ASIC Corporations (Auditor Independence) Instrument 2021/75

Key definitional scaffolding is contained in s 4 and is decisive for how the relief operates. The instrument builds its relief around several interlocking concepts:

• Relevant entity: defined in s 4 to include a company, registered scheme, registrable superannuation entity or disclosing entity. The relief therefore targets audits or reviews of these classes of entities as that term is defined in the instrument.

• Relevant period: a financial year or half-year of a relevant entity (s 4). That temporal boundary determines the window within which the $10,000 fair value cap in s 5(3)(a) is assessed and within which the financial interest may have existed.

• Relevant person: defined by reference to paragraph R510.4(c) of the APES 110 Code, as adopted by the instrument (s 4). The instrument does not restate who R510.4(c) covers; it relies on the Code for that determination. This means the class of persons protected by the Code prohibition and therefore potentially giving rise to a contravention is determined by that external Code provision.

• Financial interest: defined in s 4 to include either (a) a ‘direct financial interest’ as defined by the Code, or (b) an ‘indirect financial interest’ as defined by the Code and which is material. The statutory relief therefore draws on the Code’s own taxonomy of interests, and it imposes a materiality qualification for indirect interests as a prerequisite for being a “financial interest” for the instrument’s purposes.

• Control and controlled entity: “control” is given the same meaning as in accounting standard AASB 10 Consolidated financial statements (s 4). The instrument therefore uses accounting control concepts to determine whether an interest is in the relevant entity or in a controlled entity, with the latter included within the relief’s scope.

• Engagement partner and audit engagement team: engagement partner is defined by the Code, while audit engagement team is defined in s 4 as the persons performing work on the audit or review of the financial report for the relevant period. These terms govern who must make materiality and independence assessments and who is covered by the Code prohibition.

The relief itself operates as an exception to the Corporations Act requirement for the lead auditor to set out details of a contravention in the written independence declaration required by paragraph 307C(3)(d) of the Act (s 5(2)). The instrument does not amend the Corporations Act; it is an instrument made under subsection 341(1) of the Act (s 3) that grants a statutory exemption from the particular declaration content. The instrument therefore sits in a three-part relationship: the Code sets the professional prohibition (R510.4(c)), the Act sets the statutory declaration format and content (paragraph 307C(3)(d) and paragraph 307C(5)(b)), and this instrument temporarily relieves the lead auditor from part of that statutory content if the conditions in s 5(3) are satisfied.

Operationally important elements of s 5(3) that structure risk allocation and process are the objective monetary threshold in s 5(3)(a) (fair value not exceeding $10,000 at any time during or since the relevant period), the engagement partner’s subjective materiality assessment in s 5(3)(b), the relevant person’s written confirmation of lack of knowledge and prompt divestment with a strict seven day maximum for divestment after awareness (s 5(3)(c)), the lead auditor’s reporting obligation to the directors (s 5(3)(d)), and the directors’ formal resolution about independence and objectivity (s 5(3)(e)). The final condition in s 5(3)(f) requires the absence of the financial interest at the moment the auditor signs the statutory declaration.

The instrument’s temporary nature is specified in s 6, which provides the repeal date of 30 April 2029. Endnotes record the instrument’s registration and amendment history, which matters for determining applicable versions of s 4 definitions and s 6 repeal timing.

The instrument allocates decision points and compliance duties across several actors. It affects:

• Lead auditors: The statutory relief is framed expressly for the lead auditor. Section 5(2) relieves the lead auditor from the requirement to set out details of a contravention in the written independence declaration under paragraph 307C(3)(d) of the Corporations Act when the s 5(3) conditions are met. The lead auditor therefore controls whether the statutory declaration omits the specified details, subject to satisfying the conditions.

• Engagement partners: The engagement partner must make a materiality assessment under s 5(3)(b), specifically to be satisfied that the financial interest was not material to the relevant person. That assessment is a pre-condition to relief. The engagement partner is defined by reference to the Code (s 4).

• Audit firms and audit companies: The instrument applies where an audit firm or audit company conducts the audit or review (s 5(1)). These entities bear the organisational burden of ensuring processes are in place to collect the written confirmations, to document the engagement partner’s materiality assessment, and to make the lead auditor’s necessary report to the directors.

