Plain language law

New Zealand law explained for everyone

Companies Act 1993

Accounting records and financial reporting - Financial reporting - Audit of financial statements

206: Application of audit requirement

You could also call this:

“When companies must have their financial statements audited”

Section 207 applies to several types of companies. You need to follow this section if you’re a large company, a public entity, or a large overseas company. It also applies if your company has 10 or more shareholders. However, if you have fewer than 10 shareholders, you can choose to follow this section if you want to.

There are some exceptions to these rules. If you’re a large company, you can choose not to follow Section 207 if you follow the steps in Section 207J. If you’re a large overseas company, you might not have to follow Section 207 in some cases. This can happen if you prepare financial statements under Section 201 or 202, Section 204 doesn’t apply to you, and the laws in your home country require you to prepare financial statements but don’t require them to be audited.

When we talk about financial statements for overseas companies, we mean statements that are the same or very similar to the ones mentioned in the New Zealand law.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321101.

Topics:
Business > Industry rules
Business > Fair trading
Previous

205: Balance date of subsidiaries, or

“Aligning financial year-ends for parent companies and their subsidiaries”

Next

207: Financial statements must be audited, or

“Companies need to have their financial statements checked by a qualified auditor”

Part 11 Accounting records and financial reporting
Financial reporting: Audit of financial statements

206Application of audit requirement

  1. Section 207 applies to—

  2. every large company unless subsection (2) applies; and
    1. every company that is a public entity; and
      1. every large overseas company unless subsection (3) applies; and
        1. every company with 10 or more shareholders unless the company has opted out of compliance with that section in accordance with section 207I; and
          1. every company with fewer than 10 shareholders if the company has opted into compliance with the section in accordance with section 207K.

            1. Subsection (1)(a) does not apply to a large company (A) if A has opted out of compliance with section 207 in accordance with section 207J.

            2. Subsection (1)(c) does not apply to a large overseas company (B) in relation to a balance date if—

            3. financial statements or group financial statements are prepared in respect of B under section 201 or 202 in relation to the balance date; and
              1. section 204 does not apply to B in relation to the balance date; and
                1. under the law in force in the country where B is incorporated or constituted,—
                  1. qualifying financial statements are required to be prepared in respect of B in relation to the balance date; but
                    1. the qualifying financial statements so prepared are not required to be audited.

                    2. In subsection (3)(c), qualifying financial statements means financial statements that are equivalent, or substantially equivalent, to the financial statements or group financial statements referred to in subsection (3)(a).

                    Notes
                    • Section 206: replaced, on , by section 30 of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).
                    • Section 206(1)(c): replaced, on , by section 23(1) of the Regulatory Systems (Commercial Matters) Amendment Act 2017 (2017 No 12).
                    • Section 206(2): replaced, on , by section 23(2) of the Regulatory Systems (Commercial Matters) Amendment Act 2017 (2017 No 12).
                    • Section 206(3): inserted, on , by section 23(3) of the Regulatory Systems (Commercial Matters) Amendment Act 2017 (2017 No 12).
                    • Section 206(4): inserted, on , by section 23(3) of the Regulatory Systems (Commercial Matters) Amendment Act 2017 (2017 No 12).