Companies Act 2014 section 1535

Prohibited relationships - specific provisions to secure independence

Section 1535 sets out the relationships and circumstances that prohibit a statutory auditor or audit firm from carrying out a statutory audit, in order to safeguard auditor independence.

• A statutory audit must not be carried out where any direct or indirect financial, personal, business, employment or other relationship between the auditor (or audit firm) and the audited entity would lead a reasonable, informed third party to conclude that the auditor's independence is compromised.
• Specific individuals are prohibited from acting as statutory auditor, including current or former officers and employees of the entity, close family members or business partners of its officers, and anyone with shares registered in their name in the entity.
• An audit firm, regardless of its legal structure, is disqualified from auditing an entity if any of its principals is or has recently been an officer or employee of that entity, or if the firm is disqualified from auditing a related group entity.
• A person carrying out a statutory audit on behalf of an audit firm is personally prohibited from doing so if they hold registered shares in the entity or are a close family member of one of its officers.

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