THE CORPORATIONS LAW

CHAPTER 8 - THE FUTURES INDUSTRY

PART 8.5 - FINANCIAL STATEMENTS AND AUDIT

SECTION 1215   APPOINTMENT OF AUDITOR BY FUTURES BROKER  

1215(1)  [Broker to appoint auditor]  

Within 1 month after becoming the holder of a futures brokers licence, a futures broker (other than an Australian ADI) shall appoint a person or persons, a firm or firms, or a person or persons and a firm or firms, as auditor or auditors to audit the broker's financial statements.

1215(2)  [Restrictions on person appointed]  

Subject to this section, a person shall not:

(a)  consent to be appointed as auditor of a futures broker; or

(b)  act as auditor of a futures broker; or

(c)  prepare a report required by this Law to be prepared by an auditor of a futures broker;

if:

(d)  the person is not a registered company auditor; or

(e)  the person, or a body corporate in which the person has a substantial holding, is indebted in an amount exceeding $5,000 to the futures broker or, if the futures broker is a body corporate, to a body corporate related to the futures broker; or

(f)  the person is a partner or employee of the futures broker; or

(g)  in a case where the futures broker is a body corporate - the person is:

(i) an officer of the body; or

(ii) a partner, employer or employee of an officer of the body; or

(iii) a partner or employee of an employee of an officer of the body.

1215(3)  [Restrictions on firm appointed]  

Subject to this section, a firm shall not:

(a)  consent to be appointed as an auditor of a futures broker; or

(b)  act as auditor of a futures broker; or

(c)  prepare a report required by this Law to be prepared by an auditor of a futures broker;

unless:

(d)  at least one member of the firm is a registered company auditor who is ordinarily resident in Australia; and

(e)  where the business name under which the firm is carrying on business is not registered under a law of a State or Territory relating to the registration of business names - there has been lodged a return in the prescribed form showing, in relation to each member of the firm, the member's full name and address as at the time when the firm so consents, acts or prepares a report; and

(f)  no member of the firm, and no body corporate in which any member of the firm has a substantial holding, is indebted in an amount not exceeding $5,000 to the futures broker or, if the futures broker is a body corporate, to a body corporate that is related to the futures broker; and

(ga)  no member of the firm is a partner or employee of the futures broker; and

(g)  in a case where the futures broker is a body corporate - no member of the firm is:

(i) an officer of the body; or

(ii) a partner, employer or employee of an officer of the body; or

(iii) a partner or employee of an employee of an officer of the body; and

(h)  in a case where the futures broker is a body corporate - no officer of the body receives any remuneration from the firm for acting as a consultant to it on accounting or auditing matters.

1215(4)  [Indebtedness to body corporate]  

For the purposes of paragraphs (2)(e) and (3)(f), disregard a debt owed by a natural person to a body corporate if:

(a)  the body corporate is:

(i) an Australian ADI; or

(ii) a body corporate registered under the Life Insurance Act 1995; and

(b)  the debt arose because of a loan that the body corporate or entity made to the person in the ordinary course of its ordinary business; and

(c)  the person used the amount of the loan to pay the whole or part of the purchase price of premises that the person uses as their principal place of residence.

1215(5)  [Deemed officer of body corporate]  

For the purposes of subsections (2) and (3), a person shall be deemed to be an officer of a body corporate if:

(a)  the person is an officer of a related body corporate; or

(b)  except where the Commission, if it thinks fit in the circumstances of the case, directs that this paragraph shall not apply in relation to the person - the person has, at any time within the immediately preceding period of 12 months, been an officer or promoter of the body corporate or of a related body corporate.

1215(6)  [Liquidator not an officer]  

For the purposes of this section, a person shall not be taken to be an officer of a body corporate by reason only of being or having been the liquidator of the body corporate or of a related body corporate.

