1. finance
2. accounting and auditing

PUBLIC PRACTICE
PATHWAYS
FOR THE PROVISION OF PUBLIC ACCOUNTING SERVICES
IN NEW ZEALAND
BE HEARD.
BE RECOGNISED.
DISCLAIMER
CPA Australia has used reasonable care and skill in compiling the content of this material. However, CPA Australia makes no warranty as to the accuracy or
completeness of any information in these materials. This material is intended to be a guide only and no part of this material is intended to be advice, whether
legal or professional. You should not act solely on the basis of the information contained in these materials as parts may be generalised and may apply differently
to different people and circumstances. Further, as laws change frequently, all practitioners, readers, viewers and users are advised to undertake their own research
or to seek professional advice to keep abreast of any reforms and developments in the law.
To the extent permitted by applicable law, CPA Australia, its employees, agents and consultants exclude all liability for any loss or damage claims and expenses
including but not limited to legal costs, indirect special or consequential loss or damage (including but not limited to, negligence) arising out of the information
in the materials. Where any law prohibits the exclusion of such liability, CPA Australia limits its liability to the resupply of the information.
Copyright © CPA Australia Ltd, 2014
All rights reserved. Without limiting the rights under copyright reserved above, no part of these notes may be reproduced or utilised in any form or by any means,
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Support and Guidance
CPA Australia has a range of services specially tailored to support public practitioners.
For further information please visit cpaaustralia.com.au/practicemanagement or contact your local office on 1300 73 73 73.
Issued December 2014
This guide is published by CPA Australia. ABN 64 008 392 452
3 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
WHAT IS PUBLIC PRACTICE?
Public practitioners are the public face of
CPA Australia.
What are the benefits of being in public
practice?
Public practitioners deal with a broad range
of clients, from individual taxpayers to large
businesses. They provide a range of accounting
services to the public.
• a rewarding career offering job satisfaction
and self-esteem
Public practitioners can be involved in (but are
not limited to offering services in) the following
areas as defined in CPA Australia’s By-Laws:
• accounting
• bookkeeping
• auditing and assurance services
• taxation
• insolvency and corporate reconstruction
• financial reporting
• management accounting
• financial planning
• forensic accounting
Public accounting services do not include
information technology, management consulting
services, business valuations or company
secretarial services – unless such services are
provided in conjunction with the activities listed
above.
CPA Australia recommends that any member
offering consultancy services or performing
external CFO services hold professional
indemnity insurance.
• the challenge, interest and flexibility that
independence and autonomy offer
−− s et your own direction, manage your
own time and make your own decisions
• the prospect of financial rewards – reap
rewards from the time, skill and money that
you invest in your practice
• the ability to leverage off the CPA Australia
brand
“I ENJOYED BEING ABLE
TO BRING MY OWN
PERSONALITY TO THE
PRACTICE, FROM THE
DESIGN OF THE OFFICE
TO MY RELATIONSHIPS
WITH STAFF AND
CLIENTS. CLIENTS ALSO
RESPONDED TO THE
FRIENDLY ATMOSPHERE
WHICH WAS REFLECTED
IN THEIR LOYALTY AND
APPRECIATION.”
FAY KAIRN OAM FCPA
Fay received her Order of Australia medal for
providing accounting services for Not-for Profit
Groups, a service she was able to easily provide
because she had her own business.
5 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
PUBLIC PRACTICE PATHWAYS
IN NEW ZEALAND
The following diagram represents the various initial pathways available to a CPA or FCPA to become a
public practitioner, based on gross yearly fees earned from the provision of public accounting services
in New Zealand.
Under CPA Australia’s By-Law 9.1 (c) any member providing public accounting services into
New Zealand must hold a Public Practice Certificate, no matter where in the world they are located.
PROVIDING PUBLIC ACCOUNTING
SERVICES WITHOUT A CERTIFICATE
Only undertaking
pro-bono work1
Intending to earn less than
$10,000 in gross fees per
calendar year1
OBTAINING A PUBLIC PRACTICE CERTIFICATE
Intending to earn between
$10,000 and $45,000 in gross
fees per calendar year
Intending to earn more
than $45,000 in gross fees
per calendar year
Hold CPA or FCPA designation2
Hold minimum prescribed
professional indemnity insurance
Completed the Advanced Taxation
segment from the CPA Program3
Meet CPD and AML obligations, as applicable
Complete the Practice Management
distance learning program4
Comply with specific licensing and registration
requirements, see page 9 onwards
Meet experience
requirements5
Do not advertise or promote your services or use the
CPA Australia public practice branding
Meet experience
requirements5
Hold minimum prescribed
professional indemnity
insurance
1
xcludes those who conduct FMC audits, for which a Public Practice
E
Certificate is required.
2
ust currently hold either a CPA or FCPA designation – all other
M
CPA Australia members will not be eligible to apply for a Public
Practice Certificate, and in some very limited circumstances, may
not be able to continue to provide public accounting services.
