The Australian Securities and Investments Commission (ASIC) has released its annual guidance for financial reporting and audit oversight, setting a clear agenda for the 2025–26 financial year.
For accounting and audit firms, this announcement is more than just a compliance update—it’s a roadmap for maintaining integrity, improving audit quality, and responding to emerging regulatory expectations.
Why This Matters
Every year, ASIC outlines the areas where it expects financial report preparers and auditors to apply heightened focus. These focus areas not only reflect past findings and industry trends, but also signal where future enforcement actions and surveillance are likely to occur.
For 2025–26, ASIC’s release continues to prioritise critical areas of financial judgment, but also adds increasing scrutiny on sustainability reporting and entities newly brought under the financial reporting regime.
What’s New and What’s Continuing
Sustainability Reporting
One of the most significant developments this year is ASIC’s review of the newly required sustainability disclosures. Starting from January 2025, large, listed entities (Group 1 reporters) must comply with climate-related disclosure requirements aligned with the Australian Sustainability Reporting Standards (AASB S2). ASIC has committed to adopting a proportionate and educative approach during this transition but will still undertake reviews and provide feedback to the market. This shift marks a growing intersection between financial and non-financial reporting, and firms should expect their assurance obligations to expand accordingly.
Revenue Recognition and Asset Impairment
Beyond sustainability, ASIC is maintaining its scrutiny on longstanding problem areas. Revenue recognition remains an ongoing concern—particularly in relation to contracts that involve performance obligations or variable pricing. Likewise, asset valuation and impairment testing continue to attract attention, especially where economic uncertainty or market volatility complicates fair value assessments. ASIC is urging firms to carefully document their estimates and assumptions, ensuring consistency with the underlying economic reality and adequate disclosure in financial reports.
Audit Quality and Enforcement
Audit quality is also back in the spotlight. In FY24, ASIC’s audit surveillance led to enforcement actions against several firms, with concerns ranging from insufficient audit evidence to breaches of independence requirements. For the year ahead, ASIC will expand its review of audit files, including a randomised selection to gain broader insights into firm-wide quality systems. The message is clear: audit firms must invest in both technical rigour and effective quality management.
Registrable Superannuation Entities (RSEs)
Another ongoing priority is the financial reporting obligations of registrable superannuation entities (RSEs). Following new requirements introduced in 2024, ASIC will review a second wave of RSE reports, particularly focusing on how investment portfolios and marketing expenses are valued and disclosed. Firms with superannuation clients should review their advisory processes to ensure consistency with these expectations.
Previously Grandfathered Entities
ASIC continues to enforce compliance by large proprietary companies that lost lodgement exemptions. Enforcement actions will increase for non-lodgement and deficient disclosures.
What Recent Findings Tell Us
This year’s focus areas are consistent with ASIC’s findings from 2023–24. During that period, ASIC reviewed 188 financial reports and 15 audit files. That review led to over $1.88 billion in restatements and several high-profile actions, including preventing companies from issuing streamlined prospectuses due to deficient financial disclosures. These examples underscore ASIC’s commitment to acting where financial reporting fails to meet the required standard.
For firms still adjusting to earlier reforms—such as the removal of lodgement exemptions for ‘grandfathered’ proprietary companies—ASIC’s continued focus on compliance is a reminder that leniency has expired. Enforcement action is now firmly on the table for entities that fail to meet their lodgement and disclosure obligations.
What Firms Should Be Doing
Accounting and audit firms need to take proactive steps. At a minimum, this means reviewing existing documentation practices to ensure that areas involving significant estimates—like provisions, asset values, and revenue streams—are thoroughly supported. It also means ensuring that audits are conducted with sufficient evidence, internal review, and supervision.
For firms working with clients subject to sustainability reporting or recently added to the lodgement net, it’s time to develop clear reporting frameworks. This includes aligning financial reporting teams with ESG data analysts, establishing governance over disclosures, and preparing for independent assurance in the near future.
National Audits Group – Aligned with ASIC’s Priorities
National Audits Group is fully aligned with ASIC’s 2025–26 focus areas. We’re committed to maintaining high audit quality, strengthening our internal review systems, and ensuring compliance across key reporting areas such as asset valuation, revenue recognition, and sustainability disclosures.
We’re actively supporting clients with tailored advice on the new sustainability reporting requirements and continue to work closely with large proprietary companies and superannuation entities to meet evolving financial reporting obligations.
As always, our priority is to help clients navigate complexity with confidence and integrity.
For more information, visit www.audits.com.au.
Ashiqur Chowdhury | Senior Auditor | National Audits Group
