New Zealand is an anomaly among its trading partners in not having an independent watchdog overseeing auditors, the accounting profession says.
The industry is working with the Ministry of Economic Development on a briefing paper for the Government on what such an agency would look like.
Thirty-one countries now have
independent bodies overseeing the standards of auditors and New Zealand is lagging behind in staying self-regulating, says Tim Shaw, a practitioner who is also on the Institute of Chartered Accountants' practice review unit. He said New Zealand needed a system of registering auditors to ensure they were up to scratch. "Some auditors because of their lack of competence and experience ... should never be registered."
He said the real estate industry had been ineffectively regulating itself, and had now had regulation imposed upon it.
Deloitte chief executive Murray Jack did not agree that industry standards were necessarily the issue.
"If you're thinking more deeply about the quality of our capital markets and the reputation of our regulatory framework, then you're led to conclude fairly quickly that some form of independent oversight is appropriate."
PricewaterhouseCoopers partner Graeme Pinfold said the big firms were all governed by international standards and oversights anyway, so it was more of a perception issue.
The problem for a small economy like New Zealand was to find a practical way of making it work without too much bureaucracy or cost.
David Hay, head of accounting and finance at the University of Auckland Business School, said countries started putting independent oversight in place in the wake of scandals such as Enron.
He said the big four accounting firms and the Securities Commission wrote to the Government about it in 2007 and there had been an earlier MED report, but nothing had happened.
Apart from the collapse of the finance company sector New Zealand had not had a large financial scandal, but it might be only a matter of time.
"Then everyone around the world will say, why didn't you regulate that kind of thing when you had the chance?"
