Corporations Act 2001

A person (the defendant) contravenes this subsection if:

an audit firm 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 defendant is a member of the audit firm at that time; and

the defendant is or becomes aware of the circumstances referred to in paragraphs (a) and (b); and

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 firm does not continue to engage in audit activity in those circumstances.

A person (the defendant) contravenes this subsection if:

an audit firm 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 audit firm is the auditor of the audited body; and

the defendant is a member of the audit firm at a time when the circumstances referred to in paragraph (b) exist; and

on a particular day (the start day), the defendant becomes aware of the circumstances referred to in paragraphs (a) and (b); and

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

the circumstances referred to in paragraph (b) remain in existence; and

ASIC has not been informed in writing of those circumstances by the defendant, by another member of the audit firm or by someone else on behalf of the audit firm.

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(2B) (public company); or

subsection 328E(4) (public company with crowd‑sourced funding); or

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

subsection 331AH(4) (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 ASIC is given a notice under paragraph (1A)(e), ASIC must, as soon as practicable after the notice is received, give a copy of the notice to the audited body.

A person (the defendant) contravenes this subsection if:

an audit firm 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 defendant is a member of the audit firm at that time.

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).

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

Subsection (4) provides a defence.

A person does not commit an offence because of a contravention of subsection (2) in relation to audit activity engaged in by 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 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 audit firm; 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 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.

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 a firm if the person:

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

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

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

has no financial arrangements with the firm in relation to the accounting and audit practice conducted by the firm, 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 firm; 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 firm; and

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 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.

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.