About the Guide to support the application of the Auditor-General's Code of Ethics

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All auditors must be familiar with and abide by the International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board (hereafter referred to as PES 1 or the international Code).

The Auditor-General of New Zealand is responsible for the audits of every public entity in New Zealand.1 In fulfilling that role, the Public Audit Act 2001 (the Act) places expectations on the Auditor-General that are not adequately met by the requirements of PES 1. PES 1 is based on an international Code for the private sector.

For this reason, auditors who carry out work on behalf of the Auditor-General are required to apply the Auditor-General’s Code of Ethics (the Auditor-General’s Code).

This Guide to support the application of the Auditor-General’s Code of Ethics (the Guide) has been prepared to help auditors apply the Auditor-General’s Code of Ethics by detailing how the Auditor-General's requirements fit with or supplement PES 1.

The Guide assumes, and the Auditor-General expects, that auditors will be familar with and refer back to PES 1. It is important to emphasise that the requirements of the Auditor-General’s Code exceed the requirements of PES 1.

What entities does the Auditor-General’s Code apply to?

As well as being the auditor of all public entities, the Auditor-General is also the auditor of a few entities that are not public entities, under section 19 of the Act. The Guide also applies to any work carried out on behalf of the Auditor-General for a “section 19 entity”.

An overseas subsidiary of a public entity is not a public entity and the Auditor-General cannot directly regulate the activities of the auditor of an overseas subsidiary. The Auditor-General expects the group auditor to issue instructions that will ensure that important aspects of the Auditor-General’s auditing standards will be met by the auditor of the overseas subsidiary.

Where the auditor of the overseas subsidiary is part of the group auditor’s network firm, the subsidiary auditor shall comply with the Auditor-General’s auditing standards (including the requirements of the Auditor-General’s Code) because the group auditor must be able to assert compliance with the Auditor-General’s auditing standards in forming their opinion on the group financial statements and performance information (where relevant).

This Guide must be read alongside PES 1

The Guide must be read alongside, and is therefore structured for ease of reference back to, the relevant text of PES 1:

  • Introductory sections in PES 1
  • Part 1 of PES 1 – Complying with the Code, fundamental principles, and conceptual framework
  • Part 2 of PES 1 – Assurance practitioners performing professional activities pursuant to their relationship with the firm
  • Part 3 of PES 1 – Application of the code, fundamental principles and conceptual framework
  • Part 4A of PES 1 – Independence for audit and review engagements and
  • Glossary and Effective date in PES 1.

Within each of these sections, the Auditor-General's expectations are explained in three ways:

  • Commentary explains the Auditor-General’s overall approach or provides context.
  • Requirements are exactly that.
  • Application material provides further guidance on the Auditor-General’s requirements.

The paragraph numbering follows the paragraph numbering in PES 1. For example:

  • paragraph AG 1.1 of the Guide follows paragraph 1 of PES 1;
  • paragraph AG 100.5 A1 of the Guide follows paragraph 100.5 A1 of PES 1; and
  • paragraphs AG R100.8 A1.1 and AG R100.8 A1.2 of the Guide follow paragraphs R100.8 and 100.8 A1 of PES 1.

Copyright notice

Users of the Guide must not adapt, modify, or publish this document or the contents of this document (in any form or media) without the prior written permission of the Auditor-General.

1: Public entity is defined in section 5 of the Public Audit Act 2001.