ASIC flags lodgment of financial reports as new focus area

ASIC has flagged some of its focus areas for financial reporting and audit across its surveillance programs and enforcement activities, in a recent parliamentary joint committee hearing.

The corporate regulator told the Parliamentary Joint Committee on Corporations and Financial Services on Friday that strengthening market disclosure remains a strategic priority for ASIC, especially in terms of financial reporting, sustainability reporting and audit.

"In terms of our enforcement work, financial reporting misconduct and auditor misconduct remain priorities for us," said ASIC deputy chair Sarah Court at a hearing on Friday.

"High quality financial reports and audits are critical to informed investor decision making and to market integrity."

Court said ASIC currently has 36 open matters relating to auditors at the moment, with 18 in the preliminary investigation phase and 18 of which are on ASIC's general investigation list.

"Eight of those relate to auditor independence and conflict of interest concerns," she said.

Court said ASIC is also currently directing greater attention towards failures to lodge financial reports.

"This is a relatively new area of focus for us. We have seen some quite widespread non-compliance in terms of the lodgment of financial reports that is concerning us," she said.

"We are using that information as red flag detection for potentially more significant issues."

The importance of independent valuations for intangible or unlisted assets also continues to be a focus area for ASIC, commissioner Kate O’Rourke told the hearing.

O'Rourke said that while ASIC recognised that valuations for unlisted or intangible assets have always been a challenge for auditors, they are becoming increasingly important as the number of private credit funds grows.

A review of financial reports and audits of registrable superannuation entities by ASIC in September last year found that directors, superannuation trustees and auditors need to improve the quality of financial reports and audits, particularly when valuing investments in unlisted funds.

ASIC said it is also expanding the number of audit files in its audit surveillance program for 2025–26 to 25. For the previous 2024–25 year, it reviewed 15 files under the program.

Files are selected by ASIC for the audit surveillance program both randomly and where there are concerns about auditor independence and conflicts of interest, it said.

"We will monitor the response to the findings of these reviews," Court said.

Court also noted that ASIC's surveillance work now also includes reviews of mandatory sustainability reports.

"We will take a pragmatic and proportionate approach to supervision and enforcement in the early years, supporting industry through guidance and education," she said.

The corporate regulator also warned that it is strengthening its enforcement actions against company auditors.

"Since June 2025, ASIC has reported enforcement outcomes including imposing conditions on registration, referring matters to the Companies Auditors Disciplinary Board (CADB) resulting in cancellation of registration and issuing infringement notices," Court said.

"The most recent enforcement action was the commencement of civil penalty proceedings in the Federal Court against authorised audit company, BDO Audit (WA) Pty Ltd, and one of its directors."