Check against delivery
Thank you, Chair, and members of the Committee, for the opportunity to appear today.
I am joined today by Commissioner, Kate O’Rourke, Executive Director, Enforcement and Compliance, Chris Savundra and Senior Executive Leader, Sustainability, Financial Reporting and Audit, Claire LaBouchardiere.
A key strategic priority for ASIC is strengthening market disclosure, specifically financial reporting, sustainability reporting, and audit. In terms of enforcement, financial reporting misconduct and auditor misconduct remain priorities for ASIC. High quality financial reports and audits are critical to informed investor decision making and market integrity.
As we have discussed before with the Committee, ASIC’s role in relation to auditors has some constraints that can impact our ability to take action.
ASIC regulates individual registered company auditors and authorised audit companies. We administer the requirements of the Corporations Act as it relates to auditor independence and audit quality. ASIC does not regulate the accounting or consulting professions more broadly. Many large accounting, audit and consulting firms operate as partnerships – we do not have the power to regulate these. We also do not regulate the staff within these firms who are not registered with ASIC.
The role of an auditor is to independently examine a company’s financial reports to ensure they comply with the Corporations Act 2001 and accounting standards, and to determine whether the reports provide a true and fair view of the entity’s financial position and performance.
ASIC continues to investigate and take enforcement action against auditors who breach the law, and we share information with the professional accounting bodies where possible.
Information sharing
ASIC has worked with the professional bodies to improve the regularity and efficiency of information sharing and we have now formalised regular information sharing arrangements, replacing earlier ad hoc processes. This has improved the timeliness of referrals and reduced the risk of regulatory gaps between ASIC and the professional bodies.
The professional bodies play a key role in upholding ethical standards, and ASIC works closely with them to share conduct concerns about individuals who are both ASIC-regulated and members of a professional body, so that matters are addressed appropriately.
Strategic work and regulatory outcomes
We have continued to enhance and expand our surveillance work.
We have now reviewed financial reports and audits of registrable superannuation entities for the first time, and in September last year we released a report that found directors, superannuation trustees and auditors need to improve the quality of financial reports and audits, particularly when valuing investments in unlisted funds.
In October last year, ASIC released a separate report which found that auditors from firms of all sizes often could not demonstrate compliance with independence and conflict of interest obligations. We are now selecting audit files for review where we have independence concerns to consider whether there is an impact on audit quality.
Another report in October last year into oversight of financial reporting and audit reviewed 254 financial reports from listed and large proprietary companies and conducted surveillance of a further 22 companies. The result was 18 companies making or agreeing to make changes to their financial reports, most commonly to address inadequate disclosure of material business risks in the Operating and Financial Review.
In 2025–26, our audit surveillance program will expand to 25 audit file reviews, up from 15 in 2024–25, with files selected both randomly and where there are concerns about auditor independence and conflicts of interest. We will monitor the response to the findings of these reviews.
Our surveillance work will now include reviews of mandatory sustainability reports. We will take a pragmatic and proportionate approach to supervision and enforcement in the early years, supporting industry through guidance and education.
ASIC has recently strengthened its enforcement actions against company auditors. Since June 2025, ASIC has reported enforcement outcomes including imposing conditions on registration, referring matters to the Companies Auditors Disciplinary Board (CADB) resulting in cancellation of registration and issuing infringement notices. The most recent enforcement action was the commencement of civil penalty proceedings in the Federal Court against authorised audit company, BDO Audit (WA) Pty Ltd (BDO Audit), and one of its directors.