3
4
5
an be completed in the same semester as undertaking the
C
Practice Management program. In addition, all applicants are
required to have completed an Audit and Assurance segment
from the CPA Program (or through an accredited university) and a
company law subject from a recognised university, prior to enrolling
in the Public Practice Program.
embers holding a NZICA or Chartered Accountants Australia &
M
New Zealand certificate of public practice are automatically eligible
to be issued with a CPA Australia Public Practice Certificate without
completing the Public Practice Program.
ou must have at least three years full time work experience
Y
(in the last eight years) in an area of work relating to bookkeeping,
taxation, accounting, auditing & assurance services, insolvency &
corporate reconstruction, financial planning, forensic accounting
or financial reporting; or have at least three years full time work
experience (in the last eight years) in providing public accounting
services.
Attend Public Practice
Program Residential
Hold minimum prescribed
professional indemnity
insurance
Have an approved
company structure
Apply for a Limited Public
Practice Certificate
Apply for a Public Practice
Certificate
Apply to use the CPA Australia public practice branding
and comply with branding requirements
Apply to advertise and promote your services on Find a CPA
Comply with professional obligations (including CPD
and AML) and specific licensing and registration
requirements, see page 9 onwards
6 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
PUBLIC PRACTICE CERTIFICATE (PPC)
Members who are applying for a Public Practice
Certificate must first complete the Public Practice
Program, which consists of:
a. Practice Management distance learning
program
b. Public Practice Program Residential
A. P
RACTICE MANAGEMENT
DISTANCE LEARNING PROGRAM
The Public Practice Program has been developed
to help members establish themselves in public
practice. It builds on the technical expertise
and experience gained from the CPA Program
and through hands-on business experience. It
focuses on non technical skills such as strategic
planning, marketing, risk management and quality
assurance as well as practice development.
Practice Management is offered by distance
learning mode only. It is the equivalent of a one
semester postgraduate unit of study. Total hours
of study required will depend on a candidate’s
capabilities and individual study technique. As a
general guideline, a minimum of 10 to 15 hours
per week over a 12 week period is required.
Formal assessment for the distance learning
component is by a three hour, open book exam.
The exam includes multiple choice questions and
written response questions based on case studies.
Modules
Module 1 – An introduction to public practice
Module 2 – Ethics, professionalism and risk
management in public practice
Module 3 – Planning an independent practice
– the ‘big picture’
Module 4 – Creating a business plan that fits
your strategic plan
Module 5 – Developing a people strategy
Module 6 – A finance plan within your strategic
plan
Module 7 – Building and growing a practice
Module 8 – CPA Australia support services
(non-assessable module from
Semester 2, 2015)
B. PUBLIC PRACTICE PROGRAM
RESIDENTIAL
You must attend a two-day residential course. You
can attend a residential in the same semester you
are enrolled in the distance learning component
of the Public Practice Program or after completing
the examination. You cannot attend the residential
before enrolment in the Practice Management
distance learning program.
The residential component is divided into
several topics and interactive sessions, including
syndicate group exercises. The emphasis is on
providing professional accounting and advisory
services in a practice environment, utilising
technical and communication skills.
Topics
Topic 1 – Your public practice
Topic 2 – Strategic and business planning
Topic 3 – Financial issues in establishing a
practice and calculating charge out rates
Topic 4 – Ethics
Topic 5 – Risk management in your practice
Topic 6 – Building and growing your practice
For further information please visit
cpaaustralia.com.au/publicpracticeprogram
7 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
LIMITED PUBLIC PRACTICE CERTIFICATE (LPC)
The Limited Public Practice Certificate is available
to help members establish themselves in public
practice.
It is tailored for, among others, those who:
• operate part-time businesses
• work from home
• are engaged in postgraduate or further study
• have parenting or carer duties
• are contemplating a career change
• are transitioning into or out of public practice.
Members who are applying for a Limited Public
Practice Certificate must first complete the
Practice Management distance learning program.
PRACTICE MANAGEMENT
DISTANCE LEARNING PROGRAM
The Practice Management distance learning
program builds on the technical expertise and
experience gained from the CPA Program
and through hands-on business experience. It
focuses on non technical skills such as strategic
planning, marketing, risk management and quality
assurance as well as practice development.
Practice Management is offered by distance
learning mode. It is the equivalent of a one
semester postgraduate unit of study. Total hours
of study required will depend on a candidate’s
capabilities and individual study technique. As a
general guideline, a minimum of 10 to 15 hours
per week over a 12 week period is required.
Formal assessment is by a three hour, open
book exam. The exam includes multiple choice
questions and written response questions based
on case studies.
Modules
Module 1 – An introduction to public practice
Module 2 – Ethics, professionalism and risk
management in public practice
Module 3 – Planning an independent practice the ‘big picture’
Module 4 – Creating a business plan that fits your
strategic plan
Module 5 – Developing a people strategy
Module 6 – A finance plan within your strategic
plan
Module 7 – Building and growing a practice
Module 8 – CPA Australia support services
(non-assessable module from
Semester 2, 2015)
For further information, please visit
cpaaustralia.com.au/publicpracticeprogram
8 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
PUBLIC PRACTICE CERTIFICATE
REQUIREMENTS
Public Practice Certificate holders must abide by
the CPA Australia Constitution, By-Laws, technical
standards and Code of Professional Conduct
(APES 110).
In addition, as a certificate holder, you must:
Have a compliant practice structure
Your practice structure needs to comply with
CPA Australia’s By-Laws. Please note that if you
trade with a non-member you will need to apply
for an authority to trade with that non-member.
