Commonwealth Numbered Acts

CORPORATIONS ACT 1989 No. 109 of 1989 - SECT 857

857. (1) It is a condition of a licence that the licensee shall, within one
month after beginning to hold the licence, 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 licensee's accounts, other than a person who, or a firm that, is
ineligible by virtue of this section to act as auditor of the licensee.

(2) Subject to this section, a person is ineligible to act as auditor of the
holder of a licence if:

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

   (b)  the person, or a body corporate in which the person is a substantial
        shareholder for the purposes of Part 6.7, is indebted in an amount
        exceeding $5,000 to the holder or, if the holder is a body corporate,
        to a related body corporate; or

   (c)  the person is:

        (i)    in the case of a holder who is a natural person-a partner or
               employee of the holder; or

        (ii)   in the case of a holder that is a body corporate:

                (A)  an officer of the body corporate;

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

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

(3) Subject to this section, a firm is ineligible at a particular time to act
as auditor of the holder of a licence, unless:

   (a)  at least one member of the firm is a registered company auditor who is
        ordinarily resident in a State or Territory;

   (b)  where the business name under which the firm is carrying on business
        is not registered under a prescribed law of a State or Territory-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 the member's
        address as at that time;

   (c)  no member of the firm, and no body corporate in which any member of
        the firm is a substantial shareholder for the purposes of Part 6.7, is
        indebted in an amount exceeding $5,000 to the holder or, where the
        holder is a body corporate, to a related body corporate;

   (d)  no member of the firm is:

        (i)    in the case of a holder who is a natural person-a partner or
               employee of the holder; or

        (ii)   in the case of a holder that is a body corporate;

                (A)  an officer of the body corporate;

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

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

   (e)  in the case of a holder that is a body corporate, no officer of the
        body corporate receives any remuneration from the firm for acting as a
        consultant to it on accounting or auditing matters.

(4) A reference in subsection (2) or (3) to indebtedness to a body corporate
does not, in relation to indebtedness of a natural person, include a reference
to indebtedness of that person to a body corporate that is a prescribed
corporation for the purposes of section 409 where:

   (a)  the indebtedness arose as a result of a loan made to that person by
        the body corporate in the ordinary course of its ordinary business;
        and

   (b)  the amount of that loan was used by that person to pay the whole or
        part of the purchase price of premises that are used by that person as
        that person's principal place of residence.

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

   (a)  in any case-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 in relation to the body corporate-the person has, at any
        time within the immediately preceding 12 months, been an officer or
        promoter of the body corporate or of a related body corporate.

(6) For the purposes of this section, a person is not an officer of a body
corporate merely because of being or having been the liquidator of that body
corporate or of a related body corporate.

(7) For the purposes of this section, a person is not an officer of a body
corporate merely because of having been appointed as 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 merely because 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.

(8) Subject to this section, a person or firm shall not, while ineligible by
virtue of this section to act as auditor of the holder of a licence:

   (a)  consent to be appointed as auditor of the holder;

   (b)  act as auditor of the holder; or

   (c)  prepare a report that an auditor of the holder is to prepare under
        this Chapter.

(9) The appointment of a firm as auditor of the holder of a licence 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.

(10) Where a firm that has been appointed as auditor of the holder of a
licence is re-constituted because of the death, retirement or withdrawal of a
member or members or because of the admission of a new member or new members,
or both:

   (a)  a person who was deemed under subsection (9) to be an auditor of the
        holder and has so retired or withdrawn from the firm as previously
        constituted shall be deemed to have resigned as auditor of the holder
        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 858 does not apply to that resignation;

   (b)  a person who is a registered company auditor and is so admitted to the
        firm shall be deemed to have been appointed as an auditor of the
        holder as from the date of the 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 holders; but nothing in this subsection affects the
        operation of subsection (3).

(11) Except as provided by subsection (10), the appointment of the members of
a firm as auditors of the holder of a licence that is deemed by subsection (9)
to have been made because of the appointment of the firm as auditor of the
holder is not affected by the dissolution of the firm.

(12) A report or notice that purports to be made or given by a firm appointed
as auditor of the holder of a licence is not duly made or given unless it is
signed in the firm name and in his or her own name by a member of the firm who
is a registered company auditor.

(13) It is a condition of a licence that, where a person or firm is appointed
as an auditor of the licensee under subsection (1) (other than an appointment
that is deemed to be made by virtue of subsection (10)) or under subsection
(16), the licensee shall within 14 days after the appointment lodge a written
notice stating that the licensee has made the appointment and specifying the
name of the person or firm.

(14) A person shall not:

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

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

(15) An auditor of the holder of a licence holds office until death, until
removal or resignation from office in accordance with section 858 or until
becoming prohibited by subsection (8) from acting as auditor of the holder.

(16) It is a condition of a licence that, within 14 days after a vacancy
occurs in the office of an auditor of the licence, if there is no surviving or
continuing auditor of the licensee, the licensee shall appoint a person or
persons, a firm or firms or a person or persons and a firm or firms to fill
the vacancy, other than a person who, or a firm that, is ineligible by virtue
of this section to act as auditor of the licensee.

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

(18) It is a condition of a licence that the licensee shall not appoint a
person or firm as auditor of the licensee unless that person or firm has,
before the appointment, consented by written notice given to the licensee to
act as auditor and has not withdrawn the consent by written notice given to
the licensee.

(19) This section does not apply in relation to a body corporate (other than
an exempt proprietary company) in relation to which section 327 applies.