Quality assurance of auditors

We have a quality control system that supports auditors and other staff in complying with auditing standards and meeting relevant ethical, legal, and regulatory requirements.

Our quality control system includes:

  • a committee (the Audit Quality and Performance Governance Committee) of senior and suitably qualified staff who monitor the quality of audit products and provide the Auditor-General with assurance that we’re complying with auditing standards;
  • internal quality reviews; and
  • external quality reviews.

Internal quality reviews

audit-quality-stepsEach year, we review the quality of financial audits and performance audits.

Reviews of financial audits can happen before the audit report is issued or after the audit is finished. Reviews of performance audits happen after the audit is complete.

The reviews cover all of the audits carried out on the Auditor-General’s behalf – those carried out by Audit New Zealand and those carried out on behalf of the Auditor-General by external audit service providers.

We usually carry out 50-60 reviews of financial audits a year, as well as three reviews of performance audits. We also normally ask the Australian National Audit Office to review two performance audits and provide us with feedback and suggestions.

The results of the reviews are reported to the Audit Quality and Performance Governance Committee. It makes sure that the conclusions and any remedial actions are communicated to the Auditor-General, the Office’s Audit and Risk Committee, audit teams, and our audit service providers.

External quality reviews

External reviews provide additional scrutiny of our quality control systems and processes and help benchmark their effectiveness.

For example, in the last few years we have been subject to, or participated in:

  • a review by the Financial Markets Authority of Audit New Zealand’s system of quality control and a sample of issuer audits, carried out in 2017;
  • a review by the Financial Markets Authority of two audits on our behalf by EY and Deloitte in 2017 and 2019; and
  • a review of our practices by the Chartered Accountants of Australia and New Zealand in 2017.

Ensuring the quality of work by our audit service providers

Our ability to deliver high-quality audits depends on the quality of work carried out by the auditors we chose to work with – our external audit service providers.

Our audit service providers are required to comply with our policies, including policies about managing independence, conflicts of interest, and other audit-related policies. They are also subject to our internal quality assurance reviews, as well as their firm’s own internal quality review processes.

Our proactive supervision of the audit service providers aims to ensure that the work they do for each audit achieves the required quality.

Opinion Review Committee

To maintain consistency as well as high quality, we have a committee that deals with complex technical matters that our auditors come across. The Opinions Review Committee is responsible for considering matters involving significant accounting judgements and estimates, complex transactions, modifications to our auditor’s reports, and issues creating precedent or affecting a range of organisations that we audit.

The Opinions Review Committee consider issues in detail and from multiple perspectives. The committee is chaired either by the Auditor-General or the Deputy Auditor-General and includes senior audit executives. The Audit Quality Group provides technical support.

Safeguarding our independence

Independence is fundamental to our work. We have strong policies to safeguard our independence, including requirements to declare conflicts of interest and limits on the number of years that senior team members can audit the same organisations.

Auditing firms are sometimes asked to carry out reviews or provide consultancy advice to the organisations that they audit. We have a standard that covers whether those other engagements can be accepted. They can only be accepted when the independence of the audit opinion is properly protected and preserved.

The audit service providers have to get our approval before they can accept those other engagements. We approve these requests only after a rigorous assessment to ensure that our independence – through the independence of our audit service providers – is preserved.

Our mandate under the Public Audit Act 2001 permits us to perform additional assurance work (such as probity reviews) where we are requested to so. Before accepting these engagements (or approving our audit service providers to do so), our audit service providers are required to evaluate whether these are permissible under the Auditor-General’s Auditing Standard AG PES 1.

We monitor compliance with these policies and our approach to accepting (or approving our audit service providers to accept) other engagements so our independence is beyond reproach.

Page last updated: 15 April 2021