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Reporting and audit update - Issue 2

Published

The Reporting and audit update covers regulatory developments in reporting and audit, including sustainability and financial reporting matters.

This Reporting and audit update contains the following articles:

ASIC releases REP 819 ASIC's oversight of financial reporting and audit 2024-25

On 31 October 2025, we published REP 819 ASIC's oversight of financial reporting and audit 2024-25 (REP 819). This report is the third in our series of audit-related reports and sets out the results from ASIC’s program of work on financial reporting and audit from 1 July 2024 to 30 June 2025, including:

  • findings from our financial reporting and audit surveillance of companies
  • enforcement and compliance actions against registered company auditors and outcomes relating to company financial reports
  • observations on voluntary sustainability reporting to assist preparers of mandatory sustainability reports, and
  • observations on auditor reporting to ASIC.

We reviewed 254 listed and large proprietary company financial reports and conducted surveillances on the financial reports of 22 companies.

Findings from our financial reporting surveillances resulted in 18 companies making or agreeing to make changes to their financial reports. The main deficiency that we continue to identify is a lack of disclosure about material business risks in the Operating and Financial Review.

We also reviewed 10 company audit files at eight audit firms. The companies included eight ASX listed entities and two large proprietary companies. We issued nine comment forms to audit firms setting out our concerns, mostly related to revenue and receivables, impairment and asset values, and investments and financial instruments. These comment forms were also shared with the company directors, together with the firms’ responses (including the remediation action they intend to take in response to our concerns).

ASIC also took enforcement action against registered company auditors for failing to comply with auditing standards.

In 2025-26 our audit surveillance program will expand to 25 audit file reviews (from 15 in 2024-25) with some files selected on a random basis and some where we have concerns about auditors’ compliance with independence and conflicts of interest obligations. We will also monitor how auditors and audit firms address the findings from our audit file reviews.

REP 819 highlights areas where the quality of financial reporting and audits can be improved. We call on report preparers and auditors to review our findings and adopt our recommendations when preparing and auditing financial reports.

For more information, see REP 819 ASIC's oversight of financial reporting and audit 2024-25.

ASIC review into financial reporting and audit of super funds finds greater uplift is needed

On 30 September 2025, we published Report 816 Accounting for your super: ASIC's review into the financial reporting and audit of super funds (REP 816) summarising findings from our surveillance of registrable superannuation entity (RSE) financial reports and audits for FY 2024–25.

The review found greater uplift is needed in the quality of super fund financial reports and audits.

We reviewed 60 RSE financial reports, enquired with 17 superannuation trustees and conducted audit surveillances of five RSEs, focusing on the valuation and disclosure of investments, and disclosure of expenses. Following our audit surveillances, we issued comment forms to four of the five audit firms setting out our findings and the basis of our concerns.

Our surveillances revealed inconsistent approaches to disclosing investments, limited disclosure of sponsorship and advertising expenses, and insufficient audit evidence obtained in the valuation of some investments.

In 2025-26 we will continue to include RSEs in our surveillance program, reviewing the 30 June 2025 financial reports of all RSEs not covered in our first surveillance program and reviewing five RSE audit files.

We will work closely with the AUASB, APRA and industry to enhance the quality of RSE financial reporting and audit practices. We will also monitor how auditors and audit firms are taking action to address our findings.

For more information, see REP 816 Accounting for your super: ASIC’s review into the financial reporting and audit of super funds.

ASIC review finds gaps in auditor compliance with independence and conflicts of interest obligations

On 7 October 2025, we released Report 817 Building trust: Auditor compliance with independence and conflict of interest obligations (REP 817) which sets out the findings from ASIC’s targeted review of how 48 auditors complied with their independence requirements under the Corporations Act in relation to 53 clients.

Our surveillance focused on auditors’ compliance with independence and conflict of interest obligations, including auditor rotation, as announced in ASIC releases FY 2023-24 financial reporting and audit report and launches auditor independence surveillance (24-240MR).

