Kate O’Rourke

ASIC has outlined key focus areas for its financial reporting, audit and sustainability reporting activities in the 2026-27 financial year, including updates to its surveillance programs.

‘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,’ said ASIC Commissioner Kate O’Rourke.

Financial reporting focus areas

In keeping with ASIC’s enduring financial reporting focus areas, we will monitor areas where significant judgement from preparers of financial reports is required. This includes revenue recognition, assessment of asset impairment, recognition and measurement of financial instruments.

For 2026-27, ASIC will review the financial reports of listed and unlisted companies, registrable superannuation entities (RSEs) and managed investment schemes (MISs).

ASIC will also review the disclosures of companies that have provisions for decommissioning and site-restoration costs. This will include assessing disclosures against new guidance issued by the AASB (illustrative example D of AASB 137 Provisions, Contingent Liabilities and Contingent Assets).

Audit focus areas

For 2026-27, ASIC will review 25 audit files. While ASIC will maintain its focus on listed and unlisted companies and RSEs, it will also include a selection of MISs.

Like in 2025-26, ASIC will select audit files from a mix of sources:

• 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 indicates a risk to audit quality, or
• from a random selection process.

In responding to ASIC’s audit findings, audit firms indicate the remedial actions they intend to take. In 2026-27, we will monitor and report on firms’ implementation of those actions.

Separately, ASIC is engaging with the six largest firms to understand the firm-wide actions taken in response to Report 817 Building trust: Auditors’ compliance with independence and conflict of interest obligations.

Compliance activities

ASIC will continue to focus on non-lodgement of financial reports by large proprietary companies.

ASIC will also review compliance by registered company auditors with their obligations to lodge their annual statements. These obligations are fundamental requirements that support audit quality and auditor competence.

Sustainability reporting and assurance focus areas

ASIC has taken a range of steps to support entities’ compliance with the sustainability reporting framework, including guidance, relief and new educational materials. These are on our sustainability reporting webpage.

ASIC has updated its FAQs relating to the review and audit of sustainability reports in response to changes in the law and to address stakeholder questions, and have also provided sustainability reporting relief to related schemes. We are continuing to update our register of relief decisions to include ASIC’s decisions on individual sustainability reporting relief applications. ASIC has also shared preliminary observations on lodged sustainability reports. These observations will assist 30 June reporters as they prepare to lodge their sustainability report for the first time.

The Government has announced in the Budget that it proposes to commence consultation on reforms to reduce reporting burden while maintaining core sustainability reporting requirements, and ASIC will participate in that consultation process. Ahead of any reforms, ASIC’s administration of the mandatory climate reporting framework will continue, with a focus on the sustainability reports being submitted by Group 1 entities, and engagement with large audit firms on assurance methodologies as appropriate.

Background

ASIC’s reporting surveillance programs aim to foster high-quality, consistent and comparable financial information to help investors make informed decisions, ultimately supporting the integrity of Australia’s capital markets.

The objectives of these surveillance programs are outlined on ASIC’s audit inspection and surveillance programs webpage. Financial reporting misconduct, including non-lodgement of financial reports, and auditor misconduct are enforcement priorities for ASIC.

ASIC’s enduring focus areas relevant to the 2026-27 financial year are outlined on the sustainability reporting, financial reporting and audit focus areas webpage.

In 2025, ASIC released:

• Report 816 ASIC’s review into the financial reporting and audit of superfunds (REP 816)
• Report 817 Building trust: Auditors’ compliance with independence and conflict of interest obligations (REP 817)
• Report 819 ASIC’s oversight of financial reporting and audit 2024-2025 (REP 819).

These reports summarise findings from ASIC’s surveillance programs and other complementary work for the period 1 July 2024 to 30 June 2025. They highlights areas where the quality of financial reporting and audits can be improved.

Kate O’Rourke

ASIC has updated its regulatory guidance on managing conflicts of interest for Australian financial services businesses.

The changes align our guidance with developments in law and policy and draw on ASIC’s regulatory experience and insights from its surveillance of private markets.

‘Conflicts of interest aren’t just ethical dilemmas. They pose real threats that erode trust, tarnish reputations, and cause lasting harm to consumers, investors, and the entire financial ecosystem,’ ASIC Commissioner Kate O’Rourke said.

‘Effective conflict management is more than a regulatory checkbox—it’s the cornerstone of trust in financial services.

The updated Regulatory Guide 181 AFS Licensing: Managing Conflicts of Interest (RG 181) sets out clear, principles-based guidance for Australian financial services (AFS) licensees.