• Audit engagement team: The instrument’s defined term “audit engagement team” (s 4) identifies the persons whose independence the Code seeks to preserve and in relation to whom the Code’s R510.4(c) prohibition operates. Members of the engagement team may be the “relevant person” or be affected by the consequences of their colleagues’ interests.

• Relevant persons as defined by the Code: The instrument refers to “relevant person” by reference to paragraph R510.4(c) of the Code (s 4). Although the instrument does not restate who is a relevant person, in practical terms it affects members of the audit engagement team and other Code-defined individuals whose financial interests in the client entity are regulated by R510.4(c).

• Directors of the relevant entity: Section 5(3)(d) and (e) allocate duties to the entity’s directors. The lead auditor must give a written report to the directors stating that the relevant person held the financial interest in contravention of R510.4(c) (s 5(3)(d)). The directors must pass a resolution stating that the holding did not affect the independence and objectivity of the audit firm, lead auditor, review auditor or any member of the audit engagement team (s 5(3)(e)). Directors therefore have a formal gatekeeping role before the lead auditor may rely on the relief.

• Relevant entities and controlled entities: The relief concerns a financial interest held in the relevant entity or a controlled entity (s 5(2) and s 4). Controlled entity is determined by reference to AASB 10 (s 4), so corporate groups and their accounting relationships are implicated.

• Persons holding small financial interests: The instrument specifically addresses situations where a relevant person has a small financial interest (s 5(3)(a) fair value cap). Those individuals may need to divest to satisfy the conditions for relief and to allow the lead auditor to omit the details from the statutory declaration.

Who pays and who decides: The primary compliance costs fall on the audit firm and the lead auditor in terms of process, documentation and timing. The engagement partner decides on materiality for the purposes of s 5(3)(b). The lead auditor decides whether to include or omit the contravention details from the statutory declaration, but only if all statutory conditions are satisfied. The directors decide, by passing the resolution required by s 5(3)(e), whether to record that the holding did not affect independence and objectivity. Relevant persons must decide whether to divest and must provide the written confirmation required by s 5(3)(c).

Timing and remediation burdens are allocated as follows: the relevant person must divest the interest as soon as possible and no later than seven days after becoming aware that it was a financial interest in the relevant entity or controlled entity (s 5(3)(c)(ii)); the lead auditor must not sign the declaration until the relevant person no longer holds the interest (s 5(3)(f)). Those timings create operational pressure on small holdings to be remediated swiftly.

Finally, the instrument’s limited application window (repeal on 30 April 2029, s 6) means the affected population should plan for the relief’s eventual expiry and for potential changes to practices thereafter.

The instrument modifies the content of a statutory duty rather than creating a freestanding new duty. It adjusts the lead auditor’s statutory declaration responsibilities under paragraph 307C(3)(d) of the Corporations Act by creating a conditional exemption. The practical duties and rights under the instrument are:

Duties on the lead auditor and audit firm:

• Determine whether the scenario falls within the instrument’s scope: an audit or review by an audit firm or audit company of a relevant entity’s financial report for a relevant period (s 5(1)).
• If a relevant person has held a financial interest in contravention of R510.4(c), the lead auditor may be relieved from setting out details of that contravention in the statutory declaration, provided all s 5(3) conditions are met (s 5(2) and (3)).
• Give a written report to the entity’s directors stating that the relevant person held the financial interest in contravention of R510.4(c) (s 5(3)(d)). This report is a pre-condition to the relief.
• Ensure the lead auditor does not sign the independence declaration until the relevant person no longer holds the financial interest (s 5(3)(f)).

Duty on the engagement partner:

• Be satisfied that the financial interest was not material to the relevant person (s 5(3)(b)). This is a discrete professional judgement duty placed on the engagement partner rather than on an external adjudicator.

Duties on the relevant person:

• Provide a written confirmation to the lead auditor that the financial interest began to be held without the relevant person knowing it was a financial interest in the relevant entity or a controlled entity (s 5(3)(c)(i)).
• Confirm in writing that the interest was divested as soon as possible, and no later than seven days after becoming aware that it was a financial interest in the relevant entity or a controlled entity (s 5(3)(c)(ii)). The written confirmation is therefore a condition precedent to relief.

