Commonwealth Consolidated Acts Commonwealth Consolidated ActsContravention by member of audit firm
(1) A person (the defendant ) contravenes this subsection if:
(a) an audit firm engages in audit activity in relation to an audited body at a particular time; and
(b) a conflict of interest situation exists in relation to the audited body at that time; and
(c) the defendant is a member of the audit firm at that time; and
(d) the defendant is or becomes aware of the circumstances referred to in paragraphs (a) and (b); and
(e) the defendant does not, as soon as possible after the defendant becomes aware of those circumstances, take reasonable steps to ensure that the conflict of interest situation ceases to exist.
Note: For conflict of interest situation , see section 324CD.
Member of audit firm to notify ASIC
(1A) A person (the defendant ) contravenes this subsection if:
(a) an audit firm is the auditor of an audited body; and
(b) a conflict of interest situation exists in relation to the audited body while the audit firm is the auditor of the audited body; and
(c) the defendant is a member of the audit firm at a time when the conflict of interest situation exists; and
(d) on a particular day (the start day ), the defendant becomes aware of the circumstances referred to in paragraphs (a) and (b); and
(e) at the end of the period of 7 days from the start day:
(i) the conflict of interest situation remains in existence; and
(ii) ASIC has not been informed in writing by the defendant, by another member of the audit firm or by someone else on behalf of the audit firm that the conflict of interest situation exists.
Note 1: For conflict of interest situation , see section 324CD.
Note 2: 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:
(a) subsection 327B(2B) (public company); or
(b) subsection 328E(4) (public company with crowd - sourced funding); or
(c) subsection 331AAA(2B) (registered scheme); or
(d) subsection 331AH(4) (registrable superannuation entity).
(1B) A person is not excused from informing ASIC under subsection (1A) that a conflict of interest situation exists on the ground that the information might tend to incriminate the person or expose the person to a penalty.
(1C) However:
(a) the information; and
(b) the giving of the information;
are not admissible in evidence against the person in a criminal proceeding, or any other proceeding for the recovery of a penalty, other than proceedings for an offence based on the information given being false or misleading.
(1D) 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.
Conflict of interest situation of which another member of audit firm is aware
(2) A person contravenes this subsection if:
(a) an audit firm engages in audit activity in relation to an audited body at a particular time; and
(b) a conflict of interest situation exists in relation to the audited body at the time; and
(c) the person is a member of the audit firm at that time; and
(d) at that time, another member of the audit firm is aware that the conflict of interest situation exists; and
(e) the audit firm does not, as soon as possible after the member referred to in paragraph (d) becomes aware that the conflict of interest situation exists, take all reasonable steps to ensure that the conflict of interest situation ceases to exist.
Note: For conflict of interest situation , see section 324CD.
(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), (b), (d) and (e).
Note 1: For strict liability , see section 6.1 of the Criminal Code .
Note 2: Subsection (6) provides a defence.
Conflict of interest situation of which members are not aware
(4) A person contravenes this subsection if:
(a) an audit firm engages in audit activity in relation to an audited body at a particular time; and
(b) a conflict of interest situation exists in relation to the audited body at the time; and
(c) the person is a member of the audit firm at that time; and
(d) at that time none of the members of the audit firm is aware that the conflict of interest situation exists; and
(e) a member of the audit firm would have been aware of the existence of the conflict of interest situation if the audit firm had in place a quality control system reasonably capable of making the audit firm aware of the existence of such a conflict of interest situation.
Note: For conflict of interest situation , see section 324CD.
(5) For the purposes of an offence based on subsection (4), strict liability applies to the physical elements of the offence specified in paragraphs (4)(a), (b), (d) and (e).
Note 1: For strict liability , see section 6.1 of the Criminal Code .
Note 2: Subsection (6) provides a defence.
Defence
(6) A person does not commit an offence because of a contravention of subsection (2) or (4) 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.
Note: A defendant bears an evidential burden in relation to the matters in this subsection, see subsection 13.3(3) of the Criminal Code .
Relationship between obligations under this section and other obligations
(7) The obligations imposed by this section are in addition to, and do not derogate from, any obligation imposed by:
(a) another provision of this Act; or
(b) a code of professional conduct.
Note: Paragraph (a)--see, for example, the specific obligations imposed by Subdivision B.