The Auditor-General's Auditing Standards
Note: The Auditor-General's Auditing Standards are published every three years but are more regularly updated (the updates are summarised in our annual report). All appointed auditors should be logging in to The Auditors' Homepage to access the most recent version of any of the Auditor-General's Auditing Standards.
The Auditor-General's auditing standards have been updated (published 18 March 2014). Significant revisions are noted below:
Alignment of independence and ethics statements – AG PES 1 (Revised)
The External Reporting Board has issued a single standard based on the international professional and ethics standard on Code of Ethics for Assurance Practitioners, which applies to all assurance engagements after April 2014. Previously, there were two separate standards on Code of Ethics and Independence.
As a result, we have combined the requirements contained in our two statements (AG PES 1 and AG PES 2). There are no significant changes in requirements as a result of this alignment, although some minor consequential changes have been made in the Glossary, AG PES 3, and AG-1.
One of these minor consequential changes is the inclusion of a new appendix in AG PES 1 (Revised) that reconciles the requirements contained in PES-1 (Revised) and AG PES 1 (Revised).
New auditing statement – AG ISA (NZ) 600
A new statement on the audit of groups replaces the guidance document previously provided on the Auditors’ Homepage.
This new statement contains requirements that the group appointed auditor and the auditors of components are to work cooperatively as if they are part of the same audit firm, and covers situations where:
- a component is a public entity, in which case the requirements in AG ISA (NZ) 600 do not apply because all public entities are audited by the one auditor – the Auditor-General; or
- a component is not a public entity, because the component is not controlled by public entities or because the component is not domiciled in New Zealand.
New requirements on letters of support – AG ISA (NZ) 570
We have included a new requirement in AG ISA (NZ) 570 that requires auditors to include an “emphasis of matter” or “other matter” paragraph in the audit report when an entity has obtained a letter of support from its parent or from another entity (such as a bank). Previously, we have not provided specific guidance in this situation, and most auditors have not included reference in an audit report to the fact that the entity has obtained a letter of support because that letter has resolved the uncertainties over the use of the going-concern assumption.
In our view, the fact that a letter of support has been required is fundamental to a readers’ understanding of the financial statements, which makes it appropriate to include a reference to this fact in the audit report. This change has also been made in anticipation of the introduction of AG ISA (NZ) 701, which is likely to require the auditor to provide positive assurance in the audit report on going-concern matters.
Fix of an example audit report – AG ISA (NZ) 705
We have made some minor changes to the example 2 audit report to resolve some omissions in the basis of opinion that were identified by an Office of the Auditor-General Opinion Review Committee and to align the opinion section with the format used in AG ISA (NZ) 705. We have included the words “would ordinarily” throughout the basis of opinion because the example 2 audit report is a full disclaimer on all elements to be audited.
Page last updated: 18 March 2014