Explanatory Memorandum
(Circulated by authority of the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP)Chapter 1 - Amendments validating auditor registration
Outline of chapter
1.1 Schedule 1 to the Bill amends the Corporations Act to address the legal consequences arising from a legislative instrument issued by ASIC in November 2004 which approved an auditing competency standard (CPA/ICAA standard) produced by CPA Australia and the Institute of Chartered Accountants in Australia.
Context of amendments
1.2 Section 1280 of the Corporations Act gives ASIC the power to register a person as an auditor in response to an application made by the person.
1.3 Subparagraph 1280(2)(b)(i) makes it a condition of ASIC's approval that the applicant has satisfied all the components of an auditing competency standard approved by ASIC.
1.4 Section 1280A of the Corporations Act provides that ASIC may, on application by any person, approve an auditing competency standard for the purposes of paragraph 1280(2)(b).
1.5 In November 2004 ASIC approved an auditing competency standard (CPA/ICAA standard) produced by CPA Australia and the Institute of Chartered Accountants in Australia under section 1280A of the Corporations Act.
1.6 The instrument approving the CPA/ICAA standard may be a legislative instrument for the purposes of the Legislation Act. The Legislation Act requires that legislative instruments be registered within a certain period for it to be valid.
1.7 However, the instrument was not lodged for registration by 1 December 2005 as required by the Legislation Act, and on this basis it may be taken to have been repealed by section 32 of the Legislation Act on 2 December 2005.
1.8 As a result, the validity of the registration of an auditor on the basis of this competency standard since 1 December 2005 is uncertain.
Summary of new law
1.9 The Bill amends the Corporations Act so that auditors registered from 1 December 2005 on the basis of the CPA/ICAA competency standard, as approved by ASIC in 2004 under section 1280A of the Corporations Act, are validly registered with effect from the date of their purported registration.
Detailed explanation of new law
1.10 For the avoidance of doubt, the Bill amends the Corporations Act so that it holds that an approval, an approval of a variation or revocation of an approval of an auditing competency standard are legislative instruments. [Schedule 1, item 1, subsection 1280A(5)]
1.11 The Bill amends the Corporations Act to retrospectively ensure that the Legislation Act has effect, and has always had effect, as if approval of the CPA/ICAA competency standard had been lodged and registered immediately after it was given, and that all other requirements of the Legislation Act are taken to have been met. [Schedule 1, item 2, section 1298P]
1.12 This has the effect of validating the registration of auditors who had applied for registration under the CPA/ICAA competency standard after 1 December 2005.
1.13 The Bill also amends the Corporations Act to displace the operation of section 1350 in circumstances where the effects of section 1298P may result in the acquisition of property from a person otherwise than on just terms. [Schedule 1, item 2, section 1298Q]
Consequential amendments
1.14 Nil
Application and transitional provisions
1.15 The amendments in this Bill will apply from the date of Royal Assent.