CPA Australia Audit and Assurance Lead Tiffany Tan said the report demonstrates progress across the profession, while also highlighting broader challenges facing the superannuation sector as investment portfolios are inherently  complex.

“CPA Australia sees ASIC’s findings as evidence of a sector that is continuing to mature its approach to audit quality and valuation governance. While the second-year report identifies areas for improvement, it is encouraging that firms have responded constructively through remedial actions designed to strengthen audit quality and deliver better outcomes for super fund members,” Ms Tan said.

“The report also highlights a broader reality facing the industry. As super funds increase their exposure to unlisted and private market investments, auditors are being asked to provide assurance over increasingly complex investment structures involving multiple layers of fund managers and external parties. In many cases, the challenge is not identifying valuation risk, but obtaining sufficient information to independently assess and challenge those valuations.

“We have already seen uplift in audit quality since ASIC’s previous review, and the profession remains committed to continuous improvement. CPA Australia and the audit profession will continue working constructively with ASIC to support stronger audit outcomes and enhance confidence in the superannuation system.

“The findings reinforce that audit quality is often influenced by the quality, transparency and availability of information provided by reporting entities and other parties across the investment chain. Auditors can only provide robust assurance when they have access to sufficient appropriate information and evidence.”

Ms Tan said the findings reinforce that valuation quality is a shared responsibility across the financial reporting ecosystem and welcomed ASIC’s continued collaboration with APRA.

“Trustees, fund managers, valuers, auditors, regulators and standard setters all have a role to play in improving transparency, governance and the flow of information needed to support high-quality valuations and audits.

“The profession remains committed to continuous improvement, but there is also an opportunity for greater clarity and consistency in the application of auditing requirements across the superannuation sector. As unlisted assets become increasingly significant to Australians’ retirement savings, practical guidance that helps auditors obtain sufficient appropriate evidence over externally managed investments will support more consistent outcomes and further strengthen confidence in the system.”

CPA Australia Superannuation Lead Richard Webb said the report serves as an important reminder that responsibility for investment valuations ultimately sits with super fund trustees, not auditors or external investment managers.

“Super funds can outsource investment management and obtain valuations from external managers or independent experts, but they cannot outsource accountability for the valuation that ultimately appears in their financial statements and members’ accounts. That responsibility ultimately sits with the trustee,” Mr Webb said.

“If an auditor cannot obtain enough information about an unlisted investment to test its valuation, there is a legitimate question about whether the trustee itself has sufficient information to understand and challenge that valuation. Access to valuation information should be designed into investment arrangements from the outset, rather than becoming an issue discovered at audit time.

“Good audit cannot substitute for good valuation governance. The auditor provides independent assurance, but trustees need the systems, expertise and information necessary to understand and challenge the valuation of the assets they hold on behalf of members.”

ASIC’s report found that trustees often relied on external fund managers for valuation information relating to unlisted investments, while some auditors did not obtain sufficient evidence to test valuations or assess the reliability of information provided by third parties. The regulator also noted that timely valuation adjustments and stronger disclosures remain important areas for improvement.