The Australian Securities & Investments Commission (ASIC) has published its financial reporting and audit focus areas for the 2025-26 financial year and outlined priorities for its ongoing surveillance programs. The financial reporting program will continue to target areas requiring significant judgement, notably revenue recognition, asset valuation and the estimation of provisions, with preparers urged to take extra care given recent capital market volatility. Audit inspections will scale up in 2025-26, with a larger number of audit files reviewed using ASIC’s existing risk-based selection approach, alongside a random sample from its regulated population. Sector-specific work will continue for registerable superannuation entities (RSEs), with ASIC completing its review of around half of lodged RSE financial reports and five RSE audit files from the first year of mandatory lodgement in 2024, then reviewing the remaining half of RSE reports and a selection of RSE audit files in 2025-26, focusing on investment portfolio measurement and disclosures and marketing and advertising expense disclosures. ASIC also signalled follow-up and potential enforcement where “grandfathered entities” fail to lodge required financial reports after the 2022 removal of their exemption. On sustainability reporting, ASIC noted that reporting in accordance with AASB S2 Climate-related disclosures will be mandatory for Group 1 entities for financial years commencing on or after 1 January 2025 (subject to thresholds and any ASIC relief), and it will review 31 December 2025 sustainability reports as part of the 2025-26 program and publish market observations. Separately, ASIC is progressing a large-scale auditor independence and conflicts-of-interest surveillance that assessed potential issues in relation to over 100 audit engagements and has targeted nearly 50 auditors for detailed review, with outcomes intended to be published later this year. It also updated Information Sheet 284 for public companies on consolidated entity disclosure statements to reflect legislative changes on tax residency disclosures, applying to financial years commencing on or after 1 July 2024.
Australian Securities & Investments Commission 2025-05-19
Australian Securities & Investments Commission publishes FY 2025-26 financial reporting and audit focus areas and steps up audit and sustainability reporting reviews
ASIC's 2025-26 focus includes revenue recognition, asset valuation, and provision estimation amid market volatility. Audit inspections will increase, targeting registerable superannuation entities (RSEs). ASIC will enforce compliance for "grandfathered entities" post-2022 exemption removal. Sustainability reporting under AASB S2 becomes mandatory for Group 1 entities in 2025, with ASIC reviewing reports. Auditor independence surveillance continues, with findings published. Information Sheet 284 updates tax residency disclosure changes from July 2024.