Corporations Act 2001

CHAPTER 2M - FINANCIAL REPORTS AND AUDIT  

PART 2M.4 - APPOINTMENT AND REMOVAL OF AUDITORS  

Division 3 - Auditor independence  

Subdivision B - Specific requirements  

Note: This Subdivision applies in relation to retail CCIVs in a modified form: see section 1232P .

SECTION 324CH   RELEVANT RELATIONSHIPS  

Table of relevant relationships.

324CH(1)    

The following table lists the relationships between:

(a)    a person or a firm; and

(b)    the audited body for an audit;

that are relevant for the purposes of sections 324CE , 324CF and 324CG :

Table of relevant relationships

Table of relevant relationships

Relevant relationships
Item	This item applies to a person (or, if applicable, to a firm) at a particular time if at that time the person (or firm)...
1	is an officer of the audited body This item does not apply if subsection (3A) (about small proprietary companies) applies to the audited body for the relevant financial year.
2	is an audit-critical employee of the audited body This item does not apply if subsection (3A) (about small proprietary companies) applies to the audited body for the relevant financial year.
3	is a partner of:
		(a) an officer of the audited body; or (b) an audit-critical employee of the audited body
	This item does not apply if subsection (3A) (about small proprietary companies) applies to the audited body for the relevant financial year.
4	is an employer of:
		(a) an officer of the audited body; or (b) an audit-critical employee of the audited body
	This item does not apply if subsection (3A) (about small proprietary companies) applies to the audited body for the relevant financial year.
5	is an employee of:
		(a) an officer of the audited body; or (b) an audit-critical employee of the audited body
	This item does not apply if subsection (3A) (about small proprietary companies) applies to the audited body for the relevant financial year.
6	is a partner or employee of an employee of:
		(a) an officer of the company; or (b) an audit-critical employee of the company
	This item does not apply if subsection (3A) (about small proprietary companies) applies to the audited body for the relevant financial year.
7	provides remuneration to:
		(a) an officer of the audited body; or (b) an audit-critical employee of the audited body;
	for acting as a consultant to the person This item does not apply if subsection (3A) (about small proprietary companies) applies to the audited body for the relevant financial year.
8	was an officer of the audited body at any time during:
		(a) the period to which the audit relates; or (b) the 12 months immediately preceding the beginning of the period to which the audit relates; or (c) the period during which the audit is being conducted or the auditor ' s report is being prepared
	This item does not apply if subsection (3A) (about small proprietary companies) applies to the audited body for the relevant financial year.
9	was an audit-critical employee of the audited body at any time during:
		(a) the period to which the audit relates; or (b) the 12 months immediately preceding the beginning of the period to which the audit relates; or (c) the period during which the audit is being conducted or the auditor ' s report is being prepared
	This item does not apply if subsection (3A) (about small proprietary companies) applies to the audited body for the relevant financial year.
10	has an asset that is an investment in the audited body
11	has an asset that is a beneficial interest in an investment in the audited body and has control over that asset
12	has an asset that is a beneficial interest in an investment in the audited body that is a material interest
13	has an asset that is a material investment in an entity that has a controlling interest in the audited body
14	has an asset that is a material beneficial interest in an investment in an entity that has a controlling interest in the audited body
15	owes an amount to:
		(a) the audited body; or (b) a related body corporate; or (c) an entity that the audited body controls;
	unless the debt is disregarded under subsection (5) , (5A) or (5B)
16	is owed an amount by:
		(a) the audited body; or (b) a related body corporate; or (c) an entity that the audited body controls;
	under a loan that is not disregarded under subsection (6) or (6A)
17	is liable under a guarantee of a loan made to:
		(a) the audited body; or (b) a related body corporate; or (c) an entity that the audited body controls
18	(Repealed by No 101 of 2007, s 3, Sch 1, Pt 1 [ 55] (effective 28 June 2007).)
19	is entitled to the benefit of a guarantee given by:
		(a) the audited body; or (b) a related body corporate; or (c) an entity that the audited body controls
	in relation to a loan unless the guarantee is disregarded under subsection (8)

Applying table if audited body is registered scheme.

324CH(2)    
If the audited body is a registered scheme, apply the table in subsection (1) as if:

(a)    references to the audited body in items 1 to 9, and items 15 to 19, in the table were references to the responsible entity for the registered scheme; and

(b)    references to an interest in the audited body in items 10 to 12 in the table were references to an interest in either:

(i) the registered scheme; or

(ii) the responsible entity for the registered scheme; and

(c)    references to an investment in an entity that has a controlling interest in the audited body in items 13 and 14 of the table were references to an investment in an entity that has a controlling interest in the responsible entity for the registered scheme.

