The Australian Securities & Investments Commission (ASIC) has published Report 816, setting out findings from its first review of the financial reporting and audit of superannuation funds, and identifying shortcomings in how registrable superannuation entities (RSEs) disclose investments and expenses and how auditors test certain investment valuations. Across 60 RSE financial reports for the year ended 30 June 2024 and five RSE audit files, the review found differing approaches to categorising unlisted investments in the fair value hierarchy with limited explanation, reducing comparability and users’ ability to assess valuation reliability. It also found sponsorship and advertising expenses were not separately disclosed in some cases due to a narrow, quantitative approach to materiality. In audit file reviews, ASIC found auditors often did not obtain sufficient appropriate audit evidence over investment valuations, with high materiality settings potentially reducing audit work and leaving variances uninvestigated, and some auditors did not adequately challenge valuations provided by managed investment scheme fund managers. ASIC issued comment forms to four auditors and will continue working with them to address concerns. REP 816 is the first of three 2024-25 reports on financial reporting and audit quality, with a report on auditor independence due in early October and ASIC’s annual public report due in late October. Surveillance of RSE financial reports and audits will continue in 2025-26, with ASIC considering regulatory action where it identifies a significant breach of the Corporations Act 2001.

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