Meet professional indemnity (PI) insurance
requirements
You must hold professional indemnity insurance
and the policy must indemnify the member and
the practice. The minimum sum insured shall be
as stipulated in CPA Australia’s By-Laws or as
prescribed by any other legislative enactment.
The member shall produce proof satisfactory to
CPA Australia that such insurance is held. Other
specific terms that the policy must include may be
found in CPA Australia’s By-Law 9.8 including, but
not limited to, multiple automatic reinstatement
and cover for all persons affiliated with the
practice.
Participate in the Quality Review Program
You must participate in CPA Australia’s Quality
Review Program and comply with the APES 320
Quality Control for Firms and APES 325 Risk
Management for Firms.
Undertake continuing professional
development (CPD)
You must undertake 120 hours of CPD per
triennium, completing a minimum of 20 hours
per year.
9 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
LICENSING AND REGISTRATION
REQUIREMENTS
Some additional regulatory and licensing
requirements apply to operators in specific
sectors. The following specific sector
requirements apply to operators based
in New Zealand.
Accounting requirements
ACCOUNTANTS
• reduce compliance costs by removing or
reducing reporting obligations where they
are considered unnecessary or excessive
Only people who are suitably qualified as
accountants can describe themselves as
accountants or hold themselves out as
accountants in New Zealand. Certificates,
degrees, diplomas, registration or similar
qualifications in accounting are regarded as
suitable qualifications, whether or not these
are qualifications obtained in New Zealand.
(See the New Zealand Institute of Chartered
Accountants Act 1996 (NZICA96, s.15(1).) People
who are not suitably qualified can still describe
themselves as accountants so long as they are
not offering such services to the public
(NZICA96, s. 15(3)(a)).
Anyone, whether qualified or not, can practise
publicly under the designations of secretary or
bookkeeper or cost consultant, so long as that
person does not convey the impression that he
or she is an accountant (NZICA96, s. 15(3)(b)).
CPA Australia is a gazetted organisation under
Section 199 of the Companies Act 1993. This
enables its members to perform a range of audits.
In addition, from 18 October 2012, CPA Australia
became an accredited body of the New Zealand
Financial Markets Authority (FMA) able to license
auditors who carry out Financial Market Conduct
audits in New Zealand. (These requirements are
discussed further under Audits below.)
The Financial Reporting Act 2013 (FRA13) sets
out the financial reporting requirements for
New Zealand companies and other entities. The
FRA13 came into force in April 2014. It aims to:
• strengthen the law where the current reporting
requirements do not adequately meet users’
needs
• make financial reporting legislation more userfriendly by placing the substantive reporting
requirements in Acts where the public would
expect to find them (for example, all the
substantive rules relating to the preparation,
auditing and distribution of financial statements
for companies will form part of the Companies
Act 1993).
The thresholds for determining if a company
qualifies as a “large” company have been
lifted. All other companies are not generally be
required to prepare general-purpose financial
statements unless they are overseas companies,
provide financial products to investors (Financial
Market Conduct reporting entities) or a number
of shareholders resolve that financial statements
be prepared. The accounting record and financial
statement requirements for Financial Market
Conduct entities are set out in Part 7 of the
Financial Markets Conduct Act 2013 (FMC13).
The financial reporting and auditing requirements
for companies are set out in the Companies
Act 1993 (CA93). Some entities, including some
companies and including all FMC reporting
entities have their financial reporting and
auditing requirements set out in the FRA13 or
the FMC13. CA93 financial reporting and auditing
requirements then no longer apply to those
companies.
10 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
A company is “large” (in respect of an accounting
period) if at least one of the following applies:
• a
s at the balance date of each of the two
preceding accounting periods, the total
assets of the company and its subsidiaries
(if any) exceed $60 million or
• in each of the two preceding accounting
periods, the total revenue of the company
and its subsidiaries (if any) exceeds $30 million.
The FRA13 provides for various matters relating
to financial reporting duties including defining
key concepts (for example, generally accepted
accounting practice, financial statements, and
group financial statements); and providing for the
Financial Reporting Board to prepare and issue
financial reporting standards and auditing and
assurance standards. It also provides the standard
provisions for auditor qualifications, access to
information by auditors, and balance dates.
Other enactments (for example, the CA93 and
FMC13) specify various financial reporting duties
that apply to different kinds of entities, including
requirements to keep accounting records; and
prepare financial statements or group financial
statements in accordance with generally accepted
accounting practice or non-GAAP standards; and
have those statements audited; and register or
lodge those statements or otherwise distribute
those statements to interested persons (for
example, shareholders or members) (FRA13, s.4)
There are different levels of requirement for the
keeping of accounting records and for financial
statements found in the different pieces of
legislation. FMC reporting entities must keep
proper accounting records (FMC13, s.455) as
must all companies (CA93, s.194). FMC reporting
entity financial statements must be prepared
within four months of the balance date (FMC13,
s.460) with additional requirements for overseas
FMC reporting entities, (FMC13, s.461B, group
financial statements (FMC13, s.461) and registered
schemes and funds (FMA13, s. 461A).
