27 Oct 2009

Tougher monitoring of auditors proposed

8:51 am on 27 October 2009

The fallout from the collapses in the finance firm sector continues.

The Government is proposing to strengthen the oversight of auditors and do away with self-regulation in the accounting profession.

Commerce Minister Simon Power says the Accounting Standards Review Board will be responsible for monitoring the regulation of auditors, which will be done by the Institute of Chartered Accountants.

The new licensing system will apply to major audits, such as the audits of issuers and large firms, and will be paid for through levies and fees.

Mr Power says the marginal benefits clearly exceed the marginal costs, given the scale of investor losses that can occur where there is audit failure.

He says it also brings New Zealand into line with international standards.

The new system is expected to be up and running in 2011.

The Registrar of Companies found poor audits contributed to the failure of finance firms.