Corporations Act. Australia
an entity that the firm (or a service company or trust acting for, or on behalf of, the firm, or another entity performing a similar function) controls
15
9
a body corporate in which the firm (or a service company or trust acting for, or on behalf of, the firm, or another entity performing a similar function) has a substantial holding
15
10
an entity that a member of the firm controls or a body corporate in which a member of the firm has a substantial holding
15
11
a person who:
(a) is a former member of the firm; and
(b) does not satisfy the independence test in subsection (7)
1 and 2
12
a person who:
(a) is a former professional employee of the firm; and
(b) does not satisfy the independence test in subsection (7)
1 and 2
Maximum hours test
(6) A non‑audit services provider satisfies the maximum hours test in this subsection if:
(a) the number of hours for which the person provides services (other than services related to the conduct of an audit) to the audited body on behalf of the auditor during the period to which the audit relates does not exceed 10 hours; and
(b) the number of hours for which the person provided services (other than services related to the conduct of an audit) to the audited body on behalf of the auditor during the 12 months immediately before the beginning of the period to which the audit relates does not exceed 10 hours.
In a prosecution for an offence based on subsection (1) or (2), the prosecution must prove that the non‑audit services provider did not satisfy the maximum hours test in this subsection.
Independence test
(7) A person satisfies the independence test in this subsection in relation to a firm if the person:
(a) does not influence the operations or financial policies of the accounting and audit practice conducted by the firm; and
(b) does not participate, or appear to participate, in the business or professional activities of the accounting and audit practice conducted by the firm; and
(c) does not have any rights against the firm, or the members of the firm, in relation to the accounting and audit practice conducted by the firm in relation to the termination of, or the value of, the person’s former partnership interest in the firm; and
(d) has no financial arrangements with the firm in relation to the accounting and audit practice conducted by the firm, other than:
(i) an arrangement providing for regular payments of a fixed pre‑determined dollar amount which is not dependent, directly or indirectly, on the revenues, profits or earnings of the firm; or
(ii) an arrangement providing for regular payments of a dollar amount where the method of calculating the dollar amount is fixed and is not dependent, directly or indirectly, on the revenues, profits or earnings of the firm; and
(e) without limiting paragraph (d), has no financial arrangement with the firm to receive a commission or similar payment in relation to business generated by the person for the accounting and audit practice conducted by the firm.
In a prosecution for an offence based on subsection (1) or (2), the prosecution must prove that the person did not satisfy the independence test in this subsection in relation to the firm.
(8) In applying subsection (7), disregard any rights that the person has against the firm, or the members of the firm, by way of an indemnity for, or contribution in relation to, liabilities incurred by the person when the person was a member or employee of the firm.
Meaning of holding by firm in body corporate
(9) For the purposes of item 9 in the table in subsection (5), a firm is taken to have a holding in a body corporate if the holding is one of the firm’s partnership assets.
324CG Auditor independence — specific requirements for audit company
Specific independence requirements for audit company
(1) An audit company contravenes this subsection if:
(a) the audit company 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 (9) of this section; and
(c) the audit company is or becomes aware of the circumstances referred to in paragraph (b); and
(d) the audit company does not, as soon as possible after the audit company becomes aware of those circumstances, take all reasonable steps to ensure that the audit company does not continue to engage in audit activity in those circumstances.
Audit company to notify ASIC
(1A) An audit company contravenes this subsection if:
(a) the audit company 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 (9) of this section while the audit company is the auditor of the audited body; and
(c) on a particular day (the start day), the audit company becomes aware of the circumstances referred to in paragraph (b); and
(d) at the end of the period of 7 days from the start day:
(i) those circumstances remain in existence; and
(ii) the audit company has not informed ASIC in writing of those circumstances.
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(2C) (public company) or 331AAA(2C) (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) If the audit company gives ASIC a notice under paragraph (1A)(d), ASIC must, as soon as practicable after the notice has been received, give a copy of the notice to the audited body.
Strict liability contravention of specific independence requirements by audit company
(2) An audit company contravenes this subsection if:
(a) the audit company 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 (9) of this section.
(3) For the purposes of an offence based on subsection (2), strict liability applies to the physical elements of the offence specified in paragraph (2)(b).
Note 1: For strict liability, see section 6.1 of the Criminal Code.
Note 2: Subsection (4) provides a defence.
(4) An audit company does not commit an offence because of a contravention of subsection (2) in relation to audit activity engaged in by the audit company at a particular time if the audit company has reasonable grounds to believe that the audit company had in place at that time a quality control system that provided reasonable assurance (taking into account