The requirements for companies are found in the
Companies Act 1993 (CA93). These requirements
do not apply if the company is a FMC reporting
entity where the requirements are set out in
Part 7 of the Financial Markets Conduct Act
2013 (CA93, s.197). Companies must ensure that
financial statements that comply with generally
accepted accounting practice are prepared
within five months of the balance date (CA93,
s.201). There are additional requirements for
group financial statements (CA93, s.202) and for
overseas companies (CA93, s.204) where financial
statements must be registered (CA93, s.207E).
Financial statements of companies with fewer
than ten shareholders do not need to be prepared
unless they opt in to do so. All other companies’
accounts must prepare financial statements unless
they are eligible to opt out and they have done
so. Public entities and large overseas companies
cannot opt out and other companies can only opt
out under certain circumstances (CA93, s.206).
Companies with fewer than 10 shareholders must
opt in if they receive notice in writing from a
shareholder or shareholders with five percent of
more of their shares (CA93, s. 207k). Companies
with more than ten shareholders and large
companies that are not otherwise required to
prepare financial statements and are not expressly
prohibited from doing so in their constitutions
may opt out with a resolution of 95 percent of
shares voting on the question (CA93, s. 207I).
Other changes include that financial statements
need to be prepared within three months after a
balance date (rather than five months under the
earlier FRA 93) and changes to the requirements
for groups and overseas companies. Many
companies no longer need to prepare annual
reports.
11 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
TAX ADVISERS
New Zealand does not require registration of
tax advisers.
Tax practitioners often choose to register with
the Inland Revenue Department as tax agents,
which allows them an extension of time for filing
their clients’ tax returns and to receive standard
communications from Inland Revenue.
However, people do not have to register in
order to practise as a tax agent in New Zealand.
Most professional tax advisers are in fact either
accountants or lawyers, and are members of their
respective professional societies. If tax advisers
give financial advice, they will be covered by the
Financial Advisers Act 2011.
INSOLVENCY PRACTITIONERS
Insolvency professionals include accountants,
solicitors and bankers. The regulation and
registration of insolvency practitioners operating
as trustees and liquidators is controlled by the
Australian Securities & Investments Commission
(ASIC) and the Australian Financial Security
Authority.
AUDITORS
Since 1 July 2012 the audit profession in
New Zealand has been primarily regulated by
the Auditor Regulation Act 2011 (ARA11). The
purpose of the ARA11 is to regulate auditors
and to establish an independent oversight
system in order to promote quality, expertise,
and integrity in the profession of auditors; and to
promote the recognition of the professional status
of New Zealand auditors in overseas jurisdictions
(ARA11, s.3). The definition was changed on 1
April 2014 to take account of major changes to
financial reporting requirements in the Financial
Reporting Act 2013 (FRA13).
The requirements for auditors who carry out
audits of Financial Market Conduct (FMC)
reporting entities are covered by the ARA11.
FMC reporting entities include issuers of
regulated products. They also include listed
issuers, banks, insurers, credit unions and building
societies (FMC Act 2013, s.451).
Regulated products are financial products offered
under a regulated offer (FMC13, s.41). A regulated
offer is an offer of financial products to investors
where the offer to at least one of those investors
requires disclosure. Disclosure to investors is
required unless the investors are specifically
excluded because they are, for example, relatives
or close business associates of the issuer, or they
are wholesale investors (FMC13, s.41). Regulated
products are also managed investment products
(FMC13, s.41).
The ARA11 requires every natural person who
carries out an FMC audit to hold a licence that
authorises the person to act as an auditor for
that kind of FMC audit. Audit firms must also be
registered and must contain a licensed auditor.
The ARA11 also provides the licensing regime
that is overseen by the Financial Markets Authority
(FMA) (The FMA is discussed in the section
below). The FMA is responsible for, amongst
other things, prescribing the requirements for
the licensing and registration of auditors (ARA11,
s.5). It is also responsible for implementing
and maintaining adequate and effective audit
regulatory systems (ARA11, s. 48). This includes
regular quality reviews of every registered audit
firm and licensed auditor (ARA11, s. 65).
The Financial Markets Authority is also
empowered to grant accreditation to persons
and bodies that it is satisfied are fit and proper
(ARA11, s. 48). An accredited body must require
its members to complete competence programs
to maintain their ongoing competence and
otherwise promote, monitor and review the
ongoing competence of its members (ARA11,
s. 18). Audit firms must be licensed to carry out a
FMC audit (ARA11, s. 9). An accredited body can
also license audit firms if it meets the prescribed
minimum standards and one or more of the
partners is a licensed auditor (ARA11, s. 25).
Partners of audit firms will be held responsible
if the FMC audit is not carried out properly and
registered audit firms may have their licenses
cancelled or suspended (ARA11, s. 10).
12 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
The Financial Markets Authority has accredited
international accounting body, CPA Australia,
to license auditors who carry out issuer audits
in New Zealand (ARA11, s.48). CPA Australia
is a gazetted organisation under Section 199
of the Companies Act 1993. This means that
CPA Australia members can perform a range of
audits. In addition, CPA Australia is an accredited
body of the New Zealand Financial Markets
Authority. This enables it to license auditors who
carry out FMC audits in New Zealand. Under the
Auditor Regulation Act 2011, auditors who carry
out FMC audits must be licensed and audit firms
must be registered (ARA11, s.11).
