New Zealand’s Financial Monetary Authority (FMA) released a report last week showing that the generally audit quality has improved but ‘the challenge of inconsistencies persist’.
In an official statement that accompanied the report’s release, the FMA expressed concern the report showed little evidence of ‘professional scepticism’ when it comes to monitoring transactions and the accuracy of disclosures of related parties and related parties’ transactions.
The report for the period between July 2018 and June of this year, which is part of three-year monitoring cycle, has continually raised issues around independence.
“While the incremental improvement in overall audit quality is positive and is important to recognise, the issues we’ve seen—within and outside the sample in this annual review—tend to repeat. FMA surveys and a range of international reviews demonstrate that the industry needs to work hard to build confidence amongst the users of audit work, both as to audit quality and to the independence of audit,” FMA Chief Executive Rob Everett said.
The FMA Chief added that, “Directors and company management also need to step up, as they are responsible for maintaining good accounting records, providing auditors with high-quality information, and ensuring audit is given sufficient time and resources to do an effective job.”