It aims to help licensees fulfil their licensing obligation to have robust arrangements and tailored conflict management strategies in place.

Key updates include:

• how the law applies to conflicts of interest, including the scope of the conflicts management obligation and links to other related obligations
• the types of conflicts AFS licensees should identify and manage
• the need for robust, tailored arrangements to manage conflicts
• practical steps for effective conflict management, and
• a non-exhaustive ‘catalogue’ of related legal obligations and information.

The revised RG 181 replaces guidance issued in August 2004 and is part of ASIC’s ongoing regulatory maintenance and simplification agenda—making it easier for businesses to access regulatory information and understand their obligations.

Consultation feedback and ASIC’s response

Between 30 July and 5 September 2025, ASIC consulted publicly on proposed updates to RG 181.

ASIC received 26 submissions from industry, industry groups and other interested parties, with broad support for simplifying and updating the guidance.

Most feedback focused on technical details and specific guidance, such as the illustrative examples ASIC provided to identify different types of conflicts of interest.

ASIC updated RG 181 to address this feedback, where appropriate, and we have summarised our responses to key feedback.

You can read these responses along with the 22 non-confidential submissions to ASIC’s public consultation on the relevant consultation paper webpage.

Background

Conflicts of interest are a significant source of misconduct as well as consumer, investor and economic harm within the financial services sector.

Under section 912A(1)(aa) of the Corporations Act 2001, AFS licensees must have adequate arrangements in place to effectively manage all conflicts of interest, except those that occur wholly outside a financial services business.

The management of conflicts of interest was raised as an area requiring further clarification in a number of submissions to ASIC’s discussion paper on the evolving dynamics in public and private markets, and was a compliance issue identified in ASIC’s private credit surveillance report (REP 820). The issuance of the updated RG 181 was outlined as a deliverable in ASIC’s roadmap for the next 12-18 months, released as part of our response to the discussion paper in November (REP 823).

More information

• Regulatory Guide 181 AFS Licensing: Managing Conflicts of Interest (RG 181)
• ASIC seeks feedback on proposed updates to conflicts management guidance (25-150MR)
• Consultation paper 385 Proposed update to RG 181 Licensing: Managing conflicts of interest (CP 385)

Kate O’Rourke

ASIC has released findings from its financial reporting and audit surveillances for the 12 months to 30 June 2025.

Report 819 ASIC’s oversight of financial reporting and audit 2024–25 (REP 819) outlines:

• findings from company financial reporting and audit surveillances
• enforcement and compliance actions against registered company auditors
• outcomes relating to company financial reports, and
• observations on auditor reporting and on voluntary sustainability reporting to assist preparers of mandatory sustainability reports.

ASIC Commissioner Kate O’Rourke said: ‘Accurate, accessible and reliable financial information is essential for business and markets to work well. All participants in our economy rely on those preparing financial information to do so carefully and fairly, and those auditing that information to do so with skill, professionalism and independence.’

Reliable financial information remains more important than ever, particularly as entities with unlisted assets, such as superannuation funds and private credit funds, play a bigger role in the economy. There is also a growing focus placed on newer types of information, such as disclosures on climate and sustainability, in economic decision-making.

ASIC reviewed 254 company financial reports, conducted 22 surveillances and reviewed 10 audit files at eight audit firms.

As a result of the review:

• 18 entities made or agreed to make changes relating to 19 areas of concern in their financial reports including:

• • Bell Group Holdings Pty Limited making a restatement to consolidate a controlled subsidiary which was previously incorrectly accounted for as an associate, and
  • Energy World Corporation Limited impairing its assets by a total of US$793.8 million.

• we had audit and other findings in nine audit surveillances at eight audit firms and notified both the auditor and company of those findings in order to drive improved practices.

ASIC’s enforcement action against registered company auditors included:

• Companies Auditors Disciplinary Board (CADB) proceedings resulting in the suspension of registered company auditor Joseph John Santangelo for 18 months for failing to comply with auditing standards (24-277MR)
• a court enforceable undertaking accepted by ASIC against Perth-based registered company auditor, David Makowa of DM Advisory Services, in relation to the surrender of registration and never to be reapplied (25-112MR)
• imposition of conditions on the registration of company auditor Allan Facey of MNSA Pty Ltd requiring additional CPD and an independent auditor review and report to ASIC (25-091MR), and
• interventions to require 32 previously grandfathered companies who failed to lodge audited financial reports with ASIC to lodge their financial report. Thirty have since lodged their reports (25-169MR).

