Corporations Act 2001

CHAPTER 2M - FINANCIAL REPORTS AND AUDIT  

PART 2M.3 - FINANCIAL REPORTING  

Division 3 - Audit and auditor ' s report  

Note: This Division applies to sub-funds of retail CCIVs in a modified form: see section 1232G .

SECTION 311   REPORTING TO ASIC  

Contravention by individual auditor

311(1)    

An individual auditor conducting an audit (other than an audit of a registrable superannuation entity) contravenes this subsection if:

(a)    the auditor is aware of circumstances that:

(i) the auditor has reasonable grounds to suspect amount to a contravention of this Act; or

(ii) amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (6) ); or

(iii) amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

(b)    if subparagraph (a)(i) applies:

(i) the contravention is a significant one; or

(ii) the contravention is not a significant one and the auditor believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor ' s report or bringing it to the attention of the directors; and

(c)    the auditor does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the auditor becomes aware of those circumstances.

311(1A)    

An individual auditor conducting an audit of a registrable superannuation entity contravenes this subsection if:

(a)    the auditor suspects on reasonable grounds that there are circumstances that amount to a contravention of this Act; and

(b)    the auditor does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the auditor forms that suspicion.

311(1B)    

An individual auditor commits an offence if the auditor contravenes subsection (1A) .

311(1C)    

An individual auditor commits an offence of strict liability if the auditor contravenes subsection (1A) .

Contravention by audit company

311(2)    

An audit company conducting an audit (other than an audit of a registrable superannuation entity) contravenes this subsection if:

(a)    the lead auditor for the audit is aware of circumstances that:

(i) the lead auditor has reasonable grounds to suspect amount to a contravention of this Act; or

(ii) amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (6) ); or

(iii) amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

(b)    if subparagraph (a)(i) applies:

(i) the contravention is a significant one; or

(ii) the contravention is not a significant one and the lead auditor believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor ' s report or bringing it to the attention of the directors; and

(c)    the lead auditor does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the lead auditor becomes aware of those circumstances.

311(2A)    

An audit company conducting an audit of a registrable superannuation entity contravenes this subsection if:

(a)    the lead auditor for the audit suspects on reasonable grounds that there are circumstances that amount to a contravention of this Act; and

(b)    the lead auditor does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the lead auditor forms that suspicion.

311(2B)    

An audit company commits an offence if the company contravenes subsection (2A) .

311(2C)    

An audit company commits an offence of strict liability if the company contravenes subsection (2A) .

Contravention by member of audit firm

311(2D)    

A person (the defendant ) contravenes this subsection if:

(a)    an audit firm is conducting an audit of a registrable superannuation entity; and

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

(c)    the lead auditor for the audit suspects on reasonable grounds that there are circumstances that amount to a contravention of this Act; and

(d)    the lead auditor does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the lead auditor forms that suspicion.

311(2E)    

A person commits an offence if the person contravenes subsection (2D) .

311(2F)    

A person commits an offence of strict liability if the person contravenes subsection (2D) .

311(2G)    

A member of an audit firm does not commit an offence at a particular time because of a contravention of subsection (2D) if the member:

(a)    does not know at that time of the circumstances that constitute the contravention of subsection (2D) ; or

(b)    does know of those circumstances at that time but takes all reasonable steps to correct the contravention as soon as possible after the member becomes aware of those circumstances.

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

Contravention by lead auditor

311(3)    
A person contravenes this subsection if:

(a)    

the person is the lead auditor for an audit (other than an audit of a registrable superannuation entity); and

(b)    the person is aware of circumstances that:

(i) the person has reasonable grounds to suspect amount to a contravention of this Act; or

(ii) amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (6) ); or

(iii) amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

(c)    if subparagraph (b)(i) applies:

(i) the contravention is a significant one; or

(ii) the contravention is not a significant one and the person believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor ' s report or bringing it to the attention of the directors; and

(d)    the person does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the person becomes aware of those circumstances.

311(3A)    

A person contravenes this subsection if:

(a)    the person is the lead auditor for an audit of a registrable superannuation entity; and

(b)    the person suspects on reasonable grounds that there are circumstances that amount to a contravention of this Act; and

(c)    the person does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the person forms that suspicion.

311(3B)    

A person commits an offence if the person contravenes subsection (3A) .

311(3C)    

A person commits an offence of strict liability if the person contravenes subsection (3A) .

Significant contraventions

311(4)    
In determining for the purposes of this section whether a contravention of this Act is a significant one, have regard to:

(a)    the level of penalty provided for in relation to the contravention; and

(b)    the effect that the contravention has, or may have, on:

(i) the overall financial position of the company, registered scheme or disclosing entity; or

(ii) the adequacy of the information available about the overall financial position of the company, registered scheme or disclosing entity; and

(c)    any other relevant matter.

Note: This subsection applies to sub-funds of retail CCIVs in a modified form: see section 1232G .

311(5)    

Without limiting paragraph (4)(a) , a penalty provided for in relation to a contravention of a provision of Part 2M.2 or 2M.3 , or section 324DAA , 324DAB or 324DAC , includes a penalty imposed on a director, because of the operation of section 344 , for failing to take reasonable steps to comply with, or to secure compliance with, that provision.

Person involved in an audit

311(6)    
In this section:

person involved in the conduct of an audit
means:

(a) the auditor; or

(b) the lead auditor for the audit; or

(c) the review auditor for the audit; or

(d) a professional member of the audit team for the audit; or

(e) any other person involved in the conduct of the audit.