Action Plan developed by New Zealand Institute of Chartered Accountants (NZICA) BACKGROUND NOTE ON ACTION PLANS

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1 BACKGROUND NOTE ON ACTION PLANS Action Plans are developed by IFAC members and associates to address policy matters identified through their responses to the IFAC Compliance Self-Assessment Questionnaires. They form part of a continuous process within the IFAC Member Body Compliance Program to support the ongoing development and improvement of the accountancy profession around the world. Action Plans are prepared by members and associates for their own use based on the national frameworks, priorities, processes and challenges specific to each jurisdiction. As such, they will vary in their objectives, content and level of detail, consistent with their differing national environments and stages of development, and will be subject to periodic review and update. Refer to the Part 1 Assessment of the Regulatory and Standard-Setting Framework Questionnaire and Part 2 SMO Self- Assessment Questionnaire for background information on each member and associate their environment and existing processes. These responses may be viewed at: Use of Information Please refer to the Disclaimer published on the Compliance Program website. ACTION PLAN IFAC Member: Original Publish Date: May 2009 Last Updated: June 2012 Next Update: June 2015 Page 1 of 15

2 GLOSSARY: CA CE ICAA JP NZASB NZAuASB NZICA PAS PSB XRB Chartered Accountant Chief Executive Institute of Chartered Accountants in Australia Joint Project New Zealand Accounting Standards Board New Zealand Auditing and Board New Zealand Institute of Chartered Accountants Public Benefit Accounting Standards Professional Standards Board External Reporting Board Page 2 of 15

3 Action Plan Subject: Action Plan Objective: SMO 1 - (Practice Review) Continue to Ensure an Effective Review Program is in Place for all Members Offering Accounting to the Public and in Particular Offering Background: is one of the New Zealand Institute of Chartered Accountants' key functions. The Institute and the Chartered Accountant (CA) brand represent quality, integrity and the adoption and application of professional standards. The Institute has an obligation to the public to ensure that members practice in a manner consistent with these values. The Institute also has an obligation to its members to ensure that the CA brand continues to have relevance and maintains its value to members and the marketplace. The practice review programme is one quality assurance process that the Institute uses to ensure its members continue to be competent, act with integrity and comply with professional and technical standards. It is both educational and compliance focused. More information about the Practice Review can be found in the relevant section on NZICA s website Control Standards and Guidance 1. Well established through XRB. Director Practice Review Unit Design of the Review Program 2. Cyclical reviews every 5 years have been supplemented with a risk based review programme designed annually. Director Practice Review Unit Reporting 3. Well established process for reporting to the member reviewed. Reporting of general trends to membership through the NZICA Journal. Director Practice Review Unit Page 3 of 15

4 New Developments 4. Review and refine risk-based review programme. Annual Director Assuranc e 5. Refresh review methodology by reference to overseas best practice Director Practice Review Unit Practice Review Unit Review of NZICA s Compliance Information 6. Complete periodic review to IFAC Compliance Self-Assessment questionnaire and update sections relevant to SMO-1 if required. Assess any proposed changes against the requirements of IFAC. Director Practice Review Unit Page 4 of 15

5 Action Plan Subject: Action Plan Objective: SMO 2 - International Education Standards for Professional Accountants and Other IAESB Guidance Continue to use best endeavors to ensure NZICA Chartered Accountants education and training continues to comply with IES requirements Background: Detailed information about NZICA s professional education requirements, CPD and training can be found in the relevant section on the NZICA s website Endeavour to ensure compliance of New Zealand Chartered Accountants with all IESs 7. Continue to ensure new developments to CA pre and post qualification education and training are consistent with IESs. CE, GM Member & Support, GM Education & Admissions NZICA Board and appropriate committees, staff of the Education & Admissions and Professional Development teams of NZICA New Developments 8. Feb 2012 Replace current academic requirements with joint academic requirement (accredited degree with tertiary learning outcomes on required topics) with ICAA with effect from Feb February 2013 CE and GM Education & Admissions Joint Program Steering Committee, JP Working Group, staff of Education & Admissions Division of NZICA, and of ICAA s CA Program & Admissions Division Page 5 of 15

6 9. April 2012 Replace current practical experience requirements with joint requirements with ICAA with effect from Feb 2012 Replace current professional competence programme with a joint qualifying programme with ICAA with effect from Feb 2013 and fully transitioned by Review of NZICA s Compliance Information 2013 CE and GM Education & Admissions February 2013 CE and GM Education & Admissions Joint Program Steering Committee, JP Working Group, staff of Education & Admissions Division of NZICA, and of ICAA s CA Program & Admissions Division Joint Program Steering Committee, JP Working Group, staff of Education & Admissions Division of NZICA, and of ICAA s CA Program & Admissions Division 11. Perform periodic review of NZICA response to IFAC Compliance Self- Assessment questionnaire and update sections relevant to SMO 2 as necessary CE and GM Education & Admissions Staff of Education & Admissions Division of NZICA Page 6 of 15

