Curran Clare: Auditor Regulation and External Reporting Bill — In Committee 
Curran Clare: Auditor Regulation and External Reporting Bill — In Committee 
[Volume:672;Page:18313] 
CLARE CURRAN (Labour—Dunedin South) 
: 
 I will take a call on Part 4 of the Auditor Regulation and External Reporting Bill regarding amendments to the Financial Reporting Act 1993. I will take up just some of the important issues that my learned colleague Stuart Nash has mentioned with regard to independence. 
The independence issue is really important. It is about the arm’s-length issue of the authority. I remind members in the Chamber today and the public who are watching why we have this important legislation and what it underpins which is the as yet untested body called the Financial Markets Authority. The authority is a new consolidated market conduct regulator. It is a regulator. In this environment—in the context of the global financial crisis the collapse of financial companies in New Zealand and the issues that we are seeing in terms of anti-competitive behaviour in the market places right now particularly within the telecommunications market—we need regulation. There is an important place for regulation in New Zealand and a regulator around financial markets is absolutely critical. The independence of that regulator is also really critical and absolutely essential for a vibrant thriving and healthy democracy. 
The Financial Markets Authority is new. It started on 1 May 2011. In fact I was just looking for a website and there is a website for the Financial Markets Authority. The website is looking quite cool—one is allowed to say that in Parliament. The authority will perform the regulatory functions currently undertaken by the Securities Commission and some of those undertaken by the Government Actuary and the Companies Office. 
I will also say tonight while we are talking about the importance of the auditing profession that the actuary profession which always seemed a little bit obscure to me—as I am sure it does for many people in the community—is also an important profession. The Financial Markets Authority Act which was formerly part of the Financial Markets (Regulators and KiwiSaver) Bill established the Financial Markets Authority. One of the important things to stress again tonight is that Labour did much of the preliminary groundwork around the bill that is before us today and around the establishment of the Financial Markets Authority in terms of its importance and the principles that underline it. Although it is important to put on record that the Commerce Committee has done a lot of good work and that the Minister of Commerce Simon Power has done a lot of good work essentially Labour kicked off this process. 
With regard to Part 4 and the functions of the External Reporting Board which goes back to the core principle of independence the select committee recommended that clause 88 which inserts a new section into the Financial Reporting Act be amended in three ways. Firstly the External Reporting Board should be allowed to issue auditing and assurance standards for purposes approved by the responsible Minister. That would allow standard setting to be comprehensively consolidated within one body. Secondly the board should be allowed to give guidance on accounting policies that have authoritative support. Thirdly the committee recommended removing references to professional and ethical standards as a separate type of standard. Instead auditing and assurance standards would include professional and ethical standards. 
I just note that the new section 29 as amended states that those standards may without limitation—and I know that my learned colleague—