ASIC has highlighted its focus areas for FY2025-26 as part of its integrated financial reporting and audit surveillance program.
The integrated program covers both financial reporting and audit quality and for the first time ASIC provided some early signalling in respect of sustainability.
ASIC continues to split the areas of focus into two separate components:
- Enduring focus areas apply to all reporting periods
- Particular focus areas relevant for the reporting period and supplement the enduring focus areas.
Focus areas are consistent with those from prior periods.
Enduring ASIC focus areas
The enduring focus areas continue to be focused on areas of significant judgement. ASIC highlighted that extra care should be taken when making judgments considering recent capital market volatility.
Focus areas are identified from the results of ASIC’s integrated financial reporting and audit surveillance program. The program focuses on financial reports of listed entities and other economically significant public interest entities such as large proprietary companies, grandfathered entities and registered superannuation funds.
- Asset values
- Revenue
- Provisions
- Subsequent events
- Disclosures
ASIC guidance
Directors must:
- annually test goodwill, intangible assets not yet available for use and indefinite life intangible assets for impairment
- ensure impairment valuation methods are appropriate, use reasonable and supportable assumptions, and are validated against other relevant methods.
Directors should be mindful that market capitalisation is generally not a reliable fair value estimate but may be useful as an impairment indicator or valuation cross-check, specifically:
- share prices may reflect transactions involving small portfolio interests
- businesses may be sold in illiquid markets with few potential participants
- acquirers may seek synergistic or make significant changes to a business.
Directors are reminded that applying market capitalisation to revenue ratios from comparable entities to the entity’s own revenue is generally more suitable as a valuation cross-check. Directors should be mindful that:
- information may be dated
- there may be limitations in using an entity’s own market capitalisation
- comparable entities should have closely aligned businesses, products, markets, cost structures, and funding.
Directors should disclose estimation uncertainties, changes in key assumptions, and provide sensitivity analysis or probability-weighted scenarios.
ASIC guidance
Directors should properly consider factors that may reduce fair values of commercial and retail properties, even where market transactions are absent. These factors may include:
- changes in tenant space requirements
- online shopping trends
- future economic or industry impacts
- tenant’s financial condition.
In applying the leases standard, lessees and lessors must comply with lease accounting requirements and lessees should assess impairment of right-of-use assets.
ASIC guidance
Directors should:
- assess the reasonableness and supportability of key assumptions used in expected credit losses (ECL) calculations
- obtain reliable and up-to-date information on borrowers’ and debtors’ circumstances
- evaluate short-term liquidity, financial condition and earning capacity of borrowers and debtors
- ensure accurate ageing of receivables
- apply forward looking assumptions and avoid assuming all recent debts will be collectible
- consider the continued relevance of historical credit loss data in expected credit loss assessments
- incorporate future losses using probability weighted scenarios where appropriate
- disclose estimation uncertainties and key assumptions used in determining expected credit losses
ECLs should be a focus for companies in the financial sector. Companies, particularly financial institutions, should consider market conditions and uncertainties when assessing ECLs. Directors must evaluate significant increases in credit risk for specific lender groups and ensure adequacy of data, models, controls, and governance in calculating ECLs and disclosing related uncertainties and assumptions.
ASIC guidance
Directors should assess the following asset values:
- net realisable value of inventories, ensuring all estimated costs of completion necessary to make the sale have been considered
- recoverability of deferred tax assets
- valuation of investments in unlisted entities.
ASIC guidance
Directors should ensure financial assets are appropriately measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss.
In measuring financial assets at amortised cost both criteria must met:
- assets are held to collect contractual cash flows
- cash flows consist solely of payments of principal and interest on the principal outstanding.
Revenue
ASIC guidance
Directors should review revenue recognition policies to ensure:
- revenue and deferred revenue reflect the substance of the underlying transactions and the satisfaction of performance obligations
- judgements and assumptions used in revenue models are appropriate and reasonable
- revenue policy disclosures are tailored to each material revenue stream and not boilerplate.
Provisions
ASIC guidance
Directors should assess the need and adequacy of provisions for:
- onerous contracts
- lease make-good obligations
- mine site restoration
- restructuring plans
- financial guarantees.
Subsequent events
ASIC guidance
Directors and management must review all events occurring after their reporting date but before authorising the financial report to determine:
- events that provide evidence of conditions existing at the reporting date and require adjustment
- events arising after the reporting date, and if material, require disclosure only.
ASIC guidance
Directors should ensure the Operating and Financial Review (OFR):
- complements the financial report and tells the story of how the entity’s businesses are impacted by uncertainties and changing economic circumstances. The OFR should clearly explain businesses' performance, underlying drivers of the results and financial position, material business risks, management strategies and prospects. Forward-looking information must have a reasonable basis and continuous disclosure obligations apply if circumstances change
- provides a comprehensive, clear and understandable overview, supported by information that helps investors assess significant factors affecting the entity, its businesses and asset values
- explains the underlying drivers of performance and financial position, including risks, management strategies and future prospects
- highlights all significant factors with appropriate prominence.
Directors should also consider disclosing the most significant business risks at the entity-wide level that could impact financial outcomes. This includes discussion of environmental, social and governance risks.