Duties on the directors:

• Consider the written report from the lead auditor and pass a resolution that the holding did not affect the independence and objectivity of the audit firm, lead auditor, review auditor or any member of the audit engagement team (s 5(3)(e)). This is a formal directors’ governance act that gates the lead auditor’s ability to rely on the relief.

Rights created:

• A right for the lead auditor to omit specified details from the paragraph 307C(3)(d) statutory independence declaration under the Act, when and only when all statutory conditions in s 5(3) are satisfied (s 5(2)). This is a narrowly confined right; it does not confer a broad exemption from other disclosure or professional requirements.

Constraints and limits:

• The $10,000 fair value ceiling in s 5(3)(a) is an objective cap measured “at any time during or since the relevant period”. If the fair value ever exceeded $10,000, relief is unavailable.
• The instrument does not alter the APES 110 Code itself. The Code continues to define “financial interest”, “engagement partner”, and “relevant person”. The instrument’s relief is a statutory carve-out only for the content of a specific statutory declaration under the Act.
• The materiality assessment in s 5(3)(b) is vested in the engagement partner’s satisfaction; the instrument does not supply an external materiality test or audit standard for that determination.

Documentation obligations implicit in the conditions:

• Written confirmations from the relevant person (s 5(3)(c)).
• A written report from the lead auditor to the directors (s 5(3)(d)).
• A directors’ resolution (s 5(3)(e)).
• Evidence that the relevant person no longer holds the interest at the time the lead auditor signs the declaration (s 5(3)(f)).

Temporal constraint:

• The instrument is repealed on 30 April 2029 (s 6). The rights created are therefore time-limited, and parties must track the instrument’s existence against the audit timetable for the relevant period.

The instrument therefore reallocates a narrow procedural obligation in the auditor’s statutory declaration into a compliance process that requires written confirmations, a professional judgement by the engagement partner, a formal auditor report to directors, and a directors’ resolution. The statutory right to omit declaration details is conditional on these process elements being met.

The instrument itself does not establish new criminal or civil penalties. It is an administrative instrument made under subsection 341(1) of the Corporations Act (s 3) that grants relief from a specific statutory disclosure obligation. The text contains no provision creating fines, criminal offences or specified civil sanctions for non-compliance with the instrument’s conditions.

That absence matters operationally. Enforcement of the instrument’s boundaries and remedies for misstatement would therefore arise from other statutory regimes and professional standards that remain in force, including obligations in the Corporations Act, the APES 110 Code, and any general liability for false statements or misconduct under applicable law. The instrument does not itself identify enforcement mechanisms or sanctioning pathways. Practically, this means:

• If a lead auditor relies on the instrument but fails to satisfy a pre-condition in s 5(3), the instrument affords no statutory shield; the lead auditor’s statutory declaration under paragraph 307C(3)(d) would remain subject to the Act’s requirements. The instrument does not validate an incorrect omission where the conditions were not met.

• The instrument requires written confirmations and a directors’ resolution. If those documents are false, forged, or otherwise defective, the instrument does not specify criminal or civil consequences; other law may apply to address false documents or governance failures.

• The instrument does not describe any record-keeping or inspection regime for proof that the conditions were met. Enforcement therefore would default to the general oversight and investigatory mechanisms applicable under the Corporations Act and ASIC’s regulatory powers, and to any professional disciplinary mechanisms under the APES 110 Code or the audit firm’s professional body. The instrument itself is silent on such mechanisms.

• The engagement partner’s satisfaction about materiality (s 5(3)(b)) is a subjective professional judgement. The instrument does not prescribe criteria for review of that satisfaction. Potential challenges to a materiality conclusion would need to be pursued under the Act, under professional standards enforcement, or through civil proceedings, none of which are described in the instrument.

Implementation and compliance risk:

• Because the instrument sets out process pre-conditions (written confirmations, auditor report to directors, directors’ resolution and remedial divestment), failure to complete those steps before the lead auditor signs the independence declaration would mean the statutory relief is unavailable. The instrument places a compliance burden on audit firms to build and evidence a reliable chain of documentary proof to justify any omission.

