The New Zealand Financial Markets Authority has published its 2024/25 Audit Quality Monitoring Report, providing a snapshot of its monitoring of audit firms and highlighting areas of strength alongside issues requiring further focus to improve audit quality. Reviews this year examined whether firms appropriately designed and performed procedures to test the effectiveness of their quality management systems and how they complied with auditing and assurance standards across the audit files reviewed. Three main findings were flagged: auditors did not always obtain sufficient evidence to verify the accuracy and completeness of related party disclosures; while firms implemented Professional and Ethical Standard 3, the operational effectiveness of quality management systems needs improvement; and variable remuneration for CEOs and senior managers can increase risks of management override and fraud, requiring stronger auditor documentation of how these risks are assessed and addressed. The report also includes early observations on mandatory assurance for climate statements and oversight of overseas licensed auditors and registered audit firms. The review covered 6 of New Zealand’s 12 registered audit firms and 14 audit files, including 8 for listed entities. Most audit firms are expected to be subject to a review in the upcoming year.
New Zealand Financial Markets Authority 2025-11-12
New Zealand Financial Markets Authority publishes 2024/25 audit quality monitoring report identifying evidence gaps, quality management weaknesses and fraud risk considerations
The New Zealand Financial Markets Authority released its 2024/25 Audit Quality Monitoring Report, identifying key areas for improvement in audit quality, including insufficient evidence for related party disclosures, the need for enhanced quality management systems, and risks associated with variable remuneration. The report also provides early insights on mandatory climate statement assurance and oversight of overseas auditors.