7 Action Plan Subject: Action Plan Objective: SMO 3 - International Standards, Related Practice Statements and Other Papers Issued by the IAASB To continue using best endeavors to maintain an ongoing process to adopt ISAs and assist in the implementation of the adopted standards. Background: The External Reporting Board (XRB) is an independent Crown Entity that from 1 July 2011 is responsible for the development and issuing of accounting and auditing and assurance standards in New Zealand. Under a delegation from the XRB the New Zealand Auditing and Board (NZAuASB) develops, approves and promulgates auditing and assurance standards for application in New Zealand. Two of the key strategic objectives set by the XRB for the NZAuASB are firstly to adopt international auditing and assurance standards as applying in New Zealand unless there are very strong reasons not to and secondly to engage with international standard setters during the development phase to influence the content of exposure drafts. The NZAuASB approved and issued in July 2011 a suite of New Zealand standards. These standards are consistent with the revised and clarified ISAs. The standards are effective for periods beginning on or after 1 September Standards for assurance engagements other than Audits and Reviews of historical financial statements are effective when the engagement begins on or after 1 November Until the NZAuASB standards become effective, members must use the published auditing and assurance standards approved by Council of NZICA which are also consistent with the revised and clarified ISAs. A recent pronouncement of the Council of NZICA has determined that members, in complying with the Code of Ethics, must use the auditing and assurance standards promulgated by the NZAuASB for all audit and assurance work undertaken. Maintain existing process 12. Publication of an on-line and hard copy member s handbook which includes audit and assurance standards applying in New Zealand. Products and Page 7 of 15

8 13. Adaptation and publication of a New Zealand Audit Manual and Toolkit based on the IFAC Small and Medium Practices Committee s Guide to Using International Standards on Auditing in the Audits of Small and Medium sized entities. Products and 14. Provision of training to members aimed to promote proper implementation of New Zealand s audit and assurance standards. Professional Development 15. NZICA s Review program. Practice Review 16. Provision of technical updates including information on changes to audit and assurance standards. 17. Regular consultation with NZICA s Public Practice Advisory Group which helps NZICA identify any implementation issues that need to be addressed. Review of NZICA s Compliance Information 18. Perform periodic review of NZICA response to IFAC Compliance Self- Assessment questionnaire and update sections relevant to SMO 3 as necessary. CEO and GM Membership/ Standards and Team Page 8 of 15

9 Action Plan Subject: Action Plan Objective: SMO 4 - IESBA Code of Ethics for Professional Accountants To continue to use best endeavors to adopt the IESBA Code of Ethics Background: The External Reporting Board (XRB) is an independent Crown Entity that from 1 July 2011 is responsible for the development and issuing of accounting and auditing and assurance standards in New Zealand. Under a delegation from the XRB the New Zealand Auditing and Board (NZAuASB) develops, approves and promulgates professional and ethical standards that will govern the professional conduct of auditors. A key initiative for the NZAuASB is to ensure that New Zealand standards are converged with international standards where it is appropriate to do so. The NZAuASB is currently developing as an exposure draft a Code of Ethics that will be applied in New Zealand in respect to audits required to be performed by a licensed auditor or a registered audit firm. This Code is expected to be converged with the relevant parts of IESBA s Code of Ethics unless there is a strong reason for it not to be. At 1 July, 2011 the XRB adopted the Institute s Code, which contains some differences to IESBA s Code. Under the Institute of Chartered Accountants Act 1996, s7(1) the Institute is required to always have a Code of Ethics that governs the professional conduct of its members. The Professional Standards Board (PSB) is a body established by the Rules of the Institute and is charged with developing the Code of Ethics and Professional Standards for approval by NZICA s Board. Consistent with the NZAuASB, the PSB s strategy is to converge with the Code of Ethics of the IESBA unless there is a strong reason not to. The key difference between the NZAuASB s Code and the Institute s one is by whom it is applied. The Institute s Code relates to members carrying out professional services whereas the NZAuASB s Code relates to audits required to be performed by a licensed auditor or a registered audit firm. Maintain existing process 19. April 2012 Provide the NZAuASB with comments on its Exposure Draft. July 2012 PSB and Staff of Page 9 of 15

10 20. April 2012 Revise the Institute s Code of Ethics to be converged with IESBA s Code (unless there is a strong reason for it not to be) for exposure to members in late December 2012 PSB and Staff of Review of NZICA s Compliance Information 21. Perform periodic review of NZICA response to IFAC Compliance Self- Assessment questionnaire and update sections relevant to SMO 4 as necessary. CE and GM Membership/ Standards and Staff of Professional Standards Business Unit Page 10 of 15