• The instrument does not set out record-retention periods or audit trail standards. That increases the risk that, in any subsequent review or enforcement action, the absence of documentary proof could undermine a claimed entitlement to relief. Determinations about penalties or sanctions will therefore rely on other legal regimes not articulated in the instrument.

• The instrument’s repeal date (s 6) introduces an enforcement planning constraint: audits conducted after the repeal date cannot rely on the instrument.

In summary, the instrument creates no standalone penalty regime. It grants discretionary relief conditioned on documentary and governance steps. Enforcement and consequences for incorrect reliance will depend on the broader Corporations Act framework, the APES 110 Code’s professional discipline mechanisms and general legal remedies, none of which are altered or described in this instrument.

This instrument is expressly made under subsection 341(1) of the Corporations Act 2001 (s 3) and operates by modifying the practical effect of a statutory obligation created by the Act: the written independence declaration required by paragraph 307C(3)(d). The interaction is therefore a statutory one, where this instrument provides targeted relief from a specific declaration requirement in the Act.

Relationship with the Corporations Act:

• The instrument does not amend the Corporations Act. Instead, it relieves the lead auditor from a content obligation in paragraph 307C(3)(d) when the instrument’s conditions are met (s 5(2)). The Act continues to impose the broader statutory framework for auditors’ independence declarations, including the timing for signing (paragraph 307C(5)(b)), which the instrument references in s 5(3)(f). The instrument’s relief is thus a statutory exception to a statutory disclosure duty.

• The instrument does not purport to alter other sections of the Act that might relate to auditor independence, false statements, directors’ duties or other compliance requirements. Those provisions remain in force independently of this instrument.

Relationship with the APES 110 Code:

• The instrument cross-refers to the APES 110 Code as the Code for definitions such as engagement partner, relevant person, and direct and indirect financial interests (s 4). The instrument relies on the Code to define who is subject to R510.4(c) and what counts as a direct or indirect financial interest.

• The instrument provides relief from the statutory requirement to disclose details of a contravention of paragraph R510.4(c) of the Code. It therefore assumes the Code’s prohibition remains binding as a professional standard, but it permits a narrow statutory omission from a particular statutory declaration so long as the Code breach is small, remediated and supported by the documentary and governance steps in s 5(3). The instrument does not change the Code itself; professional obligations under the Code continue to exist independent of this instrument.

Relationship with accounting standards:

• The instrument defines “control” by reference to accounting standard AASB 10 Consolidated financial statements (s 4). That means the determination of whether an interest is in a controlled entity for the instrument’s purposes depends on accounting law definitions. The instrument therefore interacts with Australian accounting law to define the universe of entities in which a financial interest may produce a contravention.

Operational interplay and limits:

• The instrument’s relief applies only to the content of the written declaration under paragraph 307C(3)(d). It does not remove or alter other professional or statutory consequences of an independence contravention under the Code or the Act. For instance, obligations in the Code to take steps to address independence issues remain outside the instrument’s text, and any action required by the Act other than the particular declaration content is not altered by the instrument.

• The instrument ties the relief to remediation steps: the relevant person must divest the interest and the directors must pass a resolution saying independence and objectivity were not affected (s 5(3)(c), (e), (f)). Those steps embed corporate governance responses to Code contraventions into the statutory relief framework, effectively coordinating the Code, the Act and corporate governance processes.

Temporal and amendment interaction:

• The instrument is time-limited by s 6, to be repealed on 30 April 2029. The endnotes show that s 4 and s 6 have been amended since initial registration (Endnote 2). That means the interaction with other laws may shift over time if the instrument is further amended or replaced.

In essence, the instrument is a narrowly focused statutory mechanism that permits a specific omission in a statutory independence declaration where professional and governance steps have operated to identify and remediate a small financial interest contravention of the Code. It relies on and references definitions and obligations in the Corporations Act, the APES 110 Code, and AASB 10, but it does not alter those instruments beyond the narrow relief it grants.

