reports and access to information:

  • “(d) to promote compliance with the requirements imposed by or under any enactment that relate to the conduct of audits or other accounting engagements:

  • “(e) to promote compliance with auditing and assurance standards and financial reporting standards:

  • “(f) to otherwise promote reasonable care, diligence, and skill in the carrying out of audits or other accounting engagements:

  • “(g) relating to the payment of fees:

  • “(h) relating to the term of the arrangement.

  “(3) Without limiting the means of enforcing the arrangement, the arrangement is binding on A as if A were a member of the Institute or other accredited body.

  “(4) In this section,—

  “disciplinary body has the same meaning as in section 6(1) of the Auditor Regulation Act 2011

  “rules means the rules of the Institute or other accredited body (as the case may be).”

“Appointment of partnership”

“Offences concerning unqualified persons

“39A Offence for unqualified auditor to act

• “(1) A person who acts as the auditor of a specified entity or of its financial statements commits an offence if the person is not a qualified auditor in respect of the entity.

  “(2) A person who commits an offence under subsection (1) is liable on conviction to,—

  • “(a) in the case of an individual, a fine not exceeding $50,000:

  • “(b) in the case of a body corporate, a fine not exceeding $150,000.

“39B Offence to hold out as qualified auditor or as approved person

• “(1) A person must not hold out that the person is—

  • “(a) recognised for the purposes of section 36(1)(a), (ab), (c)(ia), (f), or (g) if the person is not so recognised; or

  • “(ab) approved for the purposes of section 36(1)(c) or (d) if the person is not so approved; or

  • “(b) qualified to act as the auditor of a specified entity or of its financial statements if the person is not a qualified auditor in respect of the entity.

  “(2) A person who commits an offence under subsection (1) is liable on conviction to,—

  • “(a) in the case of an individual, a fine not exceeding $50,000:

  • “(b) in the case of a body corporate, a fine not exceeding $150,000.”

• “(3) Despite subsections (1) and (2), an entity is not large in respect of an accounting period (period A) if—

  • “(a) the entity was an inactive entity in respect of period A; and

  • “(b) the entity, within 5 months after the end of period A, delivers to the Registrar a declaration, in the prescribed form, stating that it was an inactive entity in respect of period A.”

• “(ca) amending the amounts specified in section 42D of the Charities Act 2005:”.

• “(ab) prescribing matters that must be taken into account under section 36AA(1) or (2) or 36A:

• “(aba) prescribing requirements for the purposes of section 36AA(1) or (2)(a):

• “(ac) prescribing requirements for the purposes of section 36A(1)(a), including (without limitation) requirements relating to a company's or an overseas company's—

  • “(i) ownership, including requirements relating to who may be a shareholder or member and who may exercise voting rights (for example, requiring all or a majority of voting rights to be held by members of the Institute, an accredited body, or an approved association):

  • “(ii) governance, including requirements relating to who may be a director or senior manager (for example, requiring all or a majority of directors to be members of the Institute, an accredited body, or an approved association):

  • “(iii) systems, policies, and procedures that relate to any of the following:

    • “(A) promoting compliance with the requirements imposed by or under any enactment that relates to the conduct of audits:

    • “(B) promoting compliance with auditing and assurance standards:

    • “(C) promoting reasonable care, diligence, and skill in the carrying out of audits:

  • “(iv) professional indemnity insurance:

• “(ad) prescribing minimum standards for the purposes of section 36AA(2)(b) or 36A(1)(b):

• “(ae) prescribing fees payable in respect of applications under section 36AA or reports under section 36AB(1) (or the manner in which those fees may be calculated):

• “(af) prescribing matters relating to reports under section 36AB, including the times and events referred to in that section and the information that must be contained in the reports (including prescribing the manner in which the information is to be presented, calculated, or prepared):

• “(ag) prescribing procedures, requirements, and other matters, not inconsistent with this Act, for the register kept under section 36JA, including matters that relate to—

  • “(i) the operation of the register:

  • “(ii) the form of the register:

  • “(iii) the information to be contained in the register:

  • “(iv) access to the register:

  • “(v) search criteria for the register:

  • “(vi) circumstances in which amendments must be made to the register:

• “(ah) prescribing a form for the purposes of section 45(3):”.

• “(2) Regulations Any regulations made under subsection (1)(ac)(iv) relating to professional indemnity insurance may, without limitation,—

  • “(a) specify the terms and conditions upon which insurance is to be available and any circumstances in which the insurance cover may be excluded or modified:

  • “(b) specify the minimum terms and conditions that an insurance policy must satisfy:

  • “(c) specify circumstances in which a body corporate or any class of bodies corporate are exempt from the requirements:

  • “(d) require a body corporate to have arrangements in place that ensure that an accredited body or approved association can ascertain whether the insurance is being maintained in accordance with the regulations.

• “(2A) For the purposes of subsection (1)(ae),—

  • “(a) regulations may authorise the Registrar to refund or waive, in whole or in part and on any conditions that may be prescribed, payment of the fee in relation to any person or class of persons:

  • “(b) the Registrar may refuse to perform a function or exercise a power until the prescribed fee is paid:

  • “(c) any fee payable under the regulations is recoverable by the Registrar in any court of competent jurisdiction as a debt due to the Registrar.

• “(3) Different requirements, dates, methods, or other matters may be prescribed under the regulations in respect of different classes of persons or different circumstances.”

