ASIC’s approval of auditor applications stubbornly low

ASIC’s 2025–26 annual report revealed that it assessed 837 registered auditors’ applications, which include registered company auditors (RCA), authorised audit companies, and self-managed superannuation fund (SMSF) auditors.

Out of these, only 22.1 per cent, or 185 applications, were approved, while almost two-thirds or 533 licences, were cancelled or suspended.

ASIC reported that 39 applications were refused or withdrawn while 80 were still in progress.

The low application approval rate has occurred at the same time as auditor supply continues to dwindle, as over the past 20 years, the number of RCAs decreased from 6,173 to 2,992 in 2025-26, according to the ASIC annual report.

The Australian Securities and Investments Commission’s (ASIC) registered auditor dataset figures showed that as at 27 October 2026, there were 2,953 RCAs.

The number of RCAs has plummeted by 58 per cent since 2003, when there were 7,025 company auditors in total.

There has been a steady decline in the number of RCAs in the past few years from 3,441 in 2021–22 to 3,290 in 2022–23, 3,182 in 2023–24, and 3,073 in 2024–25.

There has been a similar drop in registered SMSF auditors from 5,173 in 2021–22 to 3,596 in 2025–26, representing a 30 per cent decline in the past five years.

ASIC’s entry requirements for auditors and financial advisers have been under scrutiny in the past few years, with accounting bodies previously calling for an overhaul and warning that the requirements were burdensome and contributing to talent shortages.

Last year, ASIC vowed to reduce regulatory complexity and cut red tape to increase productivity and make regulation clearer and easier to navigate.

However, Kirk Davis Accounting principal and aspiring company auditor Kirk Davis recounted that he is still facing an uphill battle in his bid to become an ASIC-registered company auditor. He argued that it is more challenging for accountants at smaller firms to become an RCA compared to those at larger firms.

Davis said that his application was refused because ASIC applied Regulatory Guide 180 on auditor registration, which, at a minimum, a competency standard should require evidence of the competent performance of tasks involving the ability to supervise staff and manage an audit.

However, Davis said that as a sole practitioner, he is the audit manager while his supervisor and RCA is the audit partner, but he has not employed any junior staff.

He contended that the Corporations Regulations offer an alternative path for small practitioners like him as it does not require supervision of staff but instead requires supervision of audits of companies.

Davis recently appeared at his third ART hearing last week to have his case heard and said the tribunal would reach a decision in the next few months.

The dwindling supply of auditors is expected to worsen in the near future, with a report commissioned by CA ANZ stating that Australia could be short 17,900 accounting, auditing, and finance professionals by 2035.

The report said the most acute proportional shortage could be among junior external auditors, with supply potentially falling by 4,400 workers or 52 per cent below demand.

ASIC’s annual report said it had taken 66 actions against auditors.

It also said that during the year, it undertook targeted, data-led surveillance to identify entities that had not lodged financial reports on time, and issued infringement notices totalling $4.5 million to 24 companies for alleged failure to lodge financial reports on time.

In addition, ASIC court action resulted in more than $1.4 million in penalties against companies that repeatedly failed to lodge annual reports, along with other governance failures, the report said.

“We reviewed auditor compliance with independence and conflict of interest obligations, identifying areas of elevated risk,” the report said.

“We took action to address deficiencies. As a result, firms have entered into court-enforceable undertakings, received infringement notices for non-compliance, or had auditor registrations cancelled for independence breaches.”