The instrument’s compilation information and endnotes provide the authoritative record of registration, commencement and amendments. The compilation is identified as No. 2 and was prepared by the Australian Securities and Investments Commission, with the compilation in force on 23 March 2024.

Key entries in Endnote 1,Instrument history:

• Instrument 2021/75 was registered for Federal Register of Legislation (FRL) on 6 May 2021 and commenced on 7 May 2021. This is the principal instrument entry (Endnote 1 table).
• Instrument 2021/381 was registered on 10 May 2021 and commenced on 11 May 2021. The endnote records that it amended s 6 (Endnote 1 and Endnote 2).
• Instrument 2024/187 was registered on 21 March 2024 and commenced on 22 March 2024, and it amended s 4 and s 6 according to the Endnote 2 amendment history.

Endnote 2,Amendment history provides shorthand codes and records:

• Section 2 was repealed under s48D LA (this entry in the amendment history refers to a technical adjustment in the instrument’s structure; the table entry is terse: "Section 2 rep. s48D LA").
• Section 6 was amended by instrument 2021/381.
• Section 4 was amended by instrument 2024/187.
• Section 6 was again amended by instrument 2024/187.

The endnotes therefore show at least two subsequent instruments affecting the original 2021/75 instrument, with substantive amendments to definitions (s 4) and to the repeal provision (s 6). The instrument’s compilation as in force on 23 March 2024 incorporates those commenced amendments.

Practical consequences of the amendment record:

• Changes to s 4 affect the definitional regime on which the relief depends. When reviewing a particular audit, practitioners must consult the instrument version current at the time of the relevant audit to ensure they apply the correct definitions.
• Changes to s 6 alter the instrument’s repeal timing and therefore the window in which the relief is available. The instrument as compiled indicates repeal on 30 April 2029 (s 6), but the amendment history should be checked for any later changes.
• The Endnotes do not provide transitional provisions or savings clauses in the table entries; any such provisions would have been recorded in the relevant amending instruments and must be consulted directly in those amending texts.

The instrument as compiled includes the history entries necessary to establish which versions of s 4 and s 6 are current as at 23 March 2024. Users should consult the FRL entries for instruments 2021/75, 2021/381 and 2024/187 to inspect the exact amending text where necessary.

The instrument and its endnotes contain no citations to adjudicated cases, no reported litigation histories, and no judicial decisions interpreting or applying this instrument are referenced. Endnote 1 and Endnote 2 set out registration, commencement and amendment records only. The instrument text itself does not report any litigation or dispute resolution outcomes.

Consequently, there is no litigation precedent included within this instrument compilation that interprets the s 5(3) conditions, the engagement partner’s materiality assessment, the directors’ resolution requirement, or the timing and substance of the written confirmations from relevant persons. Any interpretive disputes about the instrument’s application would therefore need to be addressed under the general dispute resolution and adjudication frameworks available under the Corporations Act, or by reference to professional disciplinary processes under the APES 110 Code, none of which are described in this instrument.

Practitioners seeking guidance on contested points will therefore need to rely on the instrument’s text together with relevant provisions of the Corporations Act, the APES 110 Code, and any guidance or enforcement action published by ASIC or professional bodies, none of which appears in the instrument’s compilation. The absence of litigation history in the instrument highlights that the statutory conditions and process obligations in s 5(3) have not been annotated by court decisions within the instrument text.

The instrument appears precise, but several practical traps and interpretive tight spots arise directly from its wording. The following items are grounded in the statutory text and identify points at which compliance can fail or where unintended outcomes can occur.

1. Narrow monetary ceiling and timing sensitivity (s 5(3)(a)):

• The fair value of the financial interest must not have exceeded $10,000 at any time during or since the relevant period. That is an absolute ceiling. If the fair value ever exceeded $10,000, the relief is unavailable, even if the interest was later reduced or divested. Parties must measure fair value carefully and document valuation methodologies contemporaneously.

2. Materiality assessment is vesting in the engagement partner (s 5(3)(b)):

• Relief requires that the engagement partner is satisfied the financial interest was not material to the relevant person. The instrument does not provide an external standard for materiality. The engagement partner’s judgement is therefore a critical decision point and a potential target for subsequent scrutiny. Practitioners should document the basis for the engagement partner’s satisfaction.