REP 819 is the third and final report from ASIC’s expanded program of work to improve financial report and audit quality. The report follows Report 816 Accounting for your super: ASIC’s review into the financial reporting and audit of super funds (REP 816) and Report 817 Building trust: Auditor compliance with independence and conflict of interest obligations (REP 817).

‘ASIC’s expanded program of work revealed that improvement is needed in delivering higher-quality financial reports and audits, and for auditors to be more proactive in ensuring their independence and in reporting significant contraventions to ASIC,’ said Ms O’Rourke.

ASIC will continue to engage with industry and evolve our program of work to improve financial reporting and audit practices. In the 2025–26 surveillance program ASIC will:

• increase the number of audit files reviewed to 25 and enhance the way audit files are selected for review by including a mix of risk-based and random file selections
• review sustainability reports for the year ended 31 December 2025 and share ASIC’s observations with the market to assist preparers, and
• continue to use our full range of regulatory tools to enhance audit quality and take enforcement or compliance action where appropriate.

Downloads

• Report 819 ASIC’s oversight of financial reporting and audit 2024–25 (REP 819)

Background

ASIC’s financial reporting and audit surveillance program focusses on financial reports and audits of listed entities, large proprietary companies and registrable superannuation entities. The surveillances of audit files cover firms that audit the financial reports of listed entities and other public interest entities.

Kate O’Rourke

ASIC’s first report into the financial reporting and audit of super funds has revealed inconsistent approaches to disclosing investments, limited disclosure of sponsorship and advertising expenses, and insufficient audit evidence obtained in the valuation of some investments.

‘High quality audited financial reports underpin members’ confidence in the accuracy of information about the super funds that safeguard their retirement savings,’ ASIC Commissioner Kate O’Rourke said.

‘However, when trustees and auditors do not adequately perform their roles as gatekeepers, there is a potential risk of misstatement of asset values.

‘Super trustees must have appropriate governance arrangements to assist with the preparation of high-quality financial reports, while auditors must perform independent audits in accordance with the relevant auditing and assurance standards.’

Report 816 Accounting for your super: ASIC’s review into the financial reporting and audit of super funds (REP 816) reveals the findings from ASIC’s review of financial reports from 60 registrable superannuation entities (RSEs) for the year ended 30 June 2024 and five RSE audit files (refer to Background for details).

ASIC’s review focused on the valuation and disclosure of investments and the disclosure of expenses (25-079MR).

REP 816 is the first in a series of three reports examining financial reporting and audit quality in 2024-25. ASIC will publish a report on auditor independence in early October, followed by its annual financial reporting and audit public report in late October. This expanded program of work in 2025 demonstrates ASIC’s commitment to high quality financial reports and audits.

Valuation and disclosure of investments

ASIC’s review found RSEs took different approaches when categorising unlisted investments in the fair value hierarchy, often with limited disclosure about their approach.

These different approaches meant it was difficult for a report user to compare investments between RSE financial reports, or to understand how much they could rely on those valuations.

Disclosure of sponsorship and advertising expenses

ASIC’s review also found that sponsorship and advertising expenses were not separately disclosed in some financial reports because RSEs took a narrow, quantitative approach to materiality.

Audits of RSE financial reports

ASIC’s review of audit files found that auditors are not doing enough to obtain sufficient audit evidence about investment valuations in the RSE financial reports.

Given the size of RSEs, auditors adopted high levels of materiality, which can result in less audit work and variances not being investigated.

‘We found that some auditors also did not adequately challenge the valuations provided by fund managers of managed investment schemes. This could undermine member confidence in the accuracy of financial information about their super fund,’ Ms O’Rourke said.

‘We issued comment forms to four auditors setting out our findings and will continue to work with them to resolve our concerns.’

ASIC will continue to focus on RSE financial reports and audits as part of its 2025-26 surveillance program. We will consider taking regulatory action where we see a significant breach of the Corporations Act 2001 (Corporations Act).

Download

REP 816 Accounting for your super: ASIC’s review into the financial reporting and audit of super funds

Background

RSEs were required to lodge audited financial reports with ASIC for the first time for financial years that commenced on or after 1 July 2023.

ASIC conducted surveillance activities to ensure that RSE:

• financial reports were prepared in accordance with Australian Accounting Standards
• audits were conducted in accordance with Australian Auditing and Assurance Standards, and
• financial reports and audits complied with the Corporations Act.

ASIC reviewed 60 RSE financial reports for the year ended 30 June 2024. These RSEs were selected based on investment profiles, size and other intelligence. Of these, ASIC contacted 17 RSEs to obtain further information. ASIC also reviewed five RSE audit files, choosing one file from each of the five large audit firms that collectively audit the majority of all RSE financial reports.

