ASIC Auditing Competency Standard 2026: What Australian Businesses Must Know When Choosing an Auditor

On 28 September 2026, the Australian Securities and Investments Commission (ASIC) approved an updated Auditing Competency Standard for registered company auditors, which took effect on 1 October 2026. Operating under the ASIC Corporations (Approval of Auditing Competency Standard) Instrument 2026/733, the new standard places significantly greater emphasis on ethical behaviour as a core component of professional competence. For Australian businesses that rely on auditors for financial reporting, SMSF compliance, or assurance services, understanding this change is essential when selecting and evaluating audit professionals.

Understanding the New Auditing Competency Standard

The updated standard was jointly developed and issued by Australia's three primary professional accounting bodies: CPA Australia (CPAA), Chartered Accountants Australia and New Zealand (CAANZ), and the Institute of Public Accountants (IPA). It replaces the previous standard established under ASIC Corporations (Approval of Auditing Competency Standard) Instrument 2016/474, which had been in place for a decade.

The standard serves as an alternative pathway to company auditor registration under section 1280(2)(b) of the Corporations Act 2001. Rather than relying solely on time-based experience requirements, the competency standard allows applicants to demonstrate the knowledge, skills, and professional attributes required to perform company audits to the standard expected by ASIC and the market.

The most significant change in the 2026 standard is the elevated treatment of ethical behaviour. Under the previous framework, ethics was addressed as one component among many. The new standard positions ethical conduct as a foundational requirement that underpins all other competencies — reflecting ASIC's view that technical skill without ethical grounding is insufficient for the trust that auditors must command.

ASIC is also updating its Regulatory Guide 180: Auditor Registration (RG 180) to align with the provisions of Instrument 2026/733, ensuring that the guidance available to applicants and the profession reflects the new standard.

Key Changes and What They Mean for Audit Quality

The 2026 Auditing Competency Standard introduces several important changes that have direct implications for audit quality and the selection of auditors:

• Ethics as a foundational competency — The standard explicitly frames ethical behaviour — including independence, objectivity, professional scepticism, and confidentiality — as prerequisites for all other audit competencies. Auditors who cannot demonstrate ethical grounding will not meet the standard, regardless of their technical skills.
• Updated knowledge requirements — The standard reflects the current Australian auditing and assurance standards landscape, including the Australian Auditing Standards (ASAs), the Australian Standards on Quality Management (ASQMs), and the evolving sustainability assurance framework under ASSA 5000 and ASSA 5010.
• Skills-based assessment — The competency approach allows for a more nuanced assessment of an auditor's capabilities than a simple time-in-role measure, potentially improving the quality of newly registered auditors entering the market.
• Alignment with international standards — The updated standard reflects developments in the International Federation of Accountants (IFAC) framework and the International Auditing and Assurance Standards Board (IAASB) standards, supporting Australia's position as a credible participant in global capital markets.

Common Mistakes When Choosing an Auditor

The introduction of the new competency standard is an opportunity for Australian businesses to reassess how they select and evaluate their auditors. Several common mistakes can leave businesses exposed to audit quality risks:

• Selecting on price alone — Audit fees are a legitimate consideration, but the lowest-cost auditor may not have the competencies required for a complex engagement. The new standard's emphasis on ethics and skills-based assessment makes competency evaluation more important than ever.
• Not verifying ASIC registration — Only registered company auditors (RCAs) can conduct statutory audits of companies under the Corporations Act 2001. Businesses should verify that their auditor holds a current ASIC registration before engagement.
• Ignoring independence requirements — Auditor independence is a cornerstone of audit quality. Businesses should ensure their auditor has no financial, personal, or business relationships that could compromise their objectivity. The new standard's emphasis on ethics reinforces this obligation.
• Failing to assess professional scepticism — Professional scepticism — the auditor's questioning mind and critical assessment of audit evidence — is a key competency under the new standard. Businesses should look for auditors who ask probing questions and do not simply accept management representations.
• Not considering sector-specific experience — An auditor with strong general competencies may lack the sector-specific knowledge needed for complex engagements, such as SMSF audits, not-for-profit audits, or sustainability assurance.

Australian Regulatory Context

The new Auditing Competency Standard sits within a comprehensive regulatory framework for audit quality in Australia. ASIC is the primary regulator for registered company auditors, with powers to register, monitor, and discipline auditors under the Corporations Act 2001.

ASIC's annual financial reporting and audit surveillance program identifies areas of concern in financial reporting and audit quality. For the 2026-27 year, ASIC has flagged impairment testing, revenue recognition, expected credit loss provisioning, and going concern assessments as priority areas. Businesses should ensure their auditor has current knowledge of these focus areas.

The Australian Auditing and Assurance Standards Board (AUASB) sets the auditing standards that registered company auditors must follow. Key standards include ASA 240 (fraud risk assessment), ASA 600 (group audits), and the recently revised ASA 701 (key audit matters). The AUASB has also issued ASSA 5000 and ASSA 5010 for sustainability assurance, which are becoming increasingly relevant as mandatory climate reporting obligations expand.

The Australian Standards on Quality Management — ASQM 1 (firm-level quality management) and ASQM 2 (engagement quality reviews) — set the quality management framework that audit firms must implement. Businesses engaging auditors should ask about their firm's ASQM compliance as part of the selection process.

For SMSF trustees, the ATO regulates SMSF auditors separately from ASIC's RCA framework. SMSF auditors must be registered with ASIC as approved SMSF auditors and must comply with independence requirements under APES 110 (the Code of Ethics for Professional Accountants).

Questions to Ask When Choosing an Auditor

In light of the new Auditing Competency Standard and the broader regulatory environment, businesses should ask prospective auditors the following questions:

• Are you currently registered as a company auditor with ASIC, and can you provide your registration number?
• How does your firm demonstrate compliance with ASQM 1 and ASQM 2?
• What is your approach to professional scepticism and independence in this engagement?
• Do you have experience with the specific sector or complexity of our business?
• How do you stay current with ASIC's financial reporting focus areas and the latest Australian Auditing Standards?
• For sustainability reporting: are you accredited to provide assurance under ASSA 5000 or ASSA 5010?
• What is your firm's policy on auditor rotation and independence safeguards?

What the New Standard Means for Businesses Seeking Assurance

The 2026 Auditing Competency Standard is ultimately good news for Australian businesses that rely on audit and assurance services. By raising the bar for ethical behaviour and skills-based competency, ASIC is working to improve the quality and reliability of audit opinions in the Australian market.

For businesses, the practical implication is that newly registered auditors entering the market from October 2026 will have been assessed against a more rigorous and ethically grounded standard. This should translate to higher quality audit work, greater professional scepticism, and more reliable assurance over time.

However, the standard only applies to new registrations and does not automatically upgrade the competencies of existing registered auditors. Businesses should continue to evaluate their auditors' ongoing professional development, CPD compliance, and engagement with the latest standards.

How MyMoney® Can Help

Selecting the right auditor is a critical governance decision for any Australian business. A qualified, ASIC-registered auditor with current knowledge of the 2026 Auditing Competency Standard and ASIC's financial reporting focus areas can provide the assurance your stakeholders need.

MyMoney® connects Australian businesses with experienced, registered auditors across a range of sectors and engagement types, from statutory company audits to SMSF audits and sustainability assurance. Whether you are selecting an auditor for the first time or reviewing your current arrangement, the right professional is available on the platform.

Post a Brief to describe your audit and assurance needs and receive proposals from qualified auditors. Alternatively, Browse Auditors to find a specialist with current ASIC registration and the competencies your business requires.