The review found that many auditors were unable to effectively demonstrate how they complied with their prescriptive and general independence and conflicts of interest obligations. 

Specifically, we found:

  • likely breaches of prescriptive rotation requirements and prohibited relationships for almost one third of the auditors we issued notices to
  • gaps in how auditors approached and documented compliance with their general independence requirements, taking a narrow, tick-box approach and not considering potential threats to independence. Some auditors focused on independence of mind and did not give equal consideration to independence in appearance, and
  • auditors who did not appear to meet their independence requirements failed to proactively identify and report this to ASIC despite being prompted to do so.

ASIC has taken action against auditors and audit firms as a result of this review. We will continue to investigate potential breaches of independence obligations and seek further compliance outcomes accordingly.

Auditor independence will remain a key part of our surveillance program. In 2025-26, we will select audit files for review where we have independence concerns to consider whether there is an impact on audit quality.

ASIC finds poor compliance with financial reporting requirements by grandfathered companies

Our recent surveillance has identified high levels of non-compliance by previously grandfathered companies with the requirement to lodge their financial reports. This prompted ASIC to increase its intensity of reviews and launch a broader crackdown, as announced in ASIC increases its focus on lodgement of financial reports after finding poor compliance by grandfathered companies (25-169MR).

Based on our records, more than half (755 of 1,166) of the formerly grandfathered companies did not lodge financial reports in FY23 or FY24. We made inquiries with 58 grandfathered companies, which did not lodge FY23 and FY24 financial reports and appeared to be large based on other data sources.  We found that of these 58 grandfathered companies, 32 were large and failed to lodge their reports. 30 of the 32 companies have since lodged their financial reports following our interventions.

As a result of widespread non-compliance, ASIC has launched a broader surveillance focused on non-lodgement of financial reports by large proprietary companies, which we expect to complete in Q1 2026.

Regulatory guidance reissued on auditor reporting obligations

ASIC has reissued Regulatory Guide 34 Auditor obligations: Reporting to ASIC (RG 34) to consolidate and simplify existing guidance on auditor breach notification and contravention reporting obligations to ASIC as well as reflect changes to the law.

The reissued RG 34 replaces guidance issued in March 2020.

The updates include guidance on auditor obligations to report:

  • in line with recent changes to the law, suspected contraventions in connection with sustainability reporting, and when conducting audits of registrable superannuation entities, corporate collective investment vehicles (CCIVs) and compliance plans of retail CCIVs
  • attempts to unduly influence, interfere and mislead the auditor
  • conflicts of interest and circumstances involving relevant relationships as part of an auditor’s independence obligations, and
  • the auditor’s own suspected contraventions.

For further information, download Regulatory Guide 34 Auditor obligations: Reporting to ASIC (RG 34).

Regulatory guide reissued on communicating findings from audit files

ASIC has reissued RG 260 Communicating findings from audit files to directors, audit committees or senior managers (RG 260) to update ASIC’s guidance on how we will communicate financial reporting and audit quality findings from ASIC’s reviews of audit files. 

The changes include updates to reflect: 

  • ASIC’s new responsibilities and powers following law reform to regulate the financial reporting and audit requirements of registrable superannuation entities (RSEs), and
  • that the ASIC Act allows ASIC to communicate findings from our reviews of audit files to the relevant directors of the superannuation trustees.

RG 260 provides guidance for directors, audit committees and senior managers of companies, responsible entities, superannuation trustees or disclosing entities, and for audit firms on ASIC’s approach to communicating financial reporting and audit quality findings from our reviews of audit files. 

The purpose of our communication is so the audit firms and audited entities can work together and take steps to improve financial reporting and audit quality.

For further information, download Regulatory Guide 260 Communicating findings from audit files to directors, audit committees or senior managers (RG 260).

