ASIC to focus on audit capabilities, surveillance

Financial report auditing will see an updated surveillance capability in the 2026–27 financial year, with the regulator intending to review 25 audit files and to maintain a focus on listed and unlisted companies, as well as a selection of management information systems.

As in the current financial year, the audit files will be selected “where there has been a material correction to a financial report or where ASIC is concerned that a financial report may be materially misstated, based on other internal or external data (including independence threats), which indicate a risk to audit quality, or from a random selection process”.

The 2026–27 processes will also see ASIC monitor and report on firms’ implementation of indicated remedial measures.

Monitoring of financial reporting will remain where significant judgement from the preparer is required, including in revenue recognition, asset impairment assessment, and the recognition and measurement of financial instruments.

Regarding compliance, ASIC will continue to monitor non-lodgment of financial reports by large proprietary companies, and conduct a review of compliance by registered company auditors “with their obligations to lodge their annual statements”.

Finally, ASIC outlined a range of steps intended to support compliance with sustainability reporting, with a focus on those submitted by Group 1 entities, noting the government’s announcement that “it proposes to commence consultations on reforms to reduce reporting burden while maintaining core sustainability reporting requirements”, of which ASIC will participate in the consultation process.

Commissioner Kate O’Rourke said, “Our surveillance programs reinforce the importance of high-quality reporting and audit. Reliable financial information is critical to transparency in Australia’s capital markets and informed investment decisions by investors.”