In brief – Audit newsletter Issue 1 / 2017


Upcoming AML/CFT reform

The second phase of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) legislation is currently being developed by the government, with a bill expected to be passed by parliament in mid-2017. The law will come into effect in stages for different sectors between July 2018 and July 2019. This legislation is likely to affect the following when they undertake certain transactions (eg real estate or business sales): lawyers, conveyancers, accountants, real estate agents, the gambling sector, and some businesses that deal in high-value goods.

According to the Ministry of Justice consultation paper, proposed compliance requirements include:

  • Develop and maintain an AML/CFT risk assessment and compliance programme
  • Conduct customer due diligence (that is, asking for and verifying customers’ identification) in a wider range of circumstances
  • Conduct enhanced customer due diligence (such as verifying source of funds) when conducting high-risk transactions
  • Proactively monitor accounts to identify and where appropriate, report suspicious activity to the Financial intelligence unit of NZ Police
  • Retain records of documents associated with transactions (including the nature, amount, currency, date, and parties involved) for not less than five years
  • Report transactions or proposed transactions to the Financial intelligence unit of NZ Police if you reasonably suspect they involve money laundering or the proceeds of crime
  • Meet audit and annual reporting requirements
  • Be supervised by an appropriate authority.

We will keep you informed of any developments. We have experience in auditing and assisting clients to meet phase one audit requirements and would be happy to assist or provide guidance to those phase two clients that require it once the legislation comes out.

 

Incorporated Societies Act

As discussed in previous editions of Audit News, the Incorporated Societies Act 1908 is being revised. Currently, proposed changes to financial reporting will require all Incorporated Societies prepare financial statements under the relevant tier of the Public Benefit Entity (PBE) standards issued by the New Zealand Accounting Standards Board of the External Reporting board.

The Ministry of Business Innovation and Employment is currently analysing submissions on the draft bill.  By mid-2017, it will report to Ministers regarding any changes needed to the draft bill. At this stage, the bill will be introduced to Parliament in 2018, coming into force between 2021 and 2023.

We shall keep you up to date with once the new bill is out. In the meantime, we continue to recommend that Incorporated Societies adopt the new PBE standards.

 

New MOE reporting requirements for ECEs

In its Early Learning Funding Update – April 2017, the Ministry of Education has said that ECE services, which receive Ministry income of more than $80,000 and completed a full financial year in 2016, must send audited financial statements to the MOE by 30 June 2017. There is the option of either applying the new PBE financial reporting standards or continue to follow existing Ministry reporting requirements.

From the 2016/17 financial year (reporting due to the Ministry 30 June 2018), all services required to follow the new reporting standards will be expected to do so – this is essentially all registered Charities. The Ministry will advise those services not required to report under the new accounting standards for the year end 2017 what to do.

We have confirmed with the Ministry that ECEs with operating expenditure under $500,000 are not required to have the Statement of Service Performance or Entity Information statement audited.

 

Team News

Annual conference upskills our team

In February, our teams from around New Zealand converged on Wellington for our annual Moore Stephens New Zealand conference. This was a great time for us to discuss and learn about changes in the audit and financial reporting world, and touch base with our colleagues from Australia.

Christchurch

After almost 30 years as partner, Richard Ineson has retired from Moore Stephens Markhams. You can read more about Richard’s contributions and his future plans here. 

Richard’s retirement led to the opportunity of amalgamating the Christchurch and Auckland audit practices, which took place on 1 April this year. The current audit team in Christchurch is still based there and led by Desere Arbuthnot, with Craig Hemphill now head of both Auckland and Christchurch Audit.

We are expecting to add two new members to the Christchurch audit team shortly.

Auckland

In addition to the news outlined above, we welcomed Stuart Hansen late last year. Stuart qualified with one of the big four firms before embarking on a career with St John Ambulance before rejoining audit.

Wellington

We’re currently in the busy season with auditing over 50 schools and colleges on behalf of the Auditor General.

We have recently acquired two Wellington-based audit practices, and welcome these new clients to our care. This is testament to our commitment to being a dedicated audit and assurance practice.

Daniel Trail recently joined as an auditor.

 

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