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Financial reporting and audit

Financial reporting and audit focus areas

ASIC provides guidance to financial statement preparers and auditors on its enduring and period-specific focus areas for its financial reporting and audit surveillance programs. Commencing with years ending 30 June and 31 December 2025 the focus areas will be updated on an annual basis. The focus areas highlight elements of financial reports and audits where ASIC has identified:

  • significant and/or common instances of non-compliance with Australian Accounting Standards, and/or
  • emerging significant challenges for financial report preparers, and/or
  • issues in past reviews of audit files.

Financial reporting process

Directors and superannuation trustees are primarily responsible for the quality of their financial report in accordance with the Corporations Act 2001 (the Act) and applicable Australian accounting and sustainability standards. This includes ensuring that management produces high quality and timely financial information, supported by robust position papers with appropriate analysis and conclusions.

Appropriate experience and expertise should be applied in the reporting process, particularly in more difficult and complex areas, such as asset values, provisions, revenue arising from contracts with customers, capitalisation of expenditure, expected credit losses and other estimates, the impact of post balance date events and disclosure.

The basis and circumstances related to management’s judgements on accounting estimates and forward-looking information, should be documented at the time and disclosed in the financial report.

ASIC reviews the full-year financial reports of selected listed entities and other public interest entities for each reporting period. This includes a sample of financial reports from registrable superannuation entities (RSE) and large proprietary companies that were formerly exempt from lodging audited financial statements with ASIC (grandfathered companies).

Audit

High-quality financial reports supported by robust auditing are essential for market integrity and investor confidence.

Auditors have an essential role in the production of high-quality financial reports and are reminded to focus their attention and use their professional scepticism on the elements of the financial report that require the greatest amount of professional judgement and estimation. The financial reporting focus areas outlined here are also important focus areas for auditors.

As part of our program we will review a random selection of audit files in addition to reviewing a sample of audit files where financial statements are identified as being at higher risk of material misstatement as part of our financial reporting surveillance program.

Enduring focus areas for financial report reviews

Focus areas for the relevant reporting period

In addition to enduring areas of focus, ASIC may identify areas for focus in the relevant period. In recent years ASIC’s focus has expanded to cover its increased mandate which now includes RSE and previously grandfathered entities. ASIC is also responsible for administering the sustainability reporting requirements under Chapter 2M of the Act.