3. Strict written confirmation and seven day divestment requirement (s 5(3)(c)):

• The relevant person must confirm in writing that the interest began to be held without the relevant person knowing it was a financial interest in the relevant entity or controlled entity, and the interest was divested as soon as possible and no later than seven days after becoming aware. These are conjunctive requirements. The seven day outer limit is strict in the instrument; failure to divest within that timeframe precludes relief.

4. Requirement for lead auditor’s written report to directors (s 5(3)(d)):

• The lead auditor must give the directors a written report stating that the relevant person held the financial interest in contravention of paragraph R510.4(c) of the Code. The instrument does not prescribe the report’s contents beyond that statement, but the existence of that written report is a condition precedent. Absence, delay or inadequacy in that report can nullify relief.

5. Directors’ resolution on independence and objectivity (s 5(3)(e)):

• The directors must pass a resolution that the holding did not affect the independence and objectivity of the audit firm, lead auditor, review auditor or any member of the audit engagement team. The instrument does not prescribe which directors must pass the resolution or any voting thresholds; practitioners must ensure corporate governance procedures are followed for validly passed resolutions.

6. Final non-holding condition at signing (s 5(3)(f)):

• The person must not hold the financial interest at the time the lead auditor signs the statutory independence declaration under paragraph 307C(5)(b). That means divestment must be completed and evidenced before the declaration is signed. Practically, this can compress timelines if a contravention is identified late in the audit process.

7. Interaction with the Code and accounting standards (s 4):

• The instrument imports definitions from the APES 110 Code and AASB 10. This means indirect financial interests are only treated as “financial interests” for the instrument if they are material according to the Code. Practically, this reduces but does not eliminate complexity because the instrument does not restate how the Code defines these categories.

8. Limited scope of the relief:

• The relief is limited to the content of paragraph 307C(3)(d) of the Corporations Act. It does not affect other legal or professional consequences of a contravention under the Code or the Act. Practitioners must not equate relief from a declaration content requirement with a blanket immunity from consequences.

9. Documentation and evidentiary risk:

• The instrument places documentary pre-conditions on the relief. If documents are inadequate, ambiguous, or absent, the lead auditor’s claimed reliance on the instrument will be vulnerable. The instrument does not specify record-keeping standards or retention periods.

10. Temporary nature and amendments (s 6; Endnotes):

• The instrument will be repealed on 30 April 2029 (s 6). Endnotes record amendments to s 4 and s 6. Practitioners must verify the operative text at the time of the audit and note that definitions and the repeal provision may have been amended.

11. Who counts as the “relevant person”:

• The instrument refers to paragraph R510.4(c) of the Code to define “relevant person” but does not reproduce that paragraph. Misidentifying who is a relevant person may lead to incorrect application of the relief.

12. Potential for procedural gaming:

• The instrument’s requirement that directors pass a resolution that the holding did not affect independence does not specify the evidentiary standard for that conclusion. There is a risk that a perfunctory resolution is used to satisfy the pre-condition without deeper analysis of whether independence was in fact affected. The instrument does not institute an independent check on directors’ conclusions.

Those gotchas flow directly from the instrument’s text and represent points where compliance can fail, documentation gaps can emerge, or timing constraints can impose operational burdens.

The instrument sets out a precise checklist of pre-conditions that must be satisfied before a lead auditor can lawfully omit details of a contravention of paragraph R510.4(c) from the paragraph 307C(3)(d) statutory independence declaration. Compliance requires coordinated actions by the audit firm, the engagement partner, the lead auditor, the relevant person and the entity’s board. Below is a step-by-step compliance protocol distilled from the instrument’s text.

1. Verify scope:

• Confirm the engagement is an audit or review of the financial report of a “relevant entity” for a “relevant period” as defined in s 4. Relevant entity means a company, registered scheme, registrable superannuation entity or disclosing entity. Relevant period means a financial year or half-year.

2. Identify whether a contravention under R510.4(c) has occurred:

• Determine whether a relevant person has held a “financial interest” in the relevant entity or a controlled entity. Use the APES 110 Code definitions for direct and indirect financial interests and the instrument’s materiality qualification for indirect interests (s 4). For controlled entities, use AASB 10 control definitions (s 4).