By becoming an accredited body
CPA Australia is responsible for supervising
the auditors it licenses and for following up
any breaches of their obligations. Licensees are
required to comply with all mandatory, ethical,
professional standards and pronouncements.
Further information on FMC audits and
explanation of whether you will need an audit
licence is available in the CPA Australia New
Zealand auditor licencing guide. To apply for
a licence you must complete an application form.
You must also:
• be ordinarily resident in New Zealand
• hold a current CPA Australia Public Practice
Certificate
• meet the minimum standards for licensed
auditors
• satisfy the Board that you are a fit and proper
person to hold a licence and can meet the
continuing obligations of a licensed auditor
under the ARA.
For more information on these requirements,
visit cpaaustralia.com.au/nzaudit
The Registrar of Companies maintains a Register
of licensed auditors and audit firms (ARA11, ss. 14,
25, 38). That register is available for searching by
members of the public (ARA11, s. 39).
Only people who are suitably qualified in the
practice of accounting and auditing can describe
themselves as auditors or hold themselves out as
auditors in New Zealand. Certificates, degrees,
diplomas, registration or similar qualification
in accounting and auditing are regarded as
suitable qualifications, whether or not these
are qualifications obtained in New Zealand
(New Zealand Institute of Chartered Accountants
Act 1996) (NZICA96, s. 15(1)). People who are not
suitably qualified can still describe themselves
as auditors, so long as they are not offering
such services to the public (NZICA96, s. 15(3)(a)).
Anyone, whether qualified or not, can practise
publicly under the designations of secretary or
bookkeeper or cost consultant, so long as that
person does not convey the impression that
he or she is an auditor (NZICA96, s. 15(3)(b)).
Anyone can act as auditor of a club, institution,
or association which is not carried on with a
view to profit (NZICA96, s. 15(3)(c)). The Crown,
including the Auditor General, can also appoint
individuals who might not otherwise be qualified
as auditors in respect of an undertaking (NZICA96,
s. 15(3)(d)).
The financial reporting and auditing requirements
for companies are set out in the Companies Act
1993. Some entities, including some companies
and including all FMC reporting entities have
their financial reporting and auditing requirements
set out in the Financial Reporting Act 2013 or
the Financial Markets Conduct Act 2013. The
Companies Act 1993 financial reporting and
auditing requirements then no longer apply to
those companies. Other companies must appoint
an auditor if their financial statements must
be audited (CA93, s. 207P). Large companies,
FMC reporting entities, public entities and
overseas companies must generally be audited.
13 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
A company is “large” (in respect of an accounting
period) if at least one of the following applies:
A number of persons are specifically prohibited
from acting as auditors. These are:
• as at the balance date of each of the two
preceding accounting periods, the total assets
of the company and its subsidiaries (if any)
exceed $60 million or
• a director or employee of the company itself
or a related company
• in each of the two preceding accounting
periods, the total revenue of the company
and its subsidiaries (if any) exceeds $30 million.
Large companies are exempt from audit
requirements if they are wholly-owned subsidiaries
of a company that has complied with a requirement
to lodge or register group financial statements
with the Registrar of Companies.
• a partner of an employee of the company
or a related company
• a liquidator or receiver of the company
• a body corporate (unlike the position in
Australia, where the Corporations Act 2001
(Cwlth) allows auditors to incorporate as
authorized audit companies) (FRA13, s.36).
Partnerships can be appointed auditors
(FRA13, s.37).
The accounts of companies with fewer than ten
shareholders do not need to be audited unless
they opt in to having them audited. All other
companies’ accounts must be audited unless
they are eligible to opt out and they have done
so. Public entities and large overseas companies
cannot opt out and other companies can only
opt out under certain circumstances (CA93, s.206).
Companies with fewer than 10 shareholders
must opt in if they receive notice in writing
from a shareholder or shareholders with five
percent of more of their shares (CA93, s. 207k).
Companies with more than ten shareholders and
large companies that are not otherwise required
to appoint an auditor and are not expressly
prohibited from doing so in their constitutions
may opt out with a resolution of 95 percent of
shares voting on the question (CA93, s. 207I).
Auditors are generally appointed by a standard
letter that will contain undertakings that the
audit will be conducted in accordance with
relevant legislation and that the auditor will give
reasonable assurances that financial statements
are complete and adequate. Failure to perform
in accordance with these undertakings would be
a breach of contract.
Someone is not qualified to be appointed or to
act as an auditor unless he or she is a chartered
accountant (as discussed below); or he or she is
a licensed auditor (as discussed above); or he or
she is eligible to act as an auditor outside New
Zealand or he or she is a member, a fellow, or
an associate of an association of accountants
constituted outside New Zealand approved in the
Gazette (including CPA Australia). Only licensed
auditors can audit FMC reporting entities and the
Auditor General under the Public Audit Act 2001,
is the auditor of public entities.
Auditors must comply with all applicable auditing
and assurance standards (CA93, s.207A). The
auditor of a company must make a report to
the shareholders on the financial statements
or group financial statements audited by the
auditor. The auditor’s report must comply with
the requirements of all applicable auditing and
assurance standards (CA93, s.207B).