As part of our broader financial reporting and audit program, ASIC has recently reissued Regulatory Guide 34 Auditor obligations: Reporting to ASIC. Changes to the guide include consolidating and simplifying guidance on auditor’s obligations to report contraventions to ASIC and reflecting changes to the law. These changes also include making clear that auditors are required to report contraventions when conducting audits of RSEs.

We remind auditors of their obligations to report contraventions to ASIC as we take these reports seriously.

ASIC has released proposed updates to its conflicts management guidance for financial services businesses.

Regulatory Guide 181 Licensing: Managing conflicts of interest (RG 181) was last updated in August 2004. The proposed changes will align the guidance with developments in law and policy and have been informed by ASIC’s private markets surveillance work.

ASIC Commissioner Kate O’Rourke said: ‘Conflicts management is a core obligation for financial services businesses and helps promote consumer protection and market credibility.

‘Conflicts of interest are more than mere moral dilemmas. They can undermine trust, integrity and performance, causing serious harm to consumers, investors and overall market confidence.’

The updated guidance sets out how Australian financial services (AFS) licensees should comply with their conflicts management obligation and explains:

• how the law applies, including its scope and interaction with other related obligations
• the types of conflicts AFS licensees need to identify and manage to meet their obligation
• the need to have robust and tailored arrangements that are adequate to manage conflicts, and
• how licensees can effectively manage conflicts.

The updated guidance includes a roadmap that sign-posts other related conflicts management obligations that AFS licensees need to be aware of.

‘These updates support ASIC’s strategic priority to improve transparency and consistency across products and markets and aim to ensure financial markets operate efficiently and fairly,’ O’Rourke said.

The consultation forms part of ASIC’s broader regulatory maintenance work and our proposed updates align with ASIC’s simplification agenda.

Providing feedback

Details on how to give feedback can be found in ASIC Consultation Paper 385 Proposed update to RG 181 Licensing: Managing conflicts of interest (CP 385). Responses are due by 5 pm AEST, 5 September 2025.

Background

Conflicts of interest represent a significant source of misconduct as well as consumer, investor and economic harm within the financial services sector.

An AFS licensee must comply with s912A(1)(aa) of the Corporations Act 2001 (Corporations Act), which sets out the conflicts management obligation.

The conflicts management obligation should apply to all conflicts of interest, except those that occur entirely outside of a financial services business.

Conflicts of interest were raised as an area requiring further clarification in a number of submissions to ASIC’s discussion paper on the evolving dynamics between public and private markets, released in February 2025.

ASIC also intends to publish findings from its surveillance focusing on auditors’ compliance with their independence and conflicts of interest obligations later this year.

More information

• Consultation Paper 385 Proposed update to RG 181 Licensing: Managing conflicts of interest (CP 385)

ASIC has published a regulatory guide on sustainability reporting following an extensive public consultation with stakeholders.

Regulatory Guide 280 Sustainability reporting (RG 280) provides guidance for entities that are required to prepare a sustainability report containing climate-related financial information under Chapter 2M of the Corporations Act 2001. This may include companies, registered schemes, registrable superannuation entities, and retail corporate collective investment vehicles.

RG 280 includes guidance on determining who must prepare a sustainability report under the Corporations Act, the content required in the sustainability report, disclosing sustainability-related financial information outside the sustainability report (such as in disclosure documents and product disclosure statements), and ASIC’s administration of the sustainability reporting requirements (including our specific approach to considering relief and use of our new directions power).

ASIC released a draft regulatory guide for consultation, together with Consultation Paper 380 Sustainability reporting (CP 380) on 7 November 2024. We received 60 submissions from key stakeholders, including entities, industry associations, law firms, advisory and audit service providers, academics, and consultants. We are grateful to all respondents for their feedback.

There was broad support for ASIC to provide guidance on the new sustainability reporting requirements in a regulatory guide. RG 280 has incorporated feedback from this public consultation.

In response to the feedback received, we have:

• added sections to RG 280 on climate scenario analysis and disclosing scope 3 greenhouse gas emissions
• included more specific guidance for directors of reporting entities
• included additional guidance on applying the sustainability reporting thresholds
• revised our position on labelling of sustainability-related information in sustainability reports, and
• updated guidance on disclosing sustainability-related financial information outside of the sustainability report.