1215(7)  [Other persons not ``officers'']  

For the purposes of this section, a person shall not be taken to be an officer of a body corporate by reason only of having been appointed as an auditor of that body corporate or of a related body corporate or, for any purpose relating to taxation, a public officer of a body corporate or by reason only of being or having been authorised to accept on behalf of the body corporate or a related body corporate service of process or any notices required to be served on the body corporate or related body corporate.

1215(8)  [Deemed appointment of firm members]  

The appointment of a firm as auditor of a futures broker shall be deemed to be an appointment of all persons who are members of the firm and are registered company auditors, whether resident in Australia or not, at the date of the appointment.

1215(9)  [Death etc of member]  

Where a firm that has been appointed as auditor of a futures broker is reconstituted by reason of the death, retirement or withdrawal of a member or members or by reason of the admission of a new member or new members, or both:

(a)  a person who was deemed under subsection (8) to be an auditor of the broker and who has so retired or withdrawn from the firm as previously constituted shall be deemed to have resigned as auditor of the company as from the day of the person's retirement or withdrawal but, unless that person was the only member of the firm who was a registered company auditor and, after the retirement or withdrawal of that person, there is no member of the firm who is a registered company auditor, section 1216 does not apply to that resignation;

(b)  a person who is a registered company auditor and who is so admitted to the firm shall be deemed to have been appointed as an auditor of the broker as from the day of admission; and

(c)  the reconstitution of the firm does not affect the appointment of the continuing members of the firm who are registered company auditors as auditors of the broker;

but nothing in this subsection affects the operation of subsection (3).

1215(10)  [Dissolution of firm]  

Except as provided by subsection (9), the appointment of the members of a firm as auditors of a futures broker that is deemed by subsection (8) to have been made by reason of the appointment of the firm as auditor of the broker is not affected by the dissolution of the firm.

1215(11)  [Report or notice by firm]  

A report or notice that purports to be made or given by a firm appointed as auditor of a futures broker shall not be taken to be duly made or given unless it is signed, in the firm name and in the name of the member concerned, by a member of the firm who is a registered company auditor.

1215(12)  [Notice of appointment to Commission]  

Where a person or firm is appointed as an auditor under subsection (1) (not being an appointment that is deemed to be made by virtue of subsection (9)) or under subsection (16), the futures broker shall, within 14 days after the appointment, lodge with the Commission a notice in writing stating that the broker has made the appointment and specifying the name of the person or firm.

1215(13)  [Each firm member guilty of offence]  

Without limiting the generality of section 1311, if, in contravention of this section, a firm consents to be appointed, or acts as, an auditor of a futures broker or prepares a report required by this Law to be prepared by an auditor of a futures broker, each member of the firm is guilty of an offence.

1215(14)  [Knowing disqualification]  

A person shall not:

(a)  if the person has been appointed auditor of a futures broker - knowingly disqualify himself or herself while the appointment continues from acting as auditor of the broker; or

(b)  if the person is a member of a firm that has been appointed auditor of a futures broker - knowingly disqualify the firm while the appointment continues from acting as auditor of the broker.

1215(15)  [Duration of office]  

An auditor of a futures broker holds office until death, until removal or resignation from office in accordance with section 1216 or until becoming prohibited from acting as auditor by reason of subsection (2) or (3).

1215(16)  [Vacancy]  

Within 14 days after a vacancy occurs in the office of an auditor of a futures broker, if there is no surviving or continuing auditor of the broker, the broker shall appoint a person or persons, a firm or firms or a person or persons and a firm or firms to fill the vacancy.

1215(17)  [Surviving or continuing auditors]  

While a vacancy in the office of an auditor continues, the surviving or continuing auditor or auditors (if any) may act.

1215(18)  [Consent to act as auditor]  

A futures broker shall not appoint a person or firm as auditor of the broker unless that person or firm has, before the appointment, consented by notice in writing given to the broker to act as auditor and has not withdrawn the consent by notice in writing given to the broker.

1215(19)  [Body corporate excluded]  

This section does not apply in relation to a body corporate (except a proprietary company) in relation to which section 327 applies.