1. © 2012 Grant Thornton New Zealand Audit Partnership. All rights reserved. Audit assurance challenges and changing futures Not-For-Profit Sector Finance Conference Te Papa, Wellington 4 September 2012

2. © 2012 Grant Thornton New Zealand Audit Partnership. All rights reserved. Session outline What should an audit produce? Is this what is needed? The cost vs. the benefit from audit Some comments on the Financial Reporting Bill 2012 Other important developments

3. © 2012 Grant Thornton New Zealand Audit Partnership. All rights reserved. What should an audit produce? An independent assessment of assertions (ie "presents fairly" or "true and fair") Consideration of the internal controls environment Feedback on financial condition of the organisation

4. © 2012 Grant Thornton New Zealand Audit Partnership. All rights reserved. What can we learn from the past? The audit process provides a focus for accountability You cannot have half an audit – like being pregnant: it's all or nothing Audits have identified fraud and error Audits have also failed to identify fraud and error The taxation implications of being a not-for-profit can be wide-ranging

5. © 2012 Grant Thornton New Zealand Audit Partnership. All rights reserved. Levels of assurance Financial statement audit (positive assurance) Review of financial statements (negative assurance) Agreed upon procedures (no expression of an opinion but statement of facts) Special purpose assurance assignments

6. © 2012 Grant Thornton New Zealand Audit Partnership. All rights reserved. The cost vs. the benefit International Standards of Auditing (New Zealand) outline certain minimum requirements that all auditors in this country must follow Is audit a commodity or a process? –What is the best thing to have come out of an audit that you have been involved with? –What do seek most out of an audit? To whom should the audit fee be addressed and who should pay for it?

7. © 2012 Grant Thornton New Zealand Audit Partnership. All rights reserved. Harness and unlock value Value Time X X X

8. © 2012 Grant Thornton New Zealand Audit Partnership. All rights reserved. The Financial Reporting Bill 2012 Tabled in Parliament on 31 July 2012 Audit requirements are aligned to public accountability, economic significance and separation Dovetails into the Auditor Regulation Act 2011 and there are now "licensed auditors" for cover certain not for profit entities Incorporated Societies are still to be captured

9. © 2012 Grant Thornton New Zealand Audit Partnership. All rights reserved. Other important developments MED Discussion Paper on the audit of not-for- profits Explain that the Reduced Disclosure Regime means more concise financial statements, but not less accounting work as the same recognition and measurement requirements as for "full" IPSAS Working alongside your auditor (if one is appointed) Dealing with transition

10. © 2012 Grant Thornton New Zealand Audit Partnership. All rights reserved. Questions and comments