Only licensed auditors are able to audit FMC
reporting companies and other entities.
Auditors must have access at all times to
the accounting records and other documents
of the entity they are auditing (FRA13, s.46).
Auditors are entitled to require information and
explanations that he or she thinks necessary for
the performance of his or her duties as auditor
from directors or employees (FRA13, s.39).
14 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
Audits must be carried out in accordance with
auditing standards. Auditing standards may
(without limitation) include professional and
ethical standards that govern the professional
conduct of persons who are appointed or
engaged to carry out audits or other assurance
engagements. They may differ in differ accordance
to differences in time or circumstance (FRA13,s.20).
Auditors are under a statutory duty to avoid a
conflict of interest. An auditor must ensure his or
her judgment is not impaired by any relationship
with or interest in the company or any of its
subsidiaries (CA93, s. 204). Thus, it appears it
is possible for the auditor to be ‘interested’, so
long as ‘the interest’ does not affect the auditor’s
judgment. This interpretation is supported by the
Financial Reporting Act, which requires disclosure
of interest by auditors (FRA93, s.16(1)(c)).
Unless the company is no longer required to
appoint an auditor, or an auditor is no longer
qualified, in the absence of any action, the
auditor will automatically be reappointed at
the annual meeting. The company can, however,
by resolution decide not to reappoint an auditor
(CA93, s. 207T).
When the company decides to replace an auditor,
it must give 20 working days’ notice of its proposal
to do so. This is to protect the shareholders in
case the auditor is being dismissed because
he or she has discovered some information or
irregularity that the directors do not want to be
made known to the shareholders. The auditor
must be given a reasonable opportunity to
make representations to shareholders either
by letter or by speaking personally or through
a representative at the company’s meeting.
The auditor must be given the choice of what
means the auditor will use to put his or her case
to shareholders, and the auditor must be paid
reasonable expenses in connection with this
(CA93, s. 207U).
If an auditor does not wish to be reappointed,
the procedure to be followed is set out in the
Act. The auditor must distribute to shareholders
reasons for not wishing to be reappointed and
must be given an opportunity to explain those
reasons at a shareholders’ meeting. Again, the
auditor must be paid reasonable expenses (CA93,
s. 207V). The auditor can also resign at any time
by giving notice in writing. The resignation must
be notified to the shareholders (CA93, s. 207R).
The auditor must receive all notices and
communication relating to a meeting of
shareholders, be permitted to attend
shareholders’ meetings, and be heard at
shareholders’ meetings on matters that
concern the auditor as auditor (CA93, s.207W).
Only members of the New Zealand Institute
of Chartered Accountants or members, fellows or associates of an approved association of
Commonwealth accountants (such as
CPA Australia) can be appointed as auditors
of Maori incorporations (Te Ture Whenua Maori
Act 1993, s. 277(4)) and of friendly and other
societies and credit unions (Friendly Societies
and Credit Unions Act 1982, ss. 63(1), 123(1)).
The requirements for auditors of such
incorporations, societies and credit unions
are similar to those for companies. Maori
incorporations that have a gross revenue of
$25,000 or less for their most recent financial year
are not required to appoint an auditor unless the
shareholders resolve by special resolution that
the accounts should be audited (Te Ture Whenua
Maori Act 1993, s. 277(1A)).
15 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
Undertaking liquidations and being a trustee
in bankruptcy
In an insolvency in New Zealand, accountants or
a person who keeps the creditor’s or bankrupt’s
accounts can represent creditors or the bankrupt
at a creditors’ meeting (Insolvency Act 2006,s.
91). Accountants are permitted to act as receivers
in New Zealand (Receiverships Act 1993, s. 5(1)).
Accountants will also frequently act as liquidators
of companies (Companies Act 1993, Part 16)
(CA93).
On 1 November 2007, a voluntary administration
regime modelled on the Australian regime came
into force (Companies Act 1993, Part 15A).
Voluntary Administration (VA) gives a company
in financial distress breathing space from creditors
to allow an appointed administrator to review and
rearrange a company’s affairs in order to avoid
liquidation. Any natural person may be appointed
an administrator of a company (CA93, s. 239F). It
is expected, however, that accountants will usually
act as administrators in a VA.
An administrator can be appointed by the
company, the liquidator or interim liquidator,
a secured creditor or the Court (CA93, s.
239H). While a company is in administration,
the administrator has control of the company’s
business, property and affairs. The administrator
may carry on the business of the company and
manage its property and affairs. The administrator
may terminate or dispose of all or part of the
business, or property; and may perform any
function, and exercise any power, that the
company or any of its officers could perform or
exercise if the company were not in administration
(CA93, s. 239U).
As soon as practicable after the administration
of a company begins, the administrator must
investigate the company’s business, property,
affairs and financial circumstances; and form an opinion about which of the following alternatives
is the best:
• w
hether it would be in the creditors’
interests for the company to execute
a deed of company arrangement
• w
hether it would be in the creditors’
interests for the administration to end
• w
hether it would be in the creditors’
interests for a liquidator to be appointed
(CA93, s. 239AE).
