26 Nov 2018

Lazy auditing of KiwiSaver finances highlighted by regulators

6:40 pm on 26 November 2018

Auditors need to be more rigorous, consistent and independent, according to their regulator.

Hand with pen over application form on blure water glass background

The Financial Markets Authority's review of auditors found they are sometimes too reliant on financial information provided by company directors. Photo: 123rf

The Financial Markets Authority's (FMA) annual review of auditors has found they are sometimes too reliant on financial information provided by company directors, and the auditing of KiwiSaver funds and investment schemes WAs often inadequate.

FMA director of capital markets Garth Stanish said auditors must challenge the information provided to them.

"They should be generally using professional scepticism. It's a really important part of the auditor's job."

"They're a really important component in ensuring investors are getting good quality financial information," Mr Stanish said.

The FMA reviewed 24 audit files from five firms and some listed companies.

It was pleased with four, while 20 needed some or significant improvements, most of which were KiwiSaver funds, forestry and property investment schemes.

Mr Stanish said that was cause for concern because investors put a lot of money behind such schemes.

The report said auditors did not look beyond third parties which confirmed what KiwiSaver funds had invested in, or beyond property valuers' reports.

It said auditors painted all forestry investments with the same brush, and did not account for differences in the type of land, its condition and access to it, all of which would vary their value.

Mr Stanish said all accredited audit firms showed an interest in its findings.