Commonwealth Numbered Acts

COMPANIES ACT 1981 No. 89 of 1981 - SECT 277

Division 3-Audit

277. (1) Subject to this section, a person shall not-

   (a)  consent to be appointed as auditor of a company;

   (b)  act as auditor of a company; or

   (c)  prepare a report required by this Act to be prepared by a registered
        company auditor or by an auditor of a company, if-

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

   (e)  the person, or a corporation in which the person is a substantial
        shareholder for the purposes of Division 4 of Part IV or the
        provisions of the law of a participating State or of a participating
        Territory that correspond with that Division, is indebted in an amount
        exceeding $5,000 to the company or to a related corporation; or

   (f)  except where the company is an exempt proprietary company, the person-

        (i)    is an officer of the company;

        (ii)   is a partner, employer or employee of an officer of the
               company; or

        (iii)  is a partner or employee of an employee of an officer of the
               company.

(2) Subject to this section, a firm shall not-

   (a)  consent to be appointed as auditor of a company;

   (b)  act as auditor of a company; or

   (c)  prepare a report required by this Act to be prepared by a registered
        company auditor or by an auditor of a company, unless-

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

   (e)  where the business name under which the firm is carrying on business
        is not registered under the Business Names Ordinance 1963-there has
        been lodged with the Commission a return in the prescribed form
        showing, in relation to each member of the firm, his full name and his
        address as at the time when the firm so consents, acts or prepares a
        report;

   (f)  no member of the firm, and no corporation in which any member of the
        firm is a substantial shareholder within the meaning of Division 4 of
        Part IV, or the provisions of the law of a participating State or of a
        participating Territory that correspond with that Division, is
        indebted in an amount exceeding $5,000 to the company or to a
        related corporation;

   (g)  except where the company is an exempt proprietary company, no member
        of the firm is-

        (i)    an officer of the company;

        (ii)   a partner, employer or employee of an officer of the company;
               or

        (iii)  a partner or employee of an employee of an officer of the
               company; and

   (h)  except where the company is an exempt proprietary company, no officer
        of the company receives any remuneration from the firm for acting as a
        consultant to it on accounting or auditing matters.

(3) A reference in sub-section (1) or (2) to indebtedness to a corporation
does not, in relation to indebtedness of a natural person, include a reference
to indebtedness of that person to a corporation that is a prescribed
corporation for the purposes of Division 4 where-

   (a)  the indebtedness arose as a result of a loan made to that person by
        the corporation 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
        his principal place of residence.

(4) For the purposes of sub-sections (1) and (2), a person shall be deemed to
be an officer of a company if-

   (a)  he is an officer of a related corporation; 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
        him-he has, at any time within the immediately preceding period of 12
        months, been an officer or promoter of the company or of a
        related corporation.

(5) For the purposes of this section, a person shall not be taken to be an
officer of a company by reason only of his being or having been the liquidator
of that company or of a related corporation.

(6) For the purposes of this section, a person shall not be taken to be an
officer of a company by reason only of his having been appointed as auditor of
that company or of a related corporation or, for any purpose relating to
taxation, a public officer of a corporation or by reason only of his being or
having been authorized to accept on behalf of the company or a related
corporation service of process or any notices required to be served on the
company or related corporation.

(7) The appointment of a firm as auditor of a company shall be deemed to be an
appointment of all persons who are members of the firm and are registered
company auditors, whether resident in a State or Territory or not, at the date
of the appointment.

(8) Where a firm that has been appointed as auditor of a company is
reconstituted by reason of the death, retirement or withdrawal of a member or
members or by reason of the admission of a new member or new members, or both-

   (a)  a person who was deemed under sub-section (7) to be an auditor of the
        company and who has so retired or withdrawn from the firm as
        previously constituted shall be deemed to have resigned as auditor of
        the company as from the day of his 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 282 does not apply to that
        resignation;

   (b)  a person who is a registered company auditor and who is so admitted to
        the firm shall be deemed to have been appointed as an auditor of the
        company as from the date of his 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 company, but nothing in this sub-section affects the
        operation of sub-section (2).

(9) Except as provided by sub-section (8), the appointment of the members of a
firm as auditors of a company that is deemed by sub-section (7) to have been
made by reason of the appointment of the firm as auditor of the company is not
affected by the dissolution of the firm.

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

(11) Without limiting the generality of section 570, if, in contravention of
this section, a firm consents to be appointed, or acts as, auditor of a
company or prepares a report required by this Act to be prepared by an auditor
of a company, each member of the firm is guilty of an offence.

(12) Where it is, in the opinion of the Commission, impracticable for an
exempt proprietary company to obtain the services of a registered company
auditor as auditor of the company by reason of the place where the company
carries on business, a person who is, in the opinion of the Commission,
suitably qualified or experienced and is approved by the Commission for the
purposes of this Act in relation to the audit of the company's accounts may be
appointed as auditor of the company, subject to such terms and conditions as
are specified in the approval.

(13) A person appointed in accordance with sub-section (12) shall, in relation
to the auditing of the company's accounts and, if it is a holding company for
which group accounts are required, group accounts but subject to the terms and
conditions of the approval under that sub-section, be deemed to be a
registered company auditor and the provisions of this Act shall, with the
necessary modifications, apply to and in relation to him accordingly.

(14) Where a person approved by the Commission under sub-section (12) is
acting as auditor of a company, the Commission may at any time, by notice in
writing given to the company-

   (a)  amend, revoke or vary the terms and conditions of its approval; or

   (b)  terminate the appointment of that person as auditor of the company.

(15) A notice under sub-section (14) terminating the appointment of a person
as auditor of a company takes effect as if, on the date on which the notice is
received by the company, the company had received from the person notice of
his resignation as auditor taking effect from that date.

(16) A person shall not-

   (a)  if he has been appointed auditor of a company-knowingly disqualify
        himself while the appointment continues from acting as auditor of the
        company; or

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