To assist in this task, the directors must give
the administrator a statement about the
company’s business, property, affairs and financial
circumstances (CA93, s.239AF). The administrator
may lodge a report with the Registrar specifying
any matter that, in his or her opinion, should be
brought to the Registrar’s notice and must report
misconduct (CA93, s. 239AH, s. 239AI).
The administrator needs to hold meetings of
creditors. The most important meeting is
the watershed meeting. The watershed
meeting is the meeting of creditors called
by the administrator to decide the future of
the company and, in particular, whether the
company and the deed administrator should
execute a deed of company arrangement (CA93,
s.239AS). The deed of company arrangement
is a deed that is executed by the company and
its creditors providing for payments towards the
creditors’ debts (CA93 s. 239B). If the decision
is made to execute one, a deed administrator
will be appointed (CA93 s. 239ACC). Any natural
person may be a deed administrator (CA93 s.
239ACD). It is expected, however, that the deed
administrator will also usually be an accountant.
Every administrator (including a deed
administrator) must file an account with the
Registrar for the period of six months (or shorter,
as the administrator decides) after the day on
which the administrator was appointed and each
subsequent period of six months during which
the administrator holds office (CA93, s. 239ACZ).
16 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
Financial advisers and financial service
providers
Financial advisers are regulated by the provisions
in the Financial Advisers Act 2008 (FAA08).
The purpose of the FAA is to promote the
sound and efficient delivery of financial advice,
and to encourage public confidence in the
professionalism and integrity of financial advisers,
by requiring disclosure by financial advisers.
As with other pieces of legislation where
disclosure to investors is mandated, the purpose
of the disclosure requirement is to ensure that
investors and consumers can make informed
decisions about whether to use a financial adviser
and whether to follow a financial adviser’s advice.
The FAA08, by focussing on the quality of financial
advisers and financial advice, is the culmination
of a shift in regulatory approach in New Zealand
over the past few years. Within New Zealand,
the changes are considered timely following
the failure of a number of finance companies.
Some investment advisers received undisclosed
commissions from finance companies that later
failed. As part of the reforms, the Government
replaced the Securities Commission with the
Financial Markets Authority (FMA). The FMA
has a wider ambit and greater powers than the
Securities Commission had. The responsibility
of overseeing the FAA08 rests with the FMA
(Financial Advisers Amendment Act 2011).
The FAA08 aims to protect investors by requiring
that financial advisers be competent. This
requirement is intended to ensure that the
financial advisers available to investors and
consumers have the experience, expertise
and integrity to match a person effectively to
a financial product that best meets that person’s
need and risk profile. The Act also aims to ensure
that financial advisers are held accountable
for any financial advice that they give. The
Act also requires financial advisers to manage
appropriately conflicts of interest (FAA08, s. 3).
It was originally intended that the FAA08
would create a co-regulatory regime for financial
advisers with the Securities Commission and
industry-based and approved professional bodies
working together to create and monitor standards
for financial advisers.
However, the Finance and Expenditure Committee
recommended a two-tier regulatory structure for
the financial advisory industry that is under the
control of the Financial Markets Authority. The
regulation of the industry is split, with the split
dependent on the complexity of the financial
product that the adviser deals in. Those who deal
with complex products need special authorization
under the FAA08. Qualifying Financial Entities are
able to take responsibility for advisers under their
control. Financial advisers who deal with simpler
products such as term bank deposits and call debt
securities are subject to just generic conduct and
disclosure obligations.
A Code governs authorized financial advisers
as well as provides a basis for the discipline of
the profession (FAA08, s. 86). The Code details
the minimum standards of adviser competence,
knowledge and experience, ethical conduct and
client care. It lays down guidelines for continuing
professional development and specifies standards
for the various classes of authorized financial
advisers.
Following lobbying by accountants, among other
professional groups, chartered accountants are
not defined as financial advisers and are not
required to comply with the provisions of the
FAA08. Financial advice given by an accountant,
who is not a chartered accountant, in the course
of that person’s professional practice is not
normally exempt from the need to comply
with the requirements of the FAA08. There
is an exemption only if that advice given by an
accountant is a necessary incident of professional
accounting advice (FAA08, s. 13). Even there the
implementation of the Code requires accountants
to undertake further training. The Code states
that a person must attain certain Unit Standard
Sets of the National Certificate in Financial
Services (Financial Advice) to be an authorized
financial adviser. An Accounting Technician
or an Associated Chartered Accountant may
provide financial advice in the course of his or
her professional practice as an accountant without
having attained all but one Unit Standard (B),
if the advice is a necessary incident of professional
accounting practice. Unit Standard B requires
knowledge of the Code and consumer protection
laws.
17 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
A financial adviser is a natural person who performs
a financial adviser service (FAA08, s. 8). A financial
adviser is not a company or other non-natural
person. Someone gives financial advice when
they make a recommendation or give an opinion
or guidance in relation to acquiring or disposing
of a financial product (FAA08, s. 10). An authorized
financial adviser is an individual who is registered
and authorized (FAA08, s. 51). Anybody will be
able to apply to the Financial Markets Authority
to be authorized (FAA08, s. 52). Those who deal
with more complex products rather than just
with simpler financial instruments, such as call
debt securities, bank term deposits, insurance
products (except life insurance) or consumer
credit contracts, must go through this process.