• “(a) qualified statutory accountants; and”.

“Subpart 1A—Unqualified person must not hold out as qualified statutory accountant

“53A Offence to hold out as qualified statutory accountant

• “(1) If any enactment requires a qualified statutory accountant to act in respect of a matter, a person must not hold out that the person is qualified to act in respect of the matter if the person is not a qualified statutory accountant.

  “(2) A person who commits an offence under subsection (1) is liable on conviction to,—

  • “(a) in the case of an individual, a fine not exceeding $50,000:

  • “(b) in the case of a body corporate, a fine not exceeding $150,000.”

“62 Application, savings, and transitional provisions relating to amendments to Act

• The application, savings, and transitional provisions set out in the Schedule, which relate to amendments made to this Act, have effect for the purposes of this Act.”

“Executive Board means the Executive Board of the Institute referred to in section 6(1)(e)

“specified association means the association of accountants that is declared to be the specified association under section 8A”.

“2A Transitional, savings, and related provisions

• The transitional, savings, and related provisions set out in Schedule 1AA have effect according to their terms.”

• “(aa) to carry out the duty imposed under section 5A:”.

• “(b) to promote the profession of accountancy by its members in New Zealand:”.

“5A Duty to control and regulate profession of accountancy practised by members in New Zealand

• “(1) The Institute must, with reasonable skill and care, control and regulate the practice of the profession of accountancy by its members in New Zealand.

  “(2) The duty under subsection (1) includes—

  • “(a) maintaining, complying with, monitoring compliance with, and enforcing the rules referred to in section 6(1)(f) to (ja) (which relate to the investigation and hearing of complaints and other matters, appeals, disciplinary matters, and the recognition of auditors); and

  • “(b) maintaining, monitoring members' compliance with, and enforcing professional and ethical standards, including the code of ethics required by section 7; and

  • “(c) monitoring members' compliance with the Auditor Regulation Act 2011 and other enactments that relate to the practice of accountancy; and

  • “(d) monitoring compliance with, and enforcing, section 14; and

  • “(e) complying with the Institute's duties—

    • “(i) as an accredited body under the Auditor Regulation Act 2011; and

    • “(ii) that are imposed on the Institute (by name) under any other enactment.

“5B Institute must perform duty to control and regulate profession but may delegate other functions

• “(1) The Institute must not delegate the duty under section 5A (in whole or in part) to any person.

  “(2) The Institute may delegate the functions specified in section 5(a), (b), (c), and (d) (except to the extent that those functions relate to the duty in section 5A), either generally or specifically, to any other person.

  “(3) Subsection (2) is subject to subsection (1).

“5C Specified association may act in its own interests rather than Institute's interests

• “(1) This section applies to the specified association if any functions referred to in section 5B(2) are delegated to the association.

  “(2) The specified association may, when performing a delegated function, act in a manner that the association believes is in the best interests of the association (or its members) even though it may not be in the best interests of the Institute (or the Institute's members).

  “(3) Subsection (2) does not permit the specified association to act in a manner that may materially prejudice the Institute's ability to carry out the duty imposed under section 5A.”

• “(ja) the recognition of persons for the purposes of sections 36(1)(a) and 36A of the Financial Reporting Act 2013, for keeping such recognition under review, and for the cancellation and suspension of such recognition; and

• “(jb) the powers of a person to whom functions are delegated under section 5B(2), the effect of a delegation on the Institute, and the revocation of a delegation; and”.

• “(6) The code of ethics prescribed by the Council and that is in force immediately before the commencement of this subsection continues in force and may be amended, revoked, or replaced by the Executive Board under subsection (4).”

“7A Membership rules may require membership of specified association

• “(1) The rules that relate to the matters referred to in section 6(1)(b) (admission of members and the cessation of membership) may provide for either or both of the following:

  • “(a) that a person may be admitted as a member of the Institute only if the person is a member of the specified association:

  • “(b) that a person ceases to be a member of the Institute if the person—

    • “(i) does not become a member of the specified association in accordance with the rules; or

    • “(ii) ceases to be a member of the specified association.

  “(2) Those rules may provide for a cessation referred to in subsection (1)(b) to be automatic or to occur after a specified process.

  “(3) This section does not limit section 6(1)(b) (and, in particular, the ability to provide for other requirements for the admission of members).”

“Provisions concerning specified association

“8A Specified association

• “(1) The Governor-General may, by Order in Council made on the recommendation of the Minister of Commerce, declare an association of accountants to be the specified association for the purposes of this Act.

  “(2) The Minister of Commerce may make a recommendation under subsection (1) only after consulting the Institute.

  “(3) In this section, association of accountants includes any association or other professional body of accountants (whether constituted or established overseas or in New Zealand).

“8B Members of Council or Executive Board may act in best interests of specified association rather than Institute

• “(1) This section applies to a person (A) who is appointed by or on behalf of the specified association, in accordance with the rules of the Institute, to be a member of either or both of the following:

  • “(a) the Council:

  • “(b) the Executive Board.

  “(2) A may, when exercising powers or performing duties as a member of the Council or the Executive Board, if expressly permitted to do so by the rules of the Institute, act in a manner that he or she believes is in the best interests of the specified association (or its members) even though it may not be in the best interests of the Institute (or the Institute's members).

  “(3) Subsection (2) does not permit A to act in a manner that may materially prejudice the Institute's ability to carry out the duty imposed under section 5A.”