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2013-2014-2015-2016
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CORPORATIONS AMENDMENT (AUDITOR REGISTRATION) BILL 2016
EXPLANATORY MEMORANDUM
(Circulated by authority of the
Minister for Small Business and Assistant Treasurer, the Hon Kelly O'Dwyer MP)
Table of contents
Glossary ................................................................................................. 1
General outline and financial impact....................................................... 3
Chapter 1 Amendments validating auditor registration .................. 5
Chapter 2 Statement of Compatibility with Human Rights ............. 9
Index......................................................................................................11
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
ASIC Australian Securities and Investments
Commission
Bill Corporations Amendment (Auditor
Registration) Bill 2016
Legislation Act Legislation Act 2003
1
General outline and financial impact
Validation of approval of auditing competency standard
The Corporations Amendment (Auditor Registration) Bill 2016 (Bill)
amends the Corporations Act 2001 (Corporations Act) to address the legal
consequences arising from an approval issued by the Australian Securities
and Investments Commission (ASIC) in November 2004 which approved
an auditing competency standard (CPA/ICAA standard) produced by CPA
Australia and the Institute of Chartered Accountants in Australia.
It is likely that the relevant approval is a legislative instrument for the
purposes of the Legislation Act 2003 (Legislation Act). Because certain
requirements of the Legislation Act were not met, the validity of the
registration of an auditor on the basis of the CPA/ICAA standard after
1 December 2005 is uncertain.
Parts of the Bill have retrospective operation. The retrospective effect of
the amendments will not add any new regulatory requirements. Rather, the
retrospective effect of the amendments is necessary to ensure that
decisions and actions taken by auditors, the regulator and business which
relied upon the enforceability and integrity of the Legislative Instrument
are valid, and the retrospective effect of the Bill is necessary to provide
certainty for those decisions and actions.
Date of effect: The day after the Bill receives Royal Assent.
Financial impact: The Bill provides for a right to compensation in the
event that the measures contained in the Bill could affect any property
rights so as to amount to an acquisition of property.
Human rights implications: This Bill does not raise human rights issues.
See Statement of Compatibility with Human Rights -- Chapter 2.
Compliance cost impact: Nil.
3
Chapter 1
Amendments validating auditor
registration
Outline of chapter
1.1 Schedule 1 to the Bill amends the Corporations Act to address
the legal consequences arising from a legislative instrument issued by
ASIC in November 2004 which approved an auditing competency
standard (CPA/ICAA standard) produced by CPA Australia and the
Institute of Chartered Accountants in Australia.
Context of amendments
1.2 Section 1280 of the Corporations Act gives ASIC the power to
register a person as an auditor in response to an application made by the
person.
1.3 Subparagraph 1280(2)(b)(i) makes it a condition of ASIC's
approval that the applicant has satisfied all the components of an auditing
competency standard approved by ASIC.
1.4 Section 1280A of the Corporations Act provides that ASIC may,
on application by any person, approve an auditing competency standard
for the purposes of paragraph 1280(2)(b).
1.5 In November 2004 ASIC approved an auditing competency
standard (CPA/ICAA standard) produced by CPA Australia and the
Institute of Chartered Accountants in Australia under section 1280A of the
Corporations Act.
1.6 The instrument approving the CPA/ICAA standard may be a
legislative instrument for the purposes of the Legislation Act. The
Legislation Act requires that legislative instruments be registered within a
certain period for it to be valid.
1.7 However, the instrument was not lodged for registration by
1 December 2005 as required by the Legislation Act, and on this basis it
may be taken to have been repealed by section 32 of the Legislation Act
on 2 December 2005.
5
Corporations Amendment (Auditor Registration) Bill 2016
1.8 As a result, the validity of the registration of an auditor on the
basis of this competency standard since 1 December 2005 is uncertain.
Summary of new law
1.9 The Bill amends the Corporations Act so that auditors registered
from 1 December 2005 on the basis of the CPA/ICAA competency
standard, as approved by ASIC in 2004 under section 1280A of the
Corporations Act, are validly registered with effect from the date of their
purported registration.
Detailed explanation of new law
1.10 For the avoidance of doubt, the Bill amends the Corporations
Act so that it holds that an approval, an approval of a variation or
revocation of an approval of an auditing competency standard are
legislative instruments. [Schedule 1, item 1, subsection 1280A(5)]
1.11 The Bill amends the Corporations Act to retrospectively ensure
that the Legislation Act has effect, and has always had effect, as if
approval of the CPA/ICAA competency standard had been lodged and
registered immediately after it was given, and that all other requirements
of the Legislation Act are taken to have been met. [Schedule 1, item 2,
section 1298P]
1.12 This has the effect of validating the registration of auditors who
had applied for registration under the CPA/ICAA competency standard
after 1 December 2005.
1.13 The Bill also amends the Corporations Act to displace the
operation of section 1350 in circumstances where the effects of section
1298P may result in the acquisition of property from a person otherwise
than on just terms. [Schedule 1, item 2, section 1298Q]
Consequential amendments
1.14 Nil
6
Amendments validating auditor registration
Application and transitional provisions
1.15 The amendments in this Bill will apply from the date of Royal
Assent.
7
Chapter 2
Statement of Compatibility with Human
Rights
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Corporations Amendment (Auditor Registration) Bill 2016
2.1 This Bill is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
2.2 The Bill amends the Corporations Act to address the legal
consequences arising from a legislative instrument issued by ASIC in
November 2004 which approved the CPA/ICAA standard.
2.3 The amendments in this Bill validate the initial approval of the
CPA/ICAA standard.
Human rights implications
2.4 This Bill does not engage any of the applicable rights or
freedoms
Conclusion
2.5 The Bill is compatible with human rights as it does not raise any
human rights issues.
9
Index
Schedule 1: Amendments
Bill reference Paragraph number
Item 1, subsection 1280A(5) 1.10
Item 2, section 1298P 1.11
Item 2, section 1298Q 1.13
11