ASIC has provided further information about our pragmatic and proportionate approach to supervision and enforcement of the sustainability reporting requirements as they are being phased in. As part of this, we will:

• consider how we can support reporting entities through guidance and continue to monitor practices
• engage with reporting entities to understand the basis of disclosures in sustainability reports, where we identify that a statement in a sustainability report is incorrect or misleading in any way. If concerns remain, we may provide reporting entities with an opportunity to make changes or exercise our new directions power, and
• more likely commence an enforcement investigation where we see misconduct of a serious or reckless nature, or where a reporting entity fails to prepare a sustainability report required under the Corporations Act.

ASIC Commissioner Kate O’Rourke said: ‘Climate-related financial information that is consistent, comparable and of high quality, facilitates confident and informed decision making by investors and other users of that information.’

‘The publication of RG 280 is a critical piece that supports the implementation of these sustainability reporting requirements passed by the Australian Parliament. We will continue to expand our broader suite of publications related to sustainability reporting over time as market practices evolve.

ASIC has also provided relief to allow stapled entities to prepare a consolidated sustainability report for the stapled group. ASIC will consider any applications seeking other relief from the sustainability reporting and audit requirements. These may take some time to consider in the early days as they may raise complex or novel issues.

ASIC has provided additional information for entities within the value chain of reporting entities, including small businesses and farmers, about sustainability reporting and what it means to them.

REP 809 Response to submissions on CP 380 Sustainability reporting (REP 809) provides further detail about ASIC’s responses to the submissions received during the consultation process, including how the feedback was addressed in RG 280.

Industry stakeholders can refer to RG 280 and the sustainability reporting page on the ASIC website for more information.

Background

Entities that are required to prepare an annual financial report under Chapter 2M of the Corporations Act and meet one of the sustainability reporting thresholds under s292A for a financial year are required to prepare a sustainability report containing climate-related financial information required under the Corporations Act and AASB S2.

The sustainability reporting requirements are being phased in over three years across three groups of reporting entities, with the first reporting cohort required to prepare sustainability reports for financial years commencing on or after 1 January 2025.

The second and third reporting cohorts are required to prepare annual sustainability reports for the financial years commencing on or after 1 July 2026 and 1 July 2027 respectively.

Downloads

Regulatory Guide 280 Sustainability reporting

Report 809 Response to submissions on CP 380 Sustainability reporting

Consultation Paper 380 Sustainability reporting (Non-confidential submissions in response to CP 380)

ASIC Corporations (Amendment) Instrument 2025/164

ASIC has released a draft regulatory guide on the sustainability reporting regime for consultation with stakeholders.

From 1 January 2025, many large Australian businesses and financial institutions will need to prepare annual statutory sustainability reports containing climate-related financial disclosures.

The draft Regulatory Guide 000 Sustainability reporting (Draft RG 000) includes guidance on who must prepare a sustainability report, how the regime will interact with existing legal obligations and how ASIC will administer the sustainability reporting requirements. This includes specific guidance on ASIC’s approach to granting relief from the regime and use of its new directions power.

Draft RG 000 also addresses specific issues in relation to the contents of the sustainability report and sustainability-related financial disclosures outside the sustainability report.

ASIC Commissioner Kate O’Rourke said: ‘Our focus for this regulatory guide is to assist preparers of sustainability reports to comply with their obligations so that users are provided with high-quality, decision-useful, climate-related financial disclosures that comply with the law and the sustainability standards.’

ASIC’s Consultation Paper 380 Sustainability reporting (CP 380) seeks stakeholder feedback on the draft guide, whether any ASIC legislative instruments that grant relief in relation to financial reporting or audit requirements should be extended to sustainability reporting and any other areas where ASIC should support the introduction of the sustainability reporting regime.

‘We want industry to engage with our draft guidance and what we are proposing. Their feedback will help us to ensure that we can effectively support the implementation of the sustainability reporting regime,’ Ms O’Rourke said.

‘We recognise that there will be a period of transition whilst entities build their capability, as reflected in the phasing in of requirements and modified liability provisions.

‘During this transition period, we will take a proportionate and pragmatic approach to supervision and enforcement.’

ASIC is urging all reporting entities to prepare for the new climate disclosure regime. Feedback on CP 380 is due by 19 December 2024.

Background

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 (Cth) requires mandatory climate reporting for large businesses and financial institutions in Australia through amendments to the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth).

The mandatory climate reporting requirements will be phased in over the next three years across three groups of reporting entities, with the first reporting cohort required to prepare annual sustainability reports for financial years commencing on or after 1 January 2025.

The second and third reporting cohorts are required to prepare annual sustainability reports for the financial years commencing on or after 1 July 2026 and 1 July 2027 respectively.

Industry stakeholders can refer to sustainability reporting on the ASIC website for more information.

Downloads

• Consultation Paper 380 Sustainability reporting (CP 380)