Lotu-Iiga Sam: Auditor Regulation Bill Financial Reporting Amendment Bill — Third Readings 
Text is incorporated into the Bound Volume 
Lotu-Iiga Sam: Auditor Regulation Bill Financial Reporting Amendment Bill — Third Readings 
[Sitting date: 11 May 2011. Volume:672;Page:18625. Text is incorporated into the Bound Volume.] 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 It is my honour to stand and speak to the third readings of the Auditor Regulation Bill and the Financial Reporting Amendment Bill.  
As has already been stated there are basically two major changes in these bills. First they consolidate all financial reporting auditing and assurance standards within a single Crown entity. It will be called the External Reporting Board and will be in full operation by 1 July this year. Secondly—and I think more important—the legislation introduces auditor licensing for issuer audits. More specifically it recognises that audits of companies that manage substantial public investments or where large amounts of money are obtained from the public must be performed by the top members of the auditing profession. We saw that as has already been outlined by previous speakers in 2009 when the Registrar of Companies expressed grave concerns about the capability of some of the auditors and audit firms to carry out finance company audits to the required or minimum standard.  
This legislation provides that the licensing of auditors will be carried out by the Institute of Chartered Accountants and by any other professional accounting body that may be accredited by the newly formed Financial Markets Authority. The authority will set the minimum licensing standards and this reform as was stated by the Minister of Commerce is another step in this Government’s ongoing work programme to restore investor confidence in our financial sector to restore confidence among mum and dad investors and to bring about the more effective and more efficient running of our capital markets.  
Of course the previous speaker Clare Curran said that not much had been done but let me outline some of the things that this Government has done in 2½ years: the Financial Service Providers (Pre-Implementation Adjustments) Bill the Financial Advisers Amendment Bill the Insolvency Practitioners Bill and the Insurance (Prudential Supervision) Bill as well as the regulation of exchanges and settlement systems. That is a record of achievement it is a record that this Government is proud to take into the upcoming election and it is a record that far exceeds anything that Labour did in the last 9 years of its administration.  
The Commerce Committee recommended a number of amendments to strengthen the legislation and the most significant of those was to provide for auditing firms to be registered. Firm registration will be permitted if the firm includes at least one licensed auditor and meets any other requirements imposed by the Financial Markets Authority. That change which is particularly important and was discussed round the committee table—and there seemed to be some consensus on it—reflected the fact that audit quality which is paramount within this legislation is reliant on two specific matters. The first is the competence of the practitioner or the individual who takes the audit. The second is the quality of the auditing firm’s systems processes and procedures. At firm level it is about quality of assurance of the firm that undertakes the audit.  
I support this legislation obviously. It is legislation that reserves issuer audits to experts and it substantially reduces the future risk of audit-issuer failure. I commend these bills to the House. Thank you.