Corporations Act 2001

An individual auditor contravenes this subsection if:

the individual auditor engages in audit activity at a particular time; and

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

the individual auditor is or becomes aware of the circumstances referred to in paragraph (b); and

the individual auditor does not, as soon as possible after the individual auditor becomes aware of those circumstances, take all reasonable steps to ensure that the individual auditor does not continue to engage in audit activity in those circumstances.

An individual auditor contravenes this subsection if:

the individual auditor is the auditor of an audited body; and

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 individual auditor is the auditor of the audited body; and

on a particular day (the start day), the individual auditor becomes aware of the circumstances referred to in paragraph (b); and

at the end of the period of 7 days from the start day:

those circumstances remain in existence; and

the individual auditor has not informed ASIC in writing of those circumstances.

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:

subsection 327B(2A) (public company); or

subsection 328E(3) (public company with crowd‑sourced funding); or

subsection 331AAA(2A) (registered scheme); or

subsection 331AH(3) (registrable superannuation entity).

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.

However:

the information; and

the giving of the information;

If the individual auditor 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.

An individual auditor contravenes this subsection if:

the individual auditor engages in audit activity at a particular time; and

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.

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).

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

Subsection (4) provides a defence.

An individual auditor does not commit an offence because of a contravention of subsection (2) in relation to audit activity engaged in by the individual 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.

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

The following table sets out:

the persons and entities covered by this subsection in relation to audit activity engaged in by an individual auditor; and

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

A non‑audit services provider satisfies the maximum hours test in this subsection if:

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

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 12 months immediately before the beginning of the period to which the audit relates does not exceed 10 hours.

Paragraphs (6)(a) and (b) do not apply if:

the audited body is a registrable superannuation entity; and

the services are required or permitted to be provided under the prudential standards (within the meaning of the Superannuation Industry (Supervision) Act 1993).

A person satisfies the independence test in this subsection in relation to an individual auditor if the person:

does not influence the operations or financial policies of the accounting and audit practice conducted by the auditor; and

does not participate, or appear to participate, in the business or professional activities of the accounting and audit practice conducted by the auditor; and

does not have any rights against the auditor in relation to the accounting and audit practice conducted by the auditor in relation to the termination of the person’s former employment by the auditor; and

has no financial arrangements with the auditor in relation to the accounting and audit practice conducted by the auditor, other than:

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 auditor; or

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 auditor; and

without limiting paragraph (d), has no financial arrangement with the auditor to receive a commission or similar payment in relation to business generated by the person for the accounting and audit practice conducted by the auditor.

In applying subsection (7), disregard any rights that the person has against the auditor by way of an indemnity for, or contribution in relation to, liabilities incurred by the person when the person was an employee of the auditor or the owner of the auditor’s business.