The nature of risks will vary depending on the entity’s operations and strategies. Providing an exhaustive list of generic risks that could apply broadly to many entities is not useful.
Risks should be described in context, for example:
- why the risk is important or significant
- its potential impact
- where relevant, factors within management’s control.
Directors should also assess whether climate-related risks could materially impact the entity’s future prospects and ensure these are disclosed.
Similarly, directors should consider whether cybersecurity risks require disclosure. This includes evaluating potential impacts such as loss of personal data or denial-of-service attacks, considering the extent and nature of personal data held and possible revenue implications.
ASIC guidance
Directors should consider what information is useful for investors.
Directors should ensure disclosures provide investors with relevant, entity-specific information on its business, assets, financial position and performance, including any changes from prior periods.
To enable investors to understand the approach to uncertainties, assess potential future impacts and compare entities, the financial report should disclose:
- relevant uncertainties
- changes in key assumptions
- sensitivities.
Directors should review asset and liability classification (current versus non-current) based on maturity dates, payment terms and compliance with debt covenants.
Half-year reports should disclose significant developments and changes in circumstances since the last full year financial report.
ASIC guidance
Directors must ensure non-IFRS profit measures in the OFR or market announcements are not presented in a misleading manner, and should refer to RG 230 Disclosing non-IFRS financial information.
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What are the particular ASIC focus areas for this period?
There is an ongoing focus on large proprietary companies that were exempt from lodging audited financial reports before 2022. ASIC has highlighted that there are still a number of companies failing to meet broader financial reporting obligations. ASIC continues to include this cohort in its surveillance program. These companies should ensure their financial statements comply with Australian Accounting Standards and that they are complying more broadly with their reporting obligations under the Corporations Act. Auditors are reminded to report non-compliance in lodging financial reports through the appropriate channels.
Since financial years ending on or after 30 June 2024, superannuation trustees must lodge audited financial reports for most registrable superannuation entities (RSEs) with ASIC.
ASIC’s key focus areas are:
- measurement and disclosure of investment portfolios
- disclosure of marketing and advertising expenses.
This cohort remains part of ASIC’s surveillance program.
Group 1 entities must comply with AASB S2 Climate-related disclosures for financial years commencing on or after 1 January 2025.
ASIC will review 31 December 2025 sustainability reports as part of the 2025-26 surveillance program applying a proportionate and pragmatic approach during the phased implementation.
To assist preparers and stakeholders, ASIC:
- Published Regulatory Guide 280 Sustainability Reporting (RG280). Refer to ASIC Regulatory Guide 280 Sustainability reporting (25RU-03).
- Included resources in a sustainability reporting section on its website. Refer to ASIC Sustainability Reporting website (24RU-14).
Minor clarifications to the Consolidated Entity Disclosure Statement (CEDS) were enacted in December 2024 that are applicable for financial years ending 30 June 2025 onwards. Refer to Consolidated Entity Disclosure Statement (CEDS) (25RU-02).
ASIC has updated Information Sheet 284 Public companies to include a consolidated entity disclosure statement in their annual financial report to reflect the recent legislative amendments.
Surveillance findings
ASIC reviews the full-year financial reports using a risk-based approach informed by market data, reported financial information, relevant ASX announcements and other ASIC intelligence.
The findings largely determine the selection of related audit files for review by ASIC. ASIC will review an increased number of audit files for 2025-2026 as part of the integrated program.
ASIC Surveillance results for 1 July 2024 to 30 June 2025
ASIC released its latest annual financial reporting and audit surveillance in October 2025. The report outlines ASIC’s findings, current focus areas, and reinforces the responsibilities of preparers and auditors in ensuring high quality corporate reporting and auditing.
Key findings from the financial reporting surveillance program include:
- operating and financial review (OFR) disclosures, particularly inadequate disclosure of material business risks
- impairment and asset values
- financial report disclosures.
These areas align with ASIC’s focus areas released by ASIC in May 2025. ASIC also highlighted its ongoing surveillance of financial report lodgements by previously grandfathered companies, which will extend to all large proprietary companies in the next reporting period.
ASIC has also released two other reports related to their financial reporting and audit surveillances of registrable superannuation entities (RSEs) in September 2025 and auditor compliance with independence and conflict of interest obligations in October 2025.
- Concerns raised
- Findings raised
- Key takeaways
High quality and informative disclosures are crucial
ASIC emphasises the importance of high-quality and informative disclosures.
Financial statements should be accurate, complete and informative. Judgements on accounting estimates and forward-looking information should be well-documented and appropriately disclosed.
High-quality financial reports are essential for market integrity and investor confidence.
Directors are primarily responsible for the quality of the financial report. Quality and timely financial information for audit is expected, including robust position papers with appropriate analysis and conclusions referencing relevant accounting standards. Companies must have appropriate processes, records and analysis to support disclosures in the financial report.
Access to appropriate experience and expertise in the reporting processes, particularly in more difficult and complex areas, such as asset values, provisions, and other estimates, continues to be important.
Other insights
For the latest ASIC updates on other reporting topics, refer to these additional KPMG insights.
Contact our team
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