Applying table if audited body is registrable superannuation entity

324CH(2A)    

If the audited body is a registrable superannuation entity, apply the table in subsection (1) as if:

(a)    references to the audited body in items 1 to 9, and items 15 to 19, in the table were references to the RSE licensee for the registrable superannuation entity; and

(b)    references to an interest in the audited body in items 10 to 12 in the table were references to an interest in either:

(i) the registrable superannuation entity; or

(ii) the RSE licensee for the registrable superannuation entity; and

(c)    references to an investment in an entity that has a controlling interest in the audited body in items 13 and 14 in the table were references to an investment in an entity that has a controlling interest in the RSE licensee for the registrable superannuation entity.

Applying table if audited body is listed entity (other than registered scheme).

324CH(3)    
If the audited body is a listed entity (other than a registered scheme), apply the table in subsection (1) as if references in the table to the audited body included references to an associated entity of the audited body.

Note: See section 50AAA for the definition of associated entity .

Small proprietary companies.

324CH(3A)    

This subsection applies to an audited body for a financial year if the body:

(a)    is a small proprietary company for the financial year; and

(b)    either:

(i) does not have any CSF shareholders at any time during the financial year; or

(ii) has, as at the end of the financial year, raised a total less than the CSF audit threshold from all the CSF offers it has ever made.

Firm assets.

324CH(4)    
For the purpose of applying items 10 to 14 in the table in subsection (1) to an audit firm, the firm is taken to have a particular asset if the asset is one of the firm's partnership assets.

Housing loan exception.

324CH(5)    
For the purposes of item 15 of the table in subsection (1) , disregard a debt owed by an individual to a body corporate or entity if:

(a)    

the body corporate or entity is:

(i) an Australian ADI; or

(ii) a body corporate registered under section 21 of 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.

Goods and services exception.

324CH(5A)    

For the purposes of item 15 of the table in subsection (1) , disregard a debt owed by a person or firm to a body corporate or entity if:

(a)    the debt arises from the acquisition of goods or services from:

(i) the audited body; or

(ii) an entity that the audited body controls; or

(iii) a related body corporate; and

(b)    the acquisition of goods and services was on the terms and conditions that would normally apply to goods or services acquired from the body, entity or related body corporate; and

(c)    the debt is owed on the terms and conditions that would normally apply to a debt owing to the body, entity or related body corporate; and

(d)    the goods or services will be used by the person or firm:

(i) for the personal use of the person or firm; or

(ii) in the ordinary course of business of the person or firm.

Ordinary commercial loan exception.

324CH(5B)    

For the purposes of item 15 of the table in subsection (1) , disregard a debt owed under a loan that:

(a)    is made or given in the ordinary course of business of:

(i) the audited body; or

(ii) the related body corporate; or

(iii) the controlled entity; and

(b)    is made or given on the terms and conditions that would normally apply to a loan made or given by the audited body, the related body corporate or the controlled entity.

Loans by immediate family members in ordinary business dealing with client.

324CH(6)    
For the purposes of item 16 of the table in subsection (1) , disregard a debt owed to a person by a body corporate or entity if:

(a)    the item applies to the person because the person is an immediate family member of:

(i) a professional member of the audit team conducting the audit of the audited body; or

(ii) a non-audit services provider; and

(b)    the debt is incurred in the ordinary course of business of the body corporate or entity.

324CH(6A)    

For the purposes of item 16 in the table in subsection (1) , disregard an amount owed under a loan to a person or firm by the audited body, a related body corporate or an entity that the audited body controls if:

(a)    the body, body corporate or entity is an Australian ADI; and

(b)    

the amount is deposited in a basic deposit product provided by the body, body corporate or entity; and

(c)    the amount was deposited, in the ordinary course of business of the audited body, body corporate or entity, on the terms and conditions that would normally apply to a basic deposit product provided by the body, body corporate or entity.

324CH(7)    
(Repealed by No 101 of 2007, s 3, Sch 1, Pt 1 [ 58] (effective 28 June 2007).)

Ordinary commercial guarantee exception.

324CH(8)    
For the purposes of item 19 of the table in subsection (1) , disregard any guarantee that:

(a)    is made or given in the ordinary course of the business of:

(i) the audited body; or

(ii) the related body corporate; or

(iii) the controlled entity; and

(b)    is made or given on the terms and conditions that would normally apply to a guarantee made or given by the audited body, the related body corporate or the controlled entity.

Future debts and liabilities.

324CH(8A)    

In this section:

(a)    a reference to a debt or amount that is owed by one entity to another entity includes a reference to a debt or amount that will (or may) be owed by the first entity to the other entity under an existing agreement between the entities; and

(b)    a reference to a liability under a guarantee of a loan includes a reference to a liability that will arise under the guarantee if the loan is not repaid.

Relevant financial year.

324CH(9)    

In this section:

relevant financial year
, in relation to audit activities undertaken in relation to an audit or review of a financial report for a financial year or an audit or review of a financial report for a half-year in a financial year, means the financial year immediately before that financial year.