Appointment of an auditor
This section contains the requirements and guidance relating to auditor appointments for:
- Companies (including large proprietary companies exempt from lodging accounts)
- Managed investment schemes
- Compliance plans
- Financial services licensees
Companies
The audit of a company is primarily a financial audit where the auditor is required to report to members in relation to the company's financial report, and adequacy of financial and statutory record keeping.
The following may be appointed as auditor for a company:
- an individual who is a registered company auditor;
- a firm; or
- a company that is an authorised audit company.
The directors of a proprietary company may appoint an auditor for the company if an auditor has not been appointed by the company in general meeting.
In accordance with s327A of the Corporations Act 2001 (Corporations Act), the directors of a public company must appoint an auditor within one month after the day on which the company is registered, unless the company, at a general meeting, has appointed an auditor. The auditor holds office until the company's first AGM, where the appointment is confirmed by the members or another auditor is appointed.
The auditor holds office until one of the following occurs:
- The auditor obtains ASIC consent to resign - Apply for ASIC consent to resign as an auditor of a public company through the ASIC Regulatory Portal.
- The auditor is removed by the company under s329.
- The auditor is deceased.
- The auditor ceases to be capable of acting as an auditor because of Division 2 of Part 2M.4 of the Corporations Act (ineligibility).
- The auditor ceases to be an auditor under s327B(2A), s327B(2B) or s327B(2C).
- The company is being wound up (s330).
Form 388 Copy of financial statements and reports (Form 388) may be required to notify ASIC of an appointment of an auditor to the company.
Large proprietary company exempt from lodging accounts – Form 3190
This form is only lodged by companies who have previously lodged a Form 373 exempting them from lodging accounts (old s319(4) of the Law and now s1408 of the Corporations Act). As a consequence, such companies will not be required to lodge a Form 388 with financial reports and auditor details. Instead the auditor details are notified to ASIC through the lodgement of Form 3190 Notification of appointment of auditor (large pty exempt from lodging accounts under s319(4).
Managed investment schemes
The responsible entity of a registered scheme must appoint an auditor to the scheme within one month after the day on which the scheme is registered with ASIC. The initial appointment is advised to ASIC through lodgement of a Form 5137 Notification of appointment of scheme auditor.
The auditor holds office until one of the following occurs:
- The auditor obtains ASIC consent to resign - Form 5132 Application for consent from ASIC for resignation or removal of scheme auditor (Form 5132).
- The responsible entity obtains ASIC consent to remove the auditor - Form 5132.
- The auditor is deceased.
- The auditor ceases to be capable of acting as an auditor because of Division 2 of Part 2M.4 of the Corporations Act.
- The auditor ceases to be an auditor under s331AAA(2A), s331AAA(2B), or s331AAA(2C).
- The scheme is being wound up (s331AD).
Section 331AAB(1) states that if a vacancy exists in the office of auditor of a registered scheme and there is no continuing auditor, the responsible entity must, within one month after the vacancy occurs, appoint an auditor to fill the vacancy.
Where ASIC grants its consent to the resignation or removal of the scheme auditor, the responsible entity must lodge:
- a Form 5133 Notice of resignation, removal, or cessation of a registered scheme auditor within 14 days of the receipt of the notice of resignation from the auditor; and
- a Form 5137 within 14 days of the appointment of the replacement auditor. Refer to reg 2M.4.01 of the Corporations Act.
Compliance plans
Section 601HG(1) of the Act states that the responsible entity of a registered scheme must ensure that at all times a registered company auditor, an audit firm or an authorised audit company is engaged to audit compliance with the scheme's compliance plan.
If the auditor of the compliance plan of a registered scheme changes, the responsible entity must, as soon as practicable after the change and in writing, ask ASIC to alter the record of the scheme's registration to show the name of the new auditor as the auditor of the scheme's compliance plan (s601HI). ASIC must comply with the request if the change complies with the Corporations Act.
Where ASIC has granted its consent to the resignation or removal of the compliance plan auditor, the responsible entity must lodge a written request for us to alter the record of the scheme’s registration to show the name of the new auditor of the compliance plan. This request must be lodged as soon as practicable after the change for each compliance plan.
Australian financial services licensee
Section 990B of the Corporations Act relates to auditor appointment for natural persons, partnerships, non-corporate trustees and proprietary companies which hold an AFS licence.
Unless listed in RG 166.13 or a ‘limited’ licensee (if the licensee is only licensed to provide one or more limited financial services and does not deal with money to which Division 2 of Part 7.8 of the Corporations Act applies) the financial services licensee must, within 1 month after beginning to hold the licence, appoint an auditor or auditors to audit the licensee's financial statements:
- a person or persons; or
- a firm or firms; or
- a person or persons and firm or firms.
Within 14 days after appointing the auditor, the financial services licensee is required to lodge a written notice (Form FS06 Appointment of an auditor of an Australian financial services licensee) specifying the name of the person or firm appointed and the date of their appointment. Once appointed, an auditor will generally continue to hold office until they resign or are removed by the financial services licensee.
If an applicant for a financial services licence:
- specifies, in the application for the licence, the name of a person or firm that is to be, or has been, appointed to audit the applicant's financial statements; and
- the auditor or auditors specified are appointed before the end of 1 month after the licence takes effect, the applicant is taken to have lodged a notice under the Corporations Act.