Auditing & Assurance Standards Framework
The framework sets down a suite of standards for auditing and assurance engagements in New Zealand.
Various New Zealand enactments require assurance practitioners to comply with the auditing and assurance standards issued by the XRB (including professional and ethical standards for assurance practitioners).
The NZAuASB is the sub-board of the XRB with delegated authority to develop and issue auditing and assurance standards. These are issued under section 12(b) of the Financial Reporting Act 2013. They have legal standing.
XRB Au1 is the overarching standard which gives effect to the framework. It identifies and codifies the auditing and assurance standards that must be applied for the different types of assurance engagements and related services.
There are five suites of standards:
- Professional and Ethical Standards;
- International Standards on Auditing (New Zealand) (ISAs (NZ));
- Review Engagement Standards including International Standards on Review Engagements (New Zealand) (ISRE (NZ)) and New Zealand Standard on Review Engagements (NZ SRE);
- Other Assurance Engagements Standards including Standards on Assurance Engagements (SAEs) and International Standards on Assurance Engagements (New Zealand) (ISAEs (NZ)); and
- Related Services Standards including International Standard on Related Services (New Zealand) (ISRS (NZ))
XRB Au1 establishes which suite of standards applies when conducting an assurance engagement or related service:
- All assurance practitioners are required to apply the professional and ethical standards in preparing for and conducting an assurance engagement.
- Assurance practitioners conducting an audit of historical financial information are required to apply International Standards on Auditing (New Zealand).
- Assurance practitioners conducting a review of historical financial information are required to apply Review Engagement Standards.
- Assurance practitioners conducting assurance engagements other than audits or reviews of historical financial information are required to apply Other Assurance Engagement Standards.
- Assurance practitioners conducting agreed-upon procedures to information and other related services engagements as specified by the NZAuASB are required to apply Related Services Standards.
Explanatory Guide Au 1, (EG Au1) Overview of Auditing and Assurance Standards, provides further detailed information and guidance.
Diagram showing an Overview of the Auditing & Assurance Standards Framework
The Explanatory Guides are explanatory documents and have no legal status.
The XRB’s legislative mandate is restricted to standards relating for use in assurance engagements required by statute. The Board may also issue standards relating to Other Assurance Engagements where there is no statutory requirement for assurance, provided the Minister of Commerce authorises the XRB to do so.
The XRB’s legislative mandate includes related services, meaning services to perform agreed-upon procedures or other non-assurance work that may ordinarily be carried out by an audit or assurance practitioner.
The NZAuASB also issues:
- Guidance Statements and Practice Statements which provide guidance on interpreting and applying auditing and assurance standards;
- Consultation documents, such as consultation papers and exposure drafts; and
- Explanatory documents.
None of the above, however, have legal status.
Other points to note
- Professional bodies (e.g. Chartered Accountants Australia and New Zealand) may also require members who are assurance practitioners to comply with the XRB auditing and assurance standards (including professional and ethical standards for assurance practitioners).
- XRB standards may be applied by assurance practitioners even if there is no statutory requirement for them to do so. But when applied voluntarily, all of the applicable standards need to be applied to ensure that the assurance engagement is of appropriate quality.