1190 NEW ZEALAND GAZETTE, No. 40 5 APRIL 2012

3. Prescribed minimum standards—(1) An applicant for accreditation must meet, or demonstrate it will on becoming accredited meet, the following minimum standards:

Governance and Organisational Structures

(a) The applicant must have an adequate and effective organisational structure and governance arrangements, which will support the adequate and effective performance of the regulatory functions of an accredited body, including:

(i) having an adequate constitution that sets out the responsibilities and authority of the governing body, including providing the governing body with sufficient authority and powers to effectively govern the organisation in accordance with its mandate and objectives and to otherwise ensure the obligations of the organisation are appropriately discharged;

(ii) having a clearly defined organisational mandate and objectives, which are consistent with the purposes of the Act and provide a basis for the applicant to perform regulatory functions under the Act;

(iii) having a governing body that is responsible and accountable for ensuring the sound management of the entity, and which ensures the sound management of the entity, in accordance with its mandate and objectives, including ensuring audit regulatory systems are adequate and effective, and regulatory functions are appropriately and effectively carried out in accordance with those audit regulatory systems;

(iv) having adequate and effective requirements, policies and processes regarding the composition of, and appointments to, the governing body, including ensuring that the governing body includes an acceptable number or proportion of appropriate independent directors;

(v) having any committees which are necessary or desirable for the proper and effective governance of the organisation or for the adequate and effective performance of regulatory functions under the Act, including ensuring the role, responsibilities, authority and membership of each of those committees is appropriate, and each committee is subject to appropriate reporting obligations and oversight by the governing body, or the applicant’s management;

(vi) ensuring the role, responsibilities, authority, membership criteria, and reporting and oversight arrangements for all committees which have a role in the governance of the organisation or a role in relation to regulatory functions under the Act are set out in the constitution or terms of reference approved by the governing body in accordance with the constitution;

(vii) having an appropriate internal structure that ensures responsibility for work related to regulatory functions is clearly and appropriately assigned, the authority and powers of staff at each level are clearly defined and appropriate, and the reporting lines and systems for accountability are adequate and effective; and

(viii) where the applicant’s functions or powers are delegated, having adequate and effective systems, policies and processes for granting and documenting the delegations, ensuring any delegations granted are appropriate, and overseeing the exercise of those delegations.

(b) The applicant must have adequate and effective systems, policies and processes for managing conflicts of interest, which cover members of the governing body, persons appointed to committees, and staff and contractors of the accredited body.

Personnel

(c) The applicant must have adequate and effective systems, policies and processes for ensuring that the members of its governing body, persons appointed to committees, and staff and contractors, with functions or responsibilities relating to the governance of the organisation or to the performance of regulatory functions:

(i) have the skills, knowledge and experience required of their position or role; and

(ii) are fit and proper persons to be involved in the regulation of auditors.

(d) The applicant must have adequate and effective systems, policies and processes for ensuring that the members of each committee or team responsible for performing regulatory functions collectively have the skills, knowledge and experience required to adequately and effectively perform the functions of that committee or team in accordance with relevant audit regulatory systems.

Resources to Perform Regulatory Functions

(e) The applicant must be financially sustainable, including:

(i) having sufficient income to meet its expenses;

(ii) having sufficient financial resources to meet any necessary, planned or committed capital expenditure (including any costs associated with implementing systems, policies and processes, or creating or obtaining infrastructure required for the purposes of the Act); and

(iii) having sufficient access to funds to accommodate reasonable but unforeseen expenditure demands.

(f) The applicant must allocate sufficient, appropriate resources (including financial, technological, and human resources) for the performance of its audit regulatory systems, such that its regulatory functions can be carried out adequately and effectively.

(g) The applicant’s resourcing arrangements must provide sufficient flexibility to allow for changes to the organisation’s audit regulatory systems which are necessary or desirable as a result of changes to external circumstances or where potential improvements are identified.

(h) The applicant must have a physical presence in New Zealand and must identify which of its regulatory functions will be:

(i) performed in New Zealand;

(ii) partially performed in New Zealand, but carried out with support from overseas; or

(iii) performed from outside New Zealand.

(i) The New Zealand-based branch or office must be adequately resourced for the functions carried out at that branch or office.