The timing is not coincidental
The Financial Markets Authority has released a three-year monitoring report covering 60 sets of audited financial statements from FMC-reporting entities, and the message to directors is unusually blunt. Jacco Moison, FMA Head of Audit, Financial Reporting and Climate Related Disclosures, framed reporting quality not as a box-ticking exercise but as a strategic function: “High quality reporting enables investors to assess resilience, understand emerging risks and make well informed decisions with confidence.”
That language matters. The FMA is explicitly telling boards that weak disclosure is a threat to investor trust and, by extension, to their ability to raise capital. Moison followed up with a direct call to action: “Now is the time for directors and management to reinforce robust governance, strengthen financial reporting processes and ensure transparency in areas requiring significant judgement.”
What auditors are actually finding
The three-year review identified a familiar catalogue of weaknesses: disclosures lacking transparency around key judgements and assumptions, inconsistencies in explaining how significant balances are measured, and weak communication of the basis for complex estimates. The one bright spot was that late filings declined over the period. But filing on time while filing poorly is not progress.
The FMA’s separate audit quality monitoring adds sharper detail. The regulator reviewed 9 of 12 registered audit firms and assessed 19 audit files, finding 5 non-compliant files, up from 3 the previous year. New Zealand’s non-compliance rate of 26% sits below the international average of 32%, but the trend is moving the wrong way. The prior year had seen non-compliance drop to 16% from 28%, so the reversal is notable.
Going concern warnings are flashing at post-pandemic highs
This reporting push lands at a moment when the underlying stress in listed companies is intensifying. Chartered Accountants Australia New Zealand data shows auditors have issued going concern warnings for 15% of NZX-listed companies in 2025, up from around 8% in 2023. In Australia, the rate is 30%.
CA ANZ’s Amir Ghandar put it plainly: “Auditors are now flagging greater uncertainty than during the pandemic itself, which shows how sustained economic pressures around liquidity, refinancing and future profitability can be just as challenging for businesses as an acute shock.” The sectors most exposed are consumer staples, health care and information technology, where business models are often capital intensive, dependent on future growth, or exposed to volatile input costs.
Forsyth Barr managing director Neil Paviour-Smith explained the shift from the post-Covid recovery: “You had governments providing subsidies, you had zero interest rates… since then things have tailed off, we’ve had inflation, cost pressures and other factors.”
The reporting stack keeps growing
Directors are not just being asked to do the same job better. They are being asked to do more. The FMA’s climate-related disclosures regime now requires alignment between financial statements and 109 climate statements reviewed in the latest insights report. The three-year monitoring report flagged inconsistencies between financial and climate reporting as a specific problem that undermines user confidence.
Meanwhile, the Conduct of Financial Institutions (CoFI) regime took effect on 31 March 2025, pulling banks, insurers and non-bank deposit-takers under the FMA’s conduct monitoring. Chief executive Samantha Barrass has signalled the regulator’s posture clearly: “We’re taking a no-surprises approach to enable the financial sector… to make sure they’re doing the right thing by their customers.”
The FMA’s latest audit quality report reinforces the through-line: “High-quality audits are vital to ensuring investors can make well-informed choices based on clear, concise, and effective information.”
Boards that treat this as a finance team problem are misreading their exposure
The practical implication is straightforward. When nearly one in six listed companies carries a going concern flag, disclosure quality is not an accounting technicality. It is the mechanism through which investors decide whether a company can weather the next twelve months. Weak disclosures around key judgements and estimates are precisely the areas where directors carry personal liability if those judgements later prove wrong and investors were not adequately informed.
The FMA has made enforcement concrete elsewhere. The cancellation of Saanvi 2022 Limited’s financial advice provider licence for documentation failures and undisclosed arrangements demonstrated that governance and documentation shortcomings are treated as material threats to market integrity.
Directors who still delegate reporting quality entirely to their CFO and auditor are betting that the FMA’s increasingly pointed language will not translate into enforcement action. Given the regulator has just published a three-year evidence base, launched a new conduct regime, and is publicly warning about complacency, that is not a bet most boards should be comfortable making.
Sources
- Scoop: FMA Highlights Importance Of High-Quality Financial Reporting Amid Global Uncertainty (2025-04-14)
- RNZ: Auditors warn big companies may fail (2025-04-09)
- Insurance Business Mag: FMA spotlights audit quality progress and compliance gaps (2024-12-19)
- Interest.co.nz: FMA tells financial services sector ‘we are watching you’ (2025-03-31)
- FMA: Audit Quality Monitoring Report 2025 (2025)
- FMA: Climate-related Disclosures Insights 2025 (2025)
- FMA: Annual Report 2024/25 (2025)
- FMA: Continuous improvements to audit quality and warns against complacency (2023)
- ChangeFlow: FMA Cancels Saanvi 2022 Limited’s FAP Licence (2026-03-30)