The Australian Securities and Investments Commission has outlined its financial reporting and audit focus areas for the 2025–26 financial year, building on its ongoing surveillance programs to strengthen the quality and integrity of corporate reporting across Australia.
ASIC Commissioner Kate O’Rourke commented, “These surveillance programs aim to enhance the integrity and quality of financial reporting and auditing in Australia. We expect all entities to provide reports and audits that are accurate, complete and informative.”
How revenue is recognized, how assets are valued, and how provisions are estimated
For the new reporting period, ASIC will continue its focus on areas that involve significant professional judgment, including how revenue is recognized, how assets are valued, and how provisions are estimated. The regulator flagged that preparers should be especially cautious in light of recent volatility in capital markets.
Audit supervision will also intensify, with the regulator reviewing a greater number of audit files. ASIC will select audits where changes were made to financial information or where material misstatement risk is suspected. Some files will be selected randomly, including across entities that fall within its regulated population.
The regulator is extending its review of registerable superannuation entities (RSEs), which for the first time were required to submit audited financial reports in 2024. Roughly half of the initial filings have already been reviewed. In 2025–26, ASIC will examine the remaining filings and a selection of related audit files. Particular attention will be given to how investment portfolios are measured and disclosed, along with transparency in marketing and advertising expenses.
Surveillance also continues for companies that were formerly exempt from lodging financial reports under the “grandfathered entities” provision, which was removed in 2022. ASIC noted that some entities have yet to comply and confirmed it would follow up with companies that failed to meet their obligations. Ms O’Rourke added, “Many of these previously grandfathered entities are large companies and should be lodging financial reports. If the auditor is aware that a company is not complying with its lodgement obligations, they should inform ASIC through the appropriate channels.”
Sustainability disclosures will be another area of active supervision. Starting January 2025, Group 1 entities meeting specific thresholds must report under the AASB S2 climate-related disclosure standards. ASIC expects impacted companies to begin preparations immediately if they haven’t already. The regulator will review initial disclosures with December 2025 year-ends and share its findings publicly. ASIC said it would adopt a measured approach during the early implementation phase but stressed the importance of compliance.
Auditor independence and conflict-of-interest oversight will also remain a key enforcement theme. ASIC is conducting large-scale reviews and expects to publish results later in 2025. According to the Commission, nearly 50 auditors are currently under detailed review based on a screening of more than 100 engagements.
The Commission is also updating its guidance for public companies. Information Sheet 284 now includes changes related to the disclosure of tax residency in consolidated entity statements. The revision reflects recent legislative clarifications and is applicable to financial years beginning on or after 1 July 2024.
ASIC’s surveillance activities cover publicly listed companies, large proprietary entities, grandfathered firms, and regulated superannuation funds. These programs are intended to ensure compliance with financial reporting standards and legislative requirements, and the 2025–26 agenda will build on insights from its previous cycle as detailed in Report 799, released in October 2024.