The Registrar of Financial Service Providers will
maintain a register of authorized financial advisers
(FAA08, s. 56). The FMA must notify the Registrar
of authorization.
Financial advisers who give financial advice must
disclose to the person they are giving advice to
(FAA08, s. 22). Authorized financial advisers, who
deal with more complex financial products, must
disclose information required to be disclosed by
the financial adviser’s terms and conditions of
authorization such as:
• professional or business experience relevant
to performance of a financial adviser service
• criminal convictions
• fees and remuneration
• material interests, relationships, or associations
• procedures for handling a client’s money
or other property
• dispute resolution arrangements (FAA08, s. 23).
The disclosure requirement for less complex
financial products are limited by the status of
the financial adviser, for example, whether the
financial adviser is authorized or not, dispute
resolution arrangements, location of business
premises, and telephone, email and fax details
(FAA08, s. 25). Disclosure under a disclosure
obligation must not be misleading, deceptive,
or confusing at the time that the disclosure is
made (FAA08, s. 27).
In addition to disclosure obligations, financial
advisers have conduct obligations. Authorised
financial advisers must comply with the Code
of Professional Conduct for Professional Advisers
(FAA08, s.37) and with the terms and conditions
of his or her authorisation (FA08, s.45). All financial
advisers have to exercise the care, diligence, and
skill that a reasonable financial adviser would
exercise in the same circumstances, taking into
account, but without limitation, the nature and
requirements of the financial adviser’s client
and the nature of the service performed for the
client (FAA08, s. 33). It is an offence to engage
in misleading or deceptive conduct (FAA08, s.
34), nor must an advertisement be misleading,
deceptive or confusing (FAA08, s. 35). Someone
cannot use the term ‘sharebroker’ in advertising
or promoting themselves as a financial adviser
or advertising or promoting a financial adviser
service, unless that person is a member of
a registered exchange such as the NZX
(FAA08, s. 36).
Authorised financial advisers must also comply
with the code of conduct described above
(FAA, s. 37). If an authorized financial adviser
considers that someone has breached the FAA08,
they may report that breach to the FMA
(FAA08, s. 45A).
The companion piece of legislation to the FAA08
is the Financial Service Providers (Registration and
Dispute Resolution) Act 2008 (FSP08).
18 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
The FSP08 aims to regulate financial service
providers by establishing a registration system
for them and requiring them to join an approved
dispute resolution scheme. Financial service
providers include those who provide a financial
adviser service but also extends to banks, broking
services, those who keep securities or investment
portfolios on behalf of others, providing credit,
giving financial guarantees, trustees for securities
offered to the public insurers, changing foreign
currency and a broad range of other activities
(FSP08, s. 5). Someone is in the business of
providing a financial service if that person carries
on the business of providing a financial service
whether or not that business is the provider’s
only business or the provider’s principal business
(FSP08, s. 6). A person cannot carry on business as
a financial adviser unless that person is registered
under the FSP08 or, if a financial service provider,
the person is a member of an approved dispute
resolution scheme (FSP, s. 11). Nor can someone
hold themselves out as being in the business
of providing financial services unless that person
is registered or, if a financial service provider,
the person is a member of an approved dispute
resolution scheme (FSP08, s.12, 48 ). However,
chartered accountants are not subject to the FSP
if the financial service is in the ordinary course
of business (FSP, s. 7(2)(a)).
To become qualified to be a registered financial
service provider, a person needs to be a member
of an approved dispute resolution scheme
(FSP08, ss. 13, 48). Dispute resolution schemes
are approved by the Minister and are required
to maintain a list of current approved members
on an Internet site (FSP08, s. 62). An application
to be registered as a financial services provider
is made to the Registrar of Financial Service
Providers (FSP08, s. 16) who maintains a register
of financial service providers (FSP08, s. 24). The
Financial Markets Authority can prevent someone
from being registered (FSP08, s.15B) even if they
are otherwise qualified (FSP08, s.15C). If someone
is no longer qualified to be a financial services
provider, they must notify the Registrar
(FSP08, s.17).
19 | PUBLIC PRACTICE PATHWAYS NEW ZEALAND
SUPPORT SERVICES
In addition to your existing tools and resources
as a CPA Australia member, practice management
resources are available to support Public Practice
Certificate holders and include:
• t he CPA Australia website and professional
resources
• branding materials and guidelines
• quality control tools
• INPRACTICE magazine
• INTHEBLACK magazine
• o
ther CPA Australia e-newsletters
and publications
• m
ember networking forums, such as
the Public Practice Group on LinkedIn
• an online Career Guidance System
• multimedia resources
• guides
• checklists
• standard letters
• standard forms
• working papers
• technical advice and materials
• CPD courses and seminars
• CPA professional indemnity insurance scheme
• a
dvocacy and representation to government
and regulators
• t he CPA library, a highly-resourced business
and accounting information centre
You can find these resources at
cpaaustralia.com.au/practicemanagement
APPLICATION FORMS
Application forms can be downloaded from
the CPA Australia website at
cpaaustralia.com.au/practicemanagement
Application processing takes approximately
three weeks.
Important note: It is a breach of the CPA Australia By-Laws
to commence practising in public practice without holding
a Public Practice Certificate.
CPAH1253_11.14
cpaaustralia.com.au