The Financial Markets Authority says it has updated its Audit Director's Guide.

The 12-page handbook offers guidance for directors and shareholders of New Zealand FMC reporting entities about how to improve audit quality.

The FMA notes that one of a director's key responsibilities is to ensure their organisation's financial statements fairly represent the business and comply with IFRS.

The guide covers directors' responsibilities, how to select an audit firm, auditor independence requirements and the audit processes.

The FMA says it expects directors to read and consider the guide carefully.

Audit Quality Report

The FMA has also released a 2018 report on Audit Quality. It says it reviewed 5 registered firms and 24 audit files for the report. Nine were listed companies and the other 15 were FMC Act companies.

At 30 June 2018 there were 138 domestic licensed auditors, 19 domestic registered audit firms, 190 NZX-listed companies and 1,300 FMC audits.

While there were improvements in almost all areas, the FMA says its main concern is that policies and proceduers are not consistently applied across all audits within an audit firm.