Nash Stuart: Auditor Regulation and External Reporting Bill — In Committee 
Nash Stuart: Auditor Regulation and External Reporting Bill — In Committee 
[Volume:672;Page:18312] 
STUART NASH (Labour) 
: 
 As the Minister in the chair the Hon Georgina te Heuheu has outlined in her speech Part 4 of the Auditor Regulation and External Reporting Bill talks about amendments to the Financial Reporting Act. More specifically the major grunt of this part is the External Reporting Board. There are a couple of things. Obviously as I mentioned before such a large piece of legislation has a number of implications for other Acts of Parliament especially those that have a financial basis or a commerce base. But this is quite a big change because we are talking about the External Reporting Board and we are talking about Part 3 here of the Act. 
In terms of this bill clause 88 inserts new section 22 “Continuation of External Reporting Board” in the principal Act. The External Reporting Board is a Crown entity for the purposes of section 7 of the Crown Entities Act. As the Minister outlined this is the same body—as everyone will know—as the Accounting Standards Review Board. 
Hon Clayton Cosgrove 
: Oh! 
STUART NASH 
: Yes the Accounting Standards Review Board. In fact it might have been set up by Aaron Gilmore—I am not too sure; maybe I am wrong there. 
Hon Clayton Cosgrove 
: He conquered Everest as well. 
STUART NASH 
: Ha ha! But just so that people understand what this board is about I say it has no fewer than four people and no more than nine members. According to the Act “The Minister must not recommend a person for appointment as a member of the Board unless in the opinion of the Minister that person is qualified for appointment by reason of his or her knowledge of or experience in business accounting auditing finance economics … ”. I assume of course that the Minister will seek advice and will be given advice. The word “qualified” is quite a subjective word but again I assume that the Minister will seek advice and that the people who will be appointed will be incredibly competent independent and absolutely know what they are doing. There are a number of them around this country and I am sure they will be lining up to go on this board. 
New section 24 “Functions of Board” states: “The Board has the following functions” which are basically “(a) to prepare and if it thinks fit issue financial reporting standards …”. Again I have a little concern over that language especially the expression “if it thinks fit”. I do not even know why that is there. I do not know why the bill does not just state “to prepare and issue financial reporting standards”. “If it thinks fit” is reasonably subjective. I ask what the test is there and whether board members are to have a meeting around the coffee table and say they think that they should do this. I think it is probably wise that we take out some of the subjective language and just state: “The board has the following functions: to prepare and issue financial reporting standards for the purposes of the Act the Crown Entities Act the Public Finance Act the Local Government Act and any Act that requires a person to comply with this Act as if that person were a reporting entity.” Paragraph (b) states “to prepare and”—it uses this term again—“if it thinks fit issue auditing and assurance standards for—(i) the purposes of this Act;” or of another Act. 
The board must act independently. That is most important. We have said time and time again that the purpose of this Act—as is the purpose of a number of bills that have passed through this House recently—is to restore the confidence of the investing public. This bill is slightly different from the other bills because we are talking about Crown entities here but in a way it is just as important because taxpayers absolutely need to know that about the companies they own and if we listen to that Government over there the companies that it is going to sell down. In fact one may find that this part of the Act is not necessary because when the Government sells down all the State-owned assets there will not be any need to report on assets owned by the Crown or on State-owned enterprises as there will not be any left. Who knows—I suspect that might be the case. We do know that that Government is to sell down State assets and we do know that it has committed to selling down State assets just as we know that the Prime Minister said today in question time that he is not ruling out appointing Don Brash as finance Minister in this term. Did members see Mr English’s face when he said that? Mr English’s face just dropped. He thought: “Oh my God! Am I going to be stabbed in the back by Don Brash again?”. 
But anyway I will go back to the bill. The board must act independently which I think is absolutely vital as does the Committee obviously and as does every member in this House because we are all voting for this provision. I will just outline new section 25 which is to be substituted in the Financial Reporting Act by clause 88: “Except as expressly provided otherwise in this or another Act the Board must act independently in performing its statutory functions and duties and exercising its statutory powers under—(a) this Act; and (b) any other Act …”. 
New section 26 “Consultation” which is also to be substituted in the Act by clause 88 states: “(1) The Board must not issue a specified standard or an amendment to a specified standard unless the Board has taken reasonable steps to consult with persons or organisations or representatives … who in the opinion of the Board would be affected by … the standard …”.