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CORPORATIONS ACT 2001

CHAPTER 2M - FINANCIAL REPORTS AND AUDIT  

PART 2M.4 - APPOINTMENT AND REMOVAL OF AUDITORS  

Division 3 - Auditor independence    View history reference

Subdivision B - Specific requirements    View history reference

SECTION 324CH  RELEVANT RELATIONSHIPS  

 View history reference

324CH(1)  Table of relevant relationships.  

 View history reference

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

Relevant relationships
ItemThis item applies to a person (or, if applicable, to a firm) at a particular time if at that time the person (or firm)...
1is an officer of the audited body
This item does not apply if the audited body is a small proprietary company for the relevant financial year.
2is an audit-critical employee of the audited body
This item does not apply if the audited body is a small proprietary company for the relevant financial year.
3is 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 the audited body is a small proprietary company for the relevant financial year.
4is 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 the audited body is a small proprietary company for the relevant financial year.
5is 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 the audited body is a small proprietary company for the relevant financial year.
6is 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 the audited body is a small proprietary company for the relevant financial year.
7provides 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 the audited body is a small proprietary company for the relevant financial year.
8was 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 audit report is being prepared
 This item does not apply if the audited body is a small proprietary company for the relevant financial year.
9was 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 audit report is being prepared
 This item does not apply if the audited body is a small proprietary company for the relevant financial year.
10has an asset that is an investment in the audited body
11has an asset that is a beneficial interest in an investment in the audited body and has control over that asset
12has an asset that is a beneficial interest in an investment in the audited body that is a material interest
13has an asset that is a material investment in an entity that has a controlling interest in the audited body
14has an asset that is a material beneficial interest in an investment in an entity that has a controlling interest in the audited body
15owes 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)
16is 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)
17is 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).)
19is 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)

[CCH Note: Act No 101 of 2007, Sch 1, Pt 6[234] contained the following application provision (which was effective 28 June 2007):

Application of items 47, 48, 50 and 52 to 59

The amendments made by items 47, 48, 50 and 52 to 59 of this Schedule apply to:

(a) an audit of the financial report for a financial year; or
(b) an audit or review of the financial report for a half-year in a financial year;

if the financial year begins on or after the day on which those items commence.

]

324CH(2)  Applying table if audited body is registered scheme.  


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.

324CH(3)  Applying table if audited body is listed entity (other than registered scheme).  


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.

324CH(4)  Firm assets.  


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.

324CH(5)  Housing loan exception.  


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
 View history reference


(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.

324CH(5A)  Goods and services exception.  

 View history reference

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.

[CCH Note: Act No 101 of 2007, Sch 1, Pt 6[234] contained the following application provision (which was effective 28 June 2007):

Application of items 47, 48, 50 and 52 to 59

The amendments made by items 47, 48, 50 and 52 to 59 of this Schedule apply to:

(a) an audit of the financial report for a financial year; or
(b) an audit or review of the financial report for a half-year in a financial year;

if the financial year begins on or after the day on which those items commence.

]

324CH(5B)  Ordinary commercial loan exception.  

 View history reference

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.

[CCH Note: Act No 101 of 2007, Sch 1, Pt 6[234] contained the following application provision (which was effective 28 June 2007):

Application of items 47, 48, 50 and 52 to 59

The amendments made by items 47, 48, 50 and 52 to 59 of this Schedule apply to:

(a) an audit of the financial report for a financial year; or
(b) an audit or review of the financial report for a half-year in a financial year;

if the financial year begins on or after the day on which those items commence.

]

324CH(6)  Loans by immediate family members in ordinary business dealing with client.  


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)  [Ordinary deposit product exception]  

 View history reference

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 (within the meaning of section 761A) 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.

[CCH Note: Act No 101 of 2007, Sch 1, Pt 6[234] contained the following application provision (which was effective 28 June 2007):

Application of items 47, 48, 50 and 52 to 59

The amendments made by items 47, 48, 50 and 52 to 59 of this Schedule apply to:

(a) an audit of the financial report for a financial year; or
(b) an audit or review of the financial report for a half-year in a financial year;

if the financial year begins on or after the day on which those items commence.

]

324CH(7)  

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

[CCH Note: Act No 101 of 2007, Sch 1, Pt 6[234] contained the following application provision (which was effective 28 June 2007):

Application of items 47, 48, 50 and 52 to 59

The amendments made by items 47, 48, 50 and 52 to 59 of this Schedule apply to:

(a) an audit of the financial report for a financial year; or
(b) an audit or review of the financial report for a half-year in a financial year;

if the financial year begins on or after the day on which those items commence.

]

324CH(8)  Ordinary commercial guarantee exception.  


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.

324CH(8A)  Future debts and liabilities.  

 View history reference

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.

[CCH Note: Act No 101 of 2007, Sch 1, Pt 6[234] contained the following application provision (which was effective 28 June 2007):

Application of items 47, 48, 50 and 52 to 59

The amendments made by items 47, 48, 50 and 52 to 59 of this Schedule apply to:

(a) an audit of the financial report for a financial year; or
(b) an audit or review of the financial report for a half-year in a financial year;

if the financial year begins on or after the day on which those items commence.

]

324CH(9)  Relevant financial year.  

 View history reference

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.


 



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