The FMA told the Herald in 2021 it had concluded its investigation and found no evidence to support action against Fonterra. However, it had “engaged with” NZICA over the complaint.
NZICA in July 2021 said after an investigation, it had referred the matter to its professional conduct committee.
Around $4 billion - representing 5 per cent of dairy farm equity in New Zealand - was wiped off the balance sheets of Fonterra’s then-10,000 farmer-owners in 2018 and 2019, according to calculations by shareholder watchdog the Fonterra Shareholders’ Council.
At the time Armer said the shareholders had been “badly let down” by the cooperative’s leaders, the council and auditor PwC.
NZICA’s website in a notice of disciplinary tribunal hearings said the charges against one member arose “in the context of the member’s role as engagement partner in the audit of an NZX-listed entity”.
“They concern the member’s audit work performed in respect of documentation of firm independence, impairment and related financial statement disclosures, and letters of representation required from those charged with governance.”
The notice said the charges against the second member “arise in the context of the member’s engagement quality control review of the audit”.
“The charges concern the member’s evaluation of significant judgements made and conclusions reached by the audit team in respect of its work performed on impairment and related financial statement disclosures.”
The hearings on June 22 in Auckland will be held in public.
PwC in a written response to the Herald’s approach about the hearings and charges said: “Delivering quality audits is core to our purpose. We recognise the important role of quality audits in a well-functioning capital market. In recent years, PwC New Zealand has continued to evolve our comprehensive audit quality measures and made substantial quality improvements.
“We continue to work with NZICA on a matter and will provide comment as soon as appropriate and possible,” PwC said.
Fonterra said it had received no notification from NZICA of the disciplinary tribunal hearings “and it would be inappropriate for us to comment further”.
Armer, one of the country’s biggest dairy farmers, had no comment.
A spokesman for NZICA said the institute was not able to confirm the Herald’s understanding that the June 22 hearings related to Fonterra and PwC.
“...we don’t publish those details in advance of hearings. Hearings of the Disciplinary Tribunal are held in public, however our procedure is to deal with any name suppression applications at the start of the hearing. Any suppression orders will apply to everyone, including media outlets. It is important that due process and principles of natural justice are afforded to all participants.
“For the above reasons, we cannot provide further details or comment at this stage regarding the upcoming matter.”
In his 2019 complaint to the FMA, Armer claimed there had been inconsistent valuation methods for the carrying values of Fonterra’s $750m investment in China’s Beingmate company and of China Farms, a $1b loss-making investment.
Fonterra has since sold the farms business and its stake in Beingmate.
In October 2020, PwC told the Herald it had set up an audit advisory board that would “provide guidance and challenge” related to audit quality at the firm.
Fonterra then-CFO Marc Rivers said at that time Fonterra had met with the FMA around the announcement of impairments in 2019 to discuss the methodology and rationale for the decisions around the asset write downs and accounting adjustments.
