Corporations Act. Australia
If a listed company, or the responsible entity of a listed registered scheme, does not have an audit committee:
(a) an approval under section 324DAA must not be granted unless the directors of the company or scheme are satisfied that the approval:
(i) is consistent with maintaining the quality of the audit provided to the company or scheme; and
(ii) would not give rise to a conflict of interest situation (as defined in section 324CD); and
(b) the resolution granting the approval must set out the reasons why the directors are so satisfied.
Auditor must have agreed to extension
(4) The directors of a listed company, or of a listed registered scheme, must not grant an approval under section 324DAA unless:
(a) if the individual to whom the approval relates does not act on behalf of an audit firm or company — the individual agrees, in writing, to the approval being granted; or
(b) if the individual to whom the approval relates acts on behalf of an audit firm or company — the audit firm or company on whose behalf the individual acts agrees, in writing, to the approval being granted.
324DAC Notifications about approval to extend eligibility term
If the directors of a listed company, or of a listed registered scheme, grant an approval under section 324DAA, the directors must, within 14 days of granting the approval:
(a) lodge a copy of the resolution granting the approval with ASIC; and
(b) give a copy of the resolution to:
(i) if the individual to whom the approval relates does not act on behalf of an audit firm or company — the individual; and
(ii) if the individual to whom the approval relates acts on behalf of an audit firm or company — the audit firm or company on whose behalf the individual acts.
Note: Details of the approval, and the reasons for the approval, must be included in the directors’ report under section 300.
324DAD Approval ineffective unless it complies with requirements
A purported grant of approval under section 324DAA is ineffective unless the requirements of sections 324DAA, 324DAB and 324DAC are complied with in relation to the approval.
324DB Individual’s rotation obligation
An individual contravenes this section if the individual:
(a) plays a significant role in the audit of a listed company or listed registered scheme for a financial year; and
(b) is not eligible to play that role.
324DC Audit firm’s rotation obligation
Contraventions by members of audit firm
(1) A person (the defendant) contravenes this subsection if:
(a) an audit firm consents to act as a listed company’s or listed registered scheme’s auditor for a financial year; and
(b) an individual acts, on behalf of the firm, as a lead or review auditor in relation to the audit of the company’s or scheme’s financial report for that financial year; and
(c) the individual is not eligible to play a significant role in the audit of the company or scheme for that financial year; and
(d) the defendant is a member of the firm; and
(e) the defendant is not the individual and is or becomes aware that the individual is not eligible to play that role; and
(f) the defendant fails to take the necessary steps, as soon as possible after the defendant becomes aware that the individual is not eligible to play that role, either:
(i) to ensure that the audit firm resigns as auditor of the company or scheme; or
(ii) to ensure that the individual ceases to act, on behalf of the audit firm, as a lead or review auditor in relation to the audit of the company or scheme for that financial year.
(2) A person (the defendant) contravenes this subsection if:
(a) an audit firm consents to act as a listed company’s or listed registered scheme’s auditor for a financial year; and
(b) an individual acts, on behalf of the firm, as a lead or review auditor in relation to the audit of the company’s or scheme’s financial report for that financial year; and
(c) the individual is not eligible to play a significant role in the audit of the company or scheme for that financial year:
(i) because of section 324DAD; or
(ii) for any other reason; and
(d) the defendant is a member of the firm.
(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) and subparagraph (2)(c)(ii).
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 an individual acting as lead or review auditor on behalf of 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 Division.
Note: A defendant bears an evidential burden in relation to the matters in this subsection, see subsection 13.3(3) of the Criminal Code.
324DD Audit company’s rotation obligation
Contravention by audit company
(1) An audit company contravenes this subsection if:
(a) the audit company consents to act as a listed company’s or listed registered scheme’s auditor for a financial year; and
(b) an individual acts, on behalf of the audit company, as a lead or review auditor in relation to the audit of the company’s or scheme’s financial report for that financial year; and
(c) the individual is not eligible to play a significant role in the audit of the company or scheme for that financial year; and
(d) a director of the audit company (other than the individual) is aware that the individual is not eligible to play that role; and
(e) the audit company fails to take the necessary steps, as soon as possible after the director becomes aware that the individual is not eligible to play that role, either:
(i) to resign as auditor of the company or scheme; or
(ii) to ensure that the individual ceases to act, on behalf of the audit company, as a lead or review auditor in relation to the audit of the company or scheme for that financial year.
Contraventions by directors of audit company
(2) A person (the defendant) contravenes this subsection if:
(a) an audit company consents to act as a listed company’s or listed registered scheme’s auditor for a financial year; and
(b) an individual acts, on behalf of the audit company, as a lead or review auditor in relation to the audit of the company’s or scheme’s financial report for that financial year; and
(c) the individual is not eligible to play a significant role in the audit of the company or scheme for that financial year; and
(d) the defendant is a