Corporations Act 2001

CHAPTER 2M - FINANCIAL REPORTS, SUSTAINABILITY REPORTS AND AUDIT  

PART 2M.4 - APPOINTMENT AND REMOVAL OF AUDITORS  

Division 5 - Auditor rotation for listed companies, listed registered schemes and registrable superannuation entities  

SECTION 324DC   AUDIT FIRM ' S ROTATION OBLIGATION  

Contraventions by members of audit firm

324DC(1)    
A person (the defendant ) contravenes this subsection if:

(a)    

an audit firm consents to act as a listed company ' s auditor, listed registered scheme ' s auditor or registrable superannuation entity ' s auditor for a financial year; and

(b)    

an individual acts, on behalf of the firm, as a lead or review auditor in relation to the audit of the company ' s, scheme ' s or entity ' s financial report for that financial year; and

(c)    

the individual is not eligible to play a significant role in the audit of the company, scheme or entity for that financial year; and

(d)    the defendant is a member of the firm; and

(e)    the defendant is not the individual and is or becomes aware that the individual is not eligible to play that role; and

(f)    

the defendant fails to take the necessary steps, as soon as possible after the defendant becomes aware that the individual is not eligible to play that role, either:

(i) to ensure that the audit firm resigns as auditor of the company, scheme or entity; or

(ii) to ensure that the individual ceases to act, on behalf of the audit firm, as a lead or review auditor in relation to the audit of the company, scheme or entity for that financial year.

324DC(2)    
A person (the defendant ) contravenes this subsection if:

(a)    an audit firm consents to act as a listed company ' s auditor, listed registered scheme ' s auditor or registrable superannuation entity ' s auditor for a financial year; and

(b)    

an individual acts, on behalf of the firm, as a lead or review auditor in relation to the audit of the company ' s, scheme ' s or entity ' s financial report for that financial year; and

(c)    

the individual is not eligible to play a significant role in the audit of the company, scheme or entity for that financial year:

(i) because of section 324DAD ; or

(ii) for any other reason; and

(d)    the defendant is a member of the firm.

324DC(3)    

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) and subparagraph (2)(c)(ii) .

Note 1: For strict liability , see section 6.1 of the Criminal Code .

Note 2: Subsection (4) provides a defence.

324DC(4)    
A person does not commit an offence because of a contravention of subsection (2) in relation to an individual acting as lead or review auditor on behalf of 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 Division.

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