Commonwealth Repealed Acts

This legislation has been repealed.

CORPORATIONS LAW
- SECT 857

(1)

A licensee must, within 1 month after beginning to hold the licence, appoint as auditor or auditors to audit the licensee's financial statements:

(a)

a person or persons; or

(b)

a firm or firms; or

(c)

a person or persons and a firm or firms;

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 has a substantial holding, 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)

For the purposes of paragraphs (2)(b) and (3)(c), 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.

(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)

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)

Within 14 days after a vacancy occurs in the office of an auditor of a licensee, 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)

A licensee must 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 (except a proprietary company) in relation to which section 327 applies.