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n a statement regarding its focus areas for 2025–26, the regulator said it will review an increased number of audit files and, as part of its integrated approach, will continue to select audit files where a change has been made to financial information or the financial report, or where it has concerns that a financial report may have a risk of material misstatement.
ASIC will also select audit files based on other internal or externally available data and review a random selection of audit files from its regulated population.
Financial report preparers are also under scrutiny, and ASIC said it would continue to focus on areas where significant judgment from preparers of financial reports is required.
These include revenue recognition, asset valuation, and estimation of provisions.
ASIC commissioner Kate O’Rourke said financial report preparers should take extra care when making such judgments, especially considering recent capital market volatility.
Furthermore, the regulator said it would also be progressing its proactive, large-scale surveillance focused on auditors’ compliance with their independence and conflicts of interest obligations under the Corporations Act 2001.
“We encourage auditors to self-identify and self-report non-compliance with their independence and conflicts of interest obligations through our regulatory portal,” O’Rourke said.
“Based on our data model, we considered potential independence issues in relation to over 100 audit engagements before targeting nearly 50 auditors for a more detailed review. We intend to publish the outcomes of this surveillance later this year.”
ASIC will also continue its surveillance of registerable superannuation entities (RSEs).
RSEs were required to lodge audited financial reports with ASIC for the first time in 2024, and ASIC has been finalising its review of around half of all lodged RSE financial reports and five RSE audit files.
It said that as part of its 2025-26 program, it would review the other half of the RSE financial reports as well as a selection of RSE audit files focusing on the measurement and disclosure of investment portfolios, and disclosure of marketing and advertising expenses.
Keeli Cambourne
May 20 2025
smsfadviser.com
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