Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (103 of 2004)

Schedule 1   Audit Reform

Part 3   Auditor appointment, independence and rotation requirements

Corporations Act 2001

105   After section 342

Insert:

342A ASIC's power to modify the operation of section 324DA

(1) On an application made in accordance with this section, ASIC may:

(a) declare that subsection 324DA(1) applies to a registered company auditor, in relation to the audit of an audited body or a class of audited bodies, as if the references in that subsection to 5 successive financial years were references to:

(i) 6 successive financial years; or

(ii) 7 successive financial years; or

(b) declare that subsection 324DA(2) applies to a registered company auditor, in relation to the audit of an audited body or a class of audited bodies during a particular period of 7 successive financial years, as if the reference in that subsection to 5 out of 7 successive financial years were a reference to 6 out of 7 successive financial years.

(2) The following persons may apply for the declaration:

(a) the registered company auditor;

(b) a firm or company on whose behalf the registered company auditor acts or would act in relation to the audit or audits.

If the application is made by a firm or company, the declaration has effect only in relation to activities undertaken by the registered company auditor on behalf of that firm or company.

(3) The application must be:

(a) in writing; and

(b) signed by the applicant; and

(c) lodged with ASIC.

(4) If the application is made by a registered company auditor who engages, or is to engage, in audit activities on behalf of a firm or company, the application must include the firm's or company's written consent to the application.

(5) If the application is made by a firm or company in relation to a registered company auditor, the application must include the registered company auditor's written consent to the application.

(6) To make a declaration under subsection (1), ASIC must be satisfied that, without the modification, Division 4 of Part 2M.4 would impose an unreasonable burden on:

(a) a registered company auditor; or

(b) a firm or company that is applying for the declaration; or

(c) the audited body or bodies in relation to which the application was made.

(7) In deciding for the purposes of subsection (6) whether, without the modification, Division 4 of Part 2M.4 would impose an unreasonable burden on a person referred to in that subsection, ASIC is to have regard to:

(a) the nature of the audited body or bodies, including whether the activity in which the audited body or bodies engage is such that specialist knowledge about that activity is necessary to carry out the audit properly; and

(b) the availability of other registered company auditors capable of providing satisfactory audit services for the audited body or bodies; and

(c) any other matters which ASIC considers relevant.

(8) ASIC must give the applicant written notice of the making, revocation or suspension of the declaration.

342B Auditor to notify company or registered scheme of section 342A declaration

(1) If a registered company auditor plays a significant role in the audit of a company or registered scheme in reliance on a declaration by ASIC under section 342A, the auditor must give the company or the responsible entity for the registered scheme written notice of the declaration.

(2) The notice must specify:

(a) the name of the registered company auditor; and

(b) the additional financial years for which the registered company auditor is, because of the declaration under section 342A, eligible to play a significant role in the audit of the company or registered scheme.

(3) The notice must be given:

(a) as soon as practicable after the declaration is made if the auditor has been appointed before the declaration is made; or

(b) before the auditor is appointed if the declaration is made before the auditor is appointed.