11 Action Plan Subject: Action Plan Objective: SMO 5 - International Public Sector Accounting Standards and Other IPSASB Guidance To use best endeavors to support adoption and implementation of IPSASS in New Zealand Background: The External Reporting Board (XRB) is an independent Crown Entity that from 1 July 2011 is responsible for the development and issuing of accounting and auditing and assurance standards in New Zealand. Under a delegation from the XRB the New Zealand Accounting Standards Board (NZASB) develops, approves and promulgates financial reporting standards for application in New Zealand. As required by legislation, the XRB has prepared a financial reporting strategy and this was approved by the Minister of Commerce on 2 April Under the XRB s framework accounting standards for the public sector (Public Benefit Entity Accounting Standards PAS ), being developed and approved by the NZASB, are based on IPSAS standards modified to make them appropriate for New Zealand. They will become effective for periods beginning on or after 1 July The institute is no longer involved in the development of accounting standards in New Zealand, other than in the capacity of providing advocacy on behalf of members. Maintain existing processes 22. Providing input to the NZASB on behalf of members in respect to Exposure Drafts of PASs. 23. Publication of an on-line and hard copy members handbook which includes financial reporting standards applying in New Zealand. Director- Products and 24. Provision of training to members aimed to promote proper implementation of New Zealand s financial reporting standards. Professional Development Page 11 of 15

12 25. Provision of technical updates including information on changes to financial reporting standards. Review of NZICA s Compliance Information 26. Perform periodic review of NZICA response to IFAC Compliance Self- Assessment questionnaire and update sections relevant to SMO 5 as necessary. CE and GM Membership/ Standards and Team Page 12 of 15

13 Action Plan Subject: Action Plan Objective: SMO 6 - Investigation and Discipline Continue to use best endeavors to maintain the operation of a just and effective investigative and disciplinary regime that is in line with the requirements of SMO 6. Background: NZICA s complaints and disciplinary process is mainly concerned with governing its members and the profession. NZICA does not have the powers of a court of law and can therefore not uphold the claims individuals may be able to make in a court or to provide individuals with the remedies that a court may be able to provide them. NZICA s jurisdiction is limited to the discipline of its members for any breach of NZICA s Rules or Code of Ethics. In those circumstances where a complainant seeks recovery of monies in dispute or damages, the alternative civil or legal action will need to be pursued separately. Information on making a complaint about a Chartered Accountant is available, along with a complaint form. Also available is the booklet The Complaints Process which gives some background to the actual complaint process. Maintain existing processes 27. Existing processes are mandated by NZICA s rules and Act of Parliament. Compliance Professional Conduct team Review of NZICA s Compliance Information 28. Ensure that any material changes to our processes comply with the requirements as set by IFAC. Professional Conduct Professional Conduct Staff and legal counsel Page 13 of 15

14 Action Plan Subject: Action Plan Objective: SMO 7 - International Financial Reporting Standards Continue to use best endeavors to ensure that NZ IFRSs continue to apply to entities with public accountability Background: The External Reporting Board (XRB) is an independent Crown Entity that from 1 July 2011 is responsible for the development and issuing of accounting and auditing and assurance standards in New Zealand. Under a delegation from the XRB the New Zealand Accounting Standards Board (NZASB) develops, approves and promulgates financial reporting standards for application in New Zealand. As required by legislation, the XRB has prepared a financial reporting strategy and this was approved by the Minister of Commerce on 2 April Under the XRB s framework accounting standards for the for-profit sector, which are developed and approved by the NZASB, are based on IFRS modified to make them appropriate for New Zealand. New Zealand s general purpose financial reporting regime is required to be applied by for-profit entities that are publicly accountable and/or large. Although the accounting framework has changed, New Zealand s equivalents to IFRS had been adopted by the Accounting Standards Review Board (predecessor to the XRB) since The institute is no longer involved in the development of accounting standards in New Zealand, other than in the capacity of providing advocacy on behalf of members. Maintain existing processes 29. Providing input to the NZASB on behalf of members in respect to Exposure Drafts for NZ IFRS. 30. Publication of an on-line and hard copy member s handbook which includes financial reporting standards applying in New Zealand. Products and 31. Provision of training to members aimed to promote proper implementation of New Zealand s financial reporting standards. Professional Development Page 14 of 15

15 32. Provision of technical updates including information on changes to financial reporting standards Review of NZICA s Compliance Information 33. Perform periodic review of NZICA response to IFAC Compliance Self- Assessment questionnaire and update sections relevant to SMO 7 as necessary CE and GM Membership/ Standards and Team Page 15 of 15