The Australian Securities & Investments Commission (ASIC) published Report 817 on auditor compliance with independence and conflict of interest obligations, finding that many auditors were unable to effectively demonstrate compliance and that a number appeared to have breached prescriptive requirements. The review covered auditors from firms of all sizes and follows ASIC action against several auditors and an audit firm identified as likely in breach through the work. ASIC identified 15 auditors in likely breach of rotation requirements, relationship prohibitions or providing a prohibited non-audit service, including nine auditors that failed to demonstrate compliance with mandatory rotation limits of no more than five consecutive years auditing a listed client and five auditors that appeared to hold prohibited client relationships, including one who was also an officeholder of their client. None of the 15 proactively reported potential breaches to ASIC despite a reminder in October last year. Outcomes included ASIC accepting the cancellation of a company auditor’s registration for independence failures, issuing a AUD 78,250 infringement notice to Nexia Perth over prohibited services, and entering into three court enforceable undertakings with auditors associated with Hall Chadwick (NSW) and the firm over audit rotation failures; additional inquiries are ongoing. ASIC said an annual report on its financial reporting and audit surveillance of companies and auditors will be published later in October, and that its 2025-26 financial reporting and audit program will increase the number of audit surveillances and include audit files where there are potential independence concerns.

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