ASIC publishes FAQs about auditing and assurance requirements for sustainability reports

We have published responses to some frequently asked questions about the review and auditing requirements for sustainability reports under the Corporations Act 2001 to help auditors and preparers of sustainability reports to understand their obligations under the Corporations Act.

The FAQs may be helpful for:

  • auditors in understanding their obligations under the Corporations Act, such as in relation to forming an opinion on the sustainability report, what the auditor’s report on the sustainability report must contain, and the extent to which the modified liability settings apply to statements in the auditor’s report on the sustainability report, and
  • preparers of sustainability reports in understanding their obligations in relation to obtaining a review or audit of the sustainability report, the appointment, removal or resignation of auditors, and who can conduct a review or audit of the sustainability report.

The AUASB have also published frequently asked questions that are focused on some of the practical considerations relating to the review and audit of sustainability reports.

Entities lodge their sustainability reports online with ASIC

From January 2026, entities will be able to lodge their sustainability reports online through the company officeholder, registered agent and auditor portals. The sustainability report (and auditor’s report on the sustainability report) should be lodged at the same time and relate to the same reporting period as the annual financial report.

ASIC is developing a new form that entities must use to lodge their sustainability report and the auditor’s report on the sustainability report. This form is separate to Form 388 Copy of financial statements and reports, which is used to lodge the annual financial report, directors’ report and auditor’s report on the financial report. Entities should complete and lodge this form separately to Form 388, even if the sustainability report is included within the annual report that is lodged using Form 388.

Listed entities do not have to lodge with ASIC if they have already lodged their sustainability reports with ASX, NSX or SSX and the conditions in ASIC Corporations (Electronic Lodgement of Financial and Sustainability Reports) Instrument 2016/181 are met.

Sustainability reports lodged with ASIC will be available on the public register at ASIC Connect using the company name search under Organisations & Business Names.

For information on how and when to lodge sustainability reports, visit our Sustainability reporting webpage, which will be updated in due course with details of the lodgement process.

Allow time for ASIC to consider your sustainability reporting relief applications

We encourage entities considering applying for sustainability reporting relief to begin the application process as early as possible. As sustainability reporting requirements are new, your application may raise novel issues which may take longer to assess because they raise new policy considerations. 

We encourage applicants to apply for relief well before the applicable statutory deadline. Sustainability reporting relief applications lodged around the statutory deadline risk being refused as there is insufficient time to properly consider the application. We will generally refuse sustainability reporting relief applications lodged after the statutory deadline because a breach has occurred, and we do not have the power to grant retrospective relief.

Entities considering applying for sustainability reporting relief should note the following:

  • Applications are to be lodged through the ASIC Regulatory Portal as an ‘Application for declaration or exemption or order – Application for Relief’ and selecting the appropriate head of power.
  • Applications for relief incur an application fee when the application is made, irrespective of the outcome. The current application fee is $3,487 for each entity requesting relief. Further information on our fee charges is outlined in Regulatory Guide 51 Applications for relief (RG 51).
  • Applications for relief under section 340 must be made validly – that is, the application must be in writing, be authorised by resolution of the company’s board of directors and be signed by a director. Our assessment of your relief application begins once all formal requirements are met.
  • Applications must address at least one of the statutory pre-conditions in section 342(1) for relief specifically why complying with the obligation from which you seek relief would render the sustainability report misleading, be inappropriate in the circumstances, or impose unreasonable burdens.

For guidance on how ASIC exercises its relief powers, see Regulatory Guide 280 Sustainability reporting (RG 280), Regulatory Guide 43 Financial reports and audit relief (RG 43) and the relief from sustainability reporting requirements section of our website.

You can also view the sustainability reporting and audit relief decisions register, which contains some of our decisions on sustainability reporting relief applications. Prospective applicants are encouraged to review the register before submitting a relief application as it will provide insights into the factors we consider in our decision-making process and conditions we may impose. The register will be updated as decisions are made (including where we refuse to exercise relief).

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