ASIC Credit (Mandatory Credit Reporting—Auditor Appointment) Instrument 2021/829
I, Tim Gough, delegate of the Australian Securities and Investments Commission, make the following notifiable instrument.
Date 30 September 2021
Contents
Part 1—Preliminary
1 Name of notifiable instrument
2 Commencement
3 Authority
4 Definitions
Part 2—Appointment
5 Appointment of auditors
Part 1—Preliminary
1 Name of notifiable instrument
This is the ASIC Credit (Mandatory Credit Reporting—Auditor Appointment) Instrument 2021/829.
2 Commencement
This instrument commences on the day after it is registered on the Federal Register of Legislation.
Note: The register may be accessed at www.legislation.gov.au.
3 Authority
This instrument is made under subsection 133CZD(1) of the National Consumer Credit Protection Act 2009.
4 Definitions
In this instrument:
audit firm has the meaning given by section 9 of the Corporations Act.
audit network means two or more entities:
(a) each of which is an audit firm or an authorised audit company; and
(b) that:
(i) cooperate and share common quality control procedures and policies; and
(ii) share common business strategies; and
(iii) use a common brand name.
authorised audit company has the meaning given by section 9 of the Corporations Act.
Corporations Act means the Corporations Act 2001.
entity has the meaning given by section 64A of the Corporations Act.
listed has the meaning given by section 9 of the Corporations Act.
registered company auditor has the meaning given by section 9 of the Corporations Act.
Part 2—Appointment
5 Appointment of auditors
ASIC appoints as an auditor for the purposes of Division 4 of Part 3-2CA of the National Consumer Credit Protection Act 2009 each person in relation to whom both the following apply:
(a) the person is:
(i) a registered company auditor who is a member of an audit firm; or
(ii) an authorised audit company;
(b) during the period of 12 months ending on 30 June 2021:
(i) in the case of a registered company auditor who is a member of an audit firm that is not part of an audit network—the audit firm of which the person is a member was appointed; and
(ii) in the case of a registered company auditor who is a member of an audit firm that is part of an audit network—the audit firms and authorised audit companies that are part of the audit network were between them appointed; and
(iii) in the case of an authorised audit company that is not part of an audit network—the authorised audit company was appointed; and
(iv) in the case of an authorised audit company that is part of an audit network—the audit firms and authorised audit companies that are part of the audit network were between them appointed;
as auditor for the purposes of the Corporations Act of:
(v) 50 or more listed entities; or
(vi) listed entities with a collective market capitalisation exceeding $5 billion as at 30 June 2021.
Overview
The ASIC Credit (Mandatory Credit Reporting—Auditor Appointment) Instrument 2021/829 was introduced to enhance the transparency and accountability of credit reporting in Australia. Enacted by Tim Gough, a delegate of the Australian Securities and Investments Commission, under subsection 133CZD(1) of the National Consumer Credit Protection Act 2009, the instrument aims to ensure that auditors appointed for credit reporting purposes are of the requisite calibre and experience, thereby maintaining the integrity of financial reporting. This instrument targets a specific need by ensuring that only suitably qualified auditors, who have demonstrated their capability by auditing a significant number of listed entities or entities with a substantial market capitalisation, are appointed for mandatory credit reporting responsibilities. The policy objective is to bolster consumer protection and financial market stability by ensuring rigorous oversight and high standards in credit reporting.
Scope and Application
The ASIC Credit (Mandatory Credit Reporting—Auditor Appointment) Instrument 2021/829 applies to auditors appointed for the purposes of Division 4 of Part 3-2CA of the National Consumer Credit Protection Act 2009. Specifically, it targets individuals who are registered company auditors affiliated with an audit firm, authorised audit companies, or those that are part of an audit network. The instrument mandates that such auditors were appointed within the preceding 12 months, ending on 30 June 2021, for auditing the financial statements of at least 50 listed entities or listed entities with a combined market capitalisation exceeding $5 billion as at 30 June 2021. The instrument's authority stems from subsection 133CZD(1) of the National Consumer Credit Protection Act 2009, and it commences on the day after its registration on the Federal Register of Legislation. The scope and applicability of this instrument are further defined by related terms in the Corporations Act 2001, including definitions of audit firms, audit networks, authorised audit companies, and listed entities.
Key Provisions
The ASIC Credit (Mandatory Credit Reporting—Auditor Appointment) Instrument 2021/829 outlines the framework for the appointment of auditors by the Australian Securities and Investments Commission (ASIC) under the National Consumer Credit Protection Act 2009. According to section 5, ASIC appoints auditors who meet specific criteria. These auditors must be registered company auditors who are members of an audit firm, or authorised audit companies. Furthermore, the audit firms or audit networks to which these individuals belong must have been appointed to audit the financial statements of either 50 or more listed entities, or listed entities with a collective market capitalisation exceeding $5 billion as at 30 June 2021, within the preceding 12 months.
The instrument imposes several obligations on the parties it governs. Firstly, ASIC is required to appoint auditors who meet the stringent criteria outlined in section 5. Secondly, registered company auditors and authorised audit companies must ensure their firms or networks have been appointed to audit the financial statements of the specified number or value of listed entities within the stipulated timeframe. These obligations are designed to ensure that only suitably qualified and experienced auditors are appointed to conduct credit reporting audits.
In the event of non-compliance with the provisions of this instrument, there may be significant legal consequences. Although the instrument does not explicitly outline offences or penalties, the authority under which it was made, subsection 133CZD(1) of the National Consumer Credit Protection Act 2009, allows for enforcement actions. Breaches of the Act could result in fines, corrective orders, or other civil or criminal penalties as determined by the relevant courts. The penalties for such breaches can be substantial, reflecting the importance of compliance with credit reporting requirements under Australian law.