3. Assess the fair value threshold:

• Establish whether the fair value of the financial interest has exceeded $10,000 at any time during or since the relevant period (s 5(3)(a)). If it has, relief is unavailable. Document valuation methodology and contemporaneous valuation evidence.

4. Engagement partner materiality determination:

• The engagement partner must form the view that the financial interest was not material to the relevant person (s 5(3)(b)). Document the factual basis and analysis that led to this satisfaction, including quantitative and qualitative factors relied upon.

5. Obtain the relevant person’s written confirmation:

• Secure a written confirmation from the relevant person that: (i) the financial interest began to be held without the person knowing it was a financial interest in the relevant entity or a controlled entity (s 5(3)(c)(i)), and (ii) the financial interest was divested as soon as possible and no later than seven days after the person became aware that it was a financial interest in the relevant entity or controlled entity (s 5(3)(c)(ii)).
• Ensure the confirmation includes dates, facts about how the interest came to be held, and proof of divestment timing. Retain the confirmation in the audit file.

6. Lead auditor written report to directors:

• Prepare and deliver to the entity’s board a written report stating that the relevant person held the financial interest in contravention of paragraph R510.4(c) of the Code (s 5(3)(d)). The report should reference the written confirmation from the relevant person and the engagement partner’s materiality assessment. Keep proof of delivery to the board.

7. Obtain directors’ resolution:

• Request the board to pass a resolution stating that the holding did not affect the independence and objectivity of the audit firm, lead auditor, review auditor or any member of the audit engagement team (s 5(3)(e)). Ensure that the resolution is formally recorded in board minutes and that the corporate governance requirements for validly passed resolutions are followed. Retain a signed copy of the resolution.

8. Ensure divestment is effective before signing:

• Verify that, as at the time the lead auditor signs the auditor’s independence declaration under paragraph 307C(5)(b) of the Act, the relevant person does not hold the financial interest (s 5(3)(f)). Obtain evidence of the divestment settlement or transfer and document the date and mechanism. Do not sign the independence declaration until the non-holding condition is satisfied.

9. Document the audit file:

• Maintain a coherent audit file containing:
  • The engagement partner’s materiality assessment and supporting analysis.
  • The relevant person’s written confirmation(s).
  • The lead auditor’s written report to directors.
  • The directors’ resolution and the minutes evidencing its passage.
  • Evidence proving divestment and fair value calculations.
  • Any correspondence or contemporaneous notes showing timelines and steps taken.

10. Check the instrument’s currency:

• Note that the instrument is repealed on 30 April 2029 (s 6). Confirm the instrument is in force for the audit period being reported and that any amending instruments (refer to Endnotes 1 and 2) do not alter the relevant definitions or repeal timing in a way that affects the relief.

11. Coordinate professional and legal risk management:

• Although the instrument grants relief from a specific statutory declaration content requirement, other professional obligations under the APES 110 Code and other statutory duties under the Corporations Act remain. Maintain procedures to address any independence matters beyond the narrow relief. Ensure the audit firm’s legal and compliance teams review the documentation prior to reliance on the instrument.

12. Timing and escalation protocol:

• Because divestment must occur no later than seven days after awareness, set up an escalation protocol to identify potential contraventions early in the audit cycle and to process divestments promptly. Where timing constraints make compliance difficult, treat relief as likely unavailable and plan to include the required declaration details under paragraph 307C(3)(d).

13. Consider internal controls for similar future events:

• Implement procedures for detecting inadvertent holdings by relevant persons, for assessing fair value thresholds on an ongoing basis, and for providing immediate written confirmation templates to relevant persons to expedite compliance where possible.

Following these steps will align practice with the instrument’s conditions as written. The instrument creates a discrete procedural pathway enabling omission of specified details from a statutory declaration, but only where the factual trigger, valuation ceiling, professional judgements, documentary confirmations, director action and remediation timing all align as required by s 5(3). Failure at any step removes the statutory relief and leaves the lead auditor subject to the Act’s full declaration obligations.