CORPORATIONS ACT 2001 - SECT 324CA General requirement for auditor independence--auditors
CORPORATIONS ACT 2001 - SECT 324CA
General requirement for auditor independence--auditorsContravention by individual auditor or audit company
(1) An individual auditor or audit company contravenes this subsection if:
(a) the individual auditor or audit company engages in audit activity in relation to an audited body at a particular time; and
(b) a conflict of interest situation exists in relation to the audited body at that time; and
(i) in the case of an individual auditor--the individual auditor is aware that the conflict of interest situation exists; or
(ii) in the case of an audit company--the audit company is aware that the conflict of interest situation exists; and
(d) the individual auditor or audit company does not, as soon as possible after the individual auditor or the audit company becomes aware that the conflict of interest situation exists, take all reasonable steps to ensure that the conflict of interest situation ceases to exist.
Note: For conflict of interest situation , see section 324CD.
Individual auditor or audit company to notify ASIC
(1A) An individual auditor or audit company contravenes this subsection if:
(a) the individual auditor or audit company is the auditor of an audited body; and
(b) a conflict of interest situation exists in relation to the audited body while the individual auditor or audit company is the auditor of the audited body; and
(c) on a particular day (the start day ):
(i) in the case of an individual auditor--the individual auditor becomes aware that the conflict of interest situation exists; or
(ii) in the case of an audit company--the audit company becomes aware that the conflict of interest situation exists; and
(d) at the end of the period of 7 days from the start day:
(i) the conflict of interest situation remains in existence; and
(ii) the individual auditor or audit company has not informed ASIC in writing that the conflict of interest situation exists.
Note 1: For conflict of interest situation , see section 324CD.
Note 2: If the audited body is a public company, a registered scheme or a registrable superannuation entity, the audit appointment will be terminated at the end of the period of 21 days (or a longer period that has been approved by ASIC) from the day a notice under this subsection is given if the notice is not followed up by a notice under:
(a) subsection 327B(2A) or (2C) (public company); or
(b) subsection 328E(3) or (5) (public company with crowd - sourced funding); or
(c) subsection 331AAA(2A) or (2C) (registered scheme); or
(d) subsection 331AH(3) or (5) (registrable superannuation entity).
(1B) A person is not excused from informing ASIC under subsection (1A) that a conflict of interest situation exists on the ground that the information might tend to incriminate the person or expose the person to a penalty.
(1C) 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.
(1D) If the individual auditor or 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.
Conflict of interest situation of which individual auditor or audit company is not aware
(2) An individual auditor or audit company contravenes this subsection if:
(a) the individual auditor or audit company engages in audit activity in relation to an audited body at a particular time; and
(b) a conflict of interest situation exists in relation to the audited body at the time; and
(i) in the case of an individual auditor--the individual auditor is not aware that the conflict of interest situation exists; or
(ii) in the case of an audit company--the audit company is not aware that the conflict of interest situation exists; and
(d) the individual auditor or the audit company would have been aware of the existence of the conflict of interest situation at that time if the individual auditor or audit company had had in place a quality control system reasonably capable of making the individual auditor or audit company aware of the existence of such a conflict of interest situation.
Note: For conflict of interest situation , see section 324CD.
(3) For the purposes of an offence based on subsection (2), strict liability applies to the physical element of the offence specified in paragraph (2)(b).
Note 1: For strict liability , see section 6.1 of the Criminal Code .
Note 2: Subsections (4) and (5) provide defences.
(4) An individual auditor does not commit an offence because of a contravention of subsection (2) in relation to audit activity engaged in by the auditor at a particular time if the individual auditor has reasonable grounds to believe that the individual auditor 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 individual auditor) that the individual auditor and the individual auditor'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 .
(5) 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 the size and nature of the audit practice 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 .
Relationship between obligations under this section and other obligations
(6) The obligations imposed by this section are in addition to, and do not derogate from, any obligation imposed by:
(a) another provision of this Act; or
(b) a code of professional conduct.
Note: Paragraph (a)--see, for example, the specific obligations
imposed by Subdivision B.