• “(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) The High Court may make an order, or otherwise exercise a power, on an appeal under subsection (1)(e) only in respect of 1 or more of the parties to the proceedings.”

• “(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) Any regulations made under subsection (1)(ca) 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.”