Corporations Act. Australia

      324CF Auditor independence — specific requirements for audit firm

      Contraventions by members of audit firm

      (1) A person (the defendant) contravenes this subsection if:

      (a) an audit firm engages in audit activity at a particular time; and

      (b) a relevant item of the table in subsection 324CH(1) applies at that time to a person or entity covered by subsection (5) of this section; and

      (c) the defendant is a member of the audit firm at that time; and

      (d) the defendant is or becomes aware of the circumstances referred to in paragraphs (a) and (b); and

      (e) the defendant does not, as soon as possible after the defendant becomes aware of those circumstances, take all reasonable steps to ensure that the audit firm does not continue to engage in audit activity in those circumstances.

      Member of audit firm to notify ASIC

      (1A) A person (the defendant) contravenes this subsection if:

      (a) an audit firm is the auditor of an audited body; and

      (b) a relevant item of the table in subsection 324CH(1) applies to a person or entity covered by subsection (5) of this section while the audit firm is the auditor of the audited body; and

      (c) the defendant is a member of the audit firm at a time when the circumstances referred to in paragraph (b) exist; and

      (d) on a particular day (the start day), the defendant becomes aware of the circumstances referred to in paragraphs (a) and (b); and

      (e) at the end of the period of 7 days from the start day:

      (i) the circumstances referred to in paragraph (b) remain in existence; and

      (ii) ASIC has not been informed in writing of those circumstances by the defendant, by another member of the audit firm or by someone else on behalf of the audit firm.

      Note: If the audited body is a public company or a registered scheme and the notice under this subsection is not followed up by a notice under subsection 327B(2B) (public company) or 331AAA(2B) (registered scheme) within the period of 21 days (or a longer period that has been approved by ASIC) from the day the notice under this subsection is given, the audit appointment will be terminated at the end of that period.

      (1B) A person is not excused from informing ASIC under subsection (1A) that the circumstances referred to in paragraph (1A)(b) exist on the ground that the information might tend to incriminate the person or expose the person to a penalty.

      (1C) However:

      (a) the information; and

      (b) the giving of the information;

      are not admissible in evidence against the person in a criminal proceeding, or any other proceeding for the recovery of a penalty, other than proceedings for an offence based on the information given being false or misleading.

      (1D) If ASIC is given a notice under paragraph (1A)(e), ASIC must, as soon as practicable after the notice is received, give a copy of the notice to the audited body.

      Contravention of independence requirements by members of audit firm

      (2) A person (the defendant) contravenes this subsection if:

      (a) an audit firm engages in audit activity at a particular time; and

      (b) a relevant item of the table in subsection 324CH(1) applies at that time to a person or entity covered by subsection (5) of this section; and

      (c) the defendant is a member of the audit firm at that time.

      (3) For the purposes of an offence based on subsection (2), strict liability applies to the physical elements of the offence specified in paragraphs (2)(a) and (b).

      Note 1: For strict liability, see section 6.1 of the Criminal Code.

      Note 2: Subsection (4) provides a defence.

      (4) A person does not commit an offence because of a contravention of subsection (2) in relation to audit activity engaged in by an audit firm at a particular time if the person has reasonable grounds to believe that the audit firm had in place at that time a quality control system that provided reasonable assurance (taking into account the size and nature of the audit practice of the audit firm) that the audit firm and its employees complied with the requirements of this Subdivision.

      Note: A defendant bears an evidential burden in relation to the matters in this subsection, see subsection 13.3(3) of the Criminal Code.

      People and entities covered

      (5) The following table sets out:

      (a) the persons and entities covered by this subsection in relation to audit activity engaged in by an audit firm; and

      (b) the items of the table in subsection 324CH(1) that are the relevant items for each of those persons and entities: