Corporations Act. Australia
of the audit company) that the audit company and the audit company’s 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.
Contraventions by directors of audit company
(5) A person (the defendant) contravenes this subsection if:
(a) an 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 defendant is a director of the audit company 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 company does not continue to engage in audit activity in those circumstances.
Director of audit company to notify ASIC
(5A) A person (the defendant) contravenes this subsection if:
(a) an 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) the defendant is a director of the audit company 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 director of the company or by the audit company.
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.
(5B) A person is not excused from informing ASIC under subsection (5A) that the circumstances referred to in paragraph (5A)(b) exist on the ground that the information might tend to incriminate the person or expose the person to a penalty.
(5C) However, if the person is a natural person:
(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.
(5D) If ASIC is given a notice under paragraph (5A)(e), ASIC must, as soon as practicable after the notice is received, give a copy of the notice to the audited body.
Strict liability contravention of specific independence requirements by director of audit company
(6) A person (the defendant) contravenes this subsection if:
(a) an 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 defendant is a director of the audit company at that time.
(7) For the purposes of an offence based on subsection (6), strict liability applies to the physical elements of the offence specified in paragraphs (6)(a) and (b).
Note 1: For strict liability, see section 6.1 of the Criminal Code.
Note 2: Subsection (8) provides a defence.
(8) A person does not commit an offence because of a contravention of subsection (6) in relation to audit activity engaged in by an audit company at a particular time if the person 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 the size and nature of the audit practice of the audit company) that the audit company 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
(9) The following table sets out:
(a) the persons and entities covered by this subsection in relation to audit activity engaged in by an audit company; and
(b) the items of the table in subsection 324CH(1) that are the relevant items for each of those persons and entities:
Audit company
Item
For this person or entity…
the relevant items of the table in subsection 324CH(1) are…
1
the audit company
4
7
10 to 19
2
a service company or trust acting for, or on behalf of, the audit company, or another entity performing a similar function
4
7
10 to 19
3
a director or senior manager of the audit company
1 to 7
9
15
4
a professional member of the audit team conducting the audit of the audited body
1 to 6
8 to 19
5
an immediate family member of a professional member of the audit team conducting the audit of the audited body
1 and 2
10 to 19
6
a person who:
(a) is a non‑audit services provider; and
(b) does not satisfy the maximum hours test in subsection (10)
10 to 12
7
an immediate family member of a person who:
(a) is a non‑audit services provider; and
(b) does not satisfy the maximum hours test in subsection (10)
10 to 12
8
an