ASIC Financial Reporting and Audit Focus Areas for Australia 2026–27: What Businesses Must Know

Australian businesses and their boards face a more demanding audit environment in 2026–27 than at any point in recent memory. The Australian Securities and Investments Commission (ASIC) has published its financial reporting, audit, and sustainability focus areas for the year ahead, signalling heightened scrutiny of complex accounting estimates, expanded audit file reviews, and the first wave of mandatory sustainability assurance obligations. Understanding what ASIC is looking for — and how a qualified auditor can help your organisation respond — is now a board-level priority.

Understanding ASIC's 2026–27 Audit and Reporting Focus Areas

Each year, ASIC publishes its surveillance priorities to guide preparers, auditors, and directors. For 2026–27, the regulator has identified several areas requiring particular attention from both financial report preparers and the auditors who sign off on them.

ASIC will review financial reports for listed companies, unlisted public companies, registrable superannuation entities (RSEs), and — for the first time — managed investment schemes (MISs). The regulator plans to review 25 audit files, selected on the basis of potential material misstatements, data indicating audit quality concerns, or random selection.

A new specific focus area for 2026–27 is decommissioning and site-restoration provisions. ASIC will assess whether companies with obligations to restore sites — such as mining, energy, and infrastructure businesses — are disclosing these provisions accurately and in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets. Auditors must be prepared to scrutinise management's assumptions and discount rates underpinning these estimates.

Key Areas of Audit Scrutiny in 2026–27

Beyond decommissioning provisions, ASIC's surveillance program continues to focus on areas that require significant judgement from preparers and auditors alike. Businesses should ensure their auditor has deep expertise in each of these domains.

• Revenue recognition — Auditors must verify that revenue is recognised in accordance with AASB 15, particularly for long-term contracts, variable consideration, and performance obligations.
• Asset impairment assessments — With interest rates and economic conditions affecting asset values, ASIC expects rigorous testing of goodwill, intangibles, and property, plant and equipment impairment models.
• Financial instruments recognition and measurement — Complex financial instruments, including derivatives and hybrid instruments, remain a high-risk area requiring specialist audit procedures.
• Decommissioning and site-restoration provisions — A new focus area for 2026–27, requiring auditors to challenge management's estimates and discount rate assumptions.
• Sustainability reporting assurance — Group 1 entities are now subject to mandatory sustainability reporting, and ASIC is actively engaging with large audit firms on assurance methodologies.

ASIC is also monitoring the remedial actions that audit firms committed to following previous surveillance findings, and is engaging with the six largest audit firms regarding independence and conflict-of-interest issues identified in Report 817 (Building Trust).

Sustainability Reporting and Assurance: New Obligations for 2026

One of the most significant developments for Australian businesses in 2026 is the commencement of mandatory sustainability reporting. Group 1 entities — generally large listed companies and financial institutions — are now required to prepare and lodge sustainability reports alongside their annual financial reports.

Sustainability reports must be lodged separately from the annual financial report using Form 398 (Copy of sustainability report and auditor's report) via the ASIC company officeholder, registered agent, or auditor portals. This is a new administrative obligation that requires coordination between management, the board, and the appointed auditor.

Auditors engaged to provide assurance over sustainability reports must be registered company auditors or, in some cases, authorised assurance practitioners. ASIC has published FAQs to assist auditors and preparers with their obligations, including the application of modified liability settings. Entities seeking relief from these new reporting requirements are encouraged to apply early through the ASIC Regulatory Portal.

AASB 18: Preparing for the Next Wave of Change

While not yet in effect for most entities, AASB 18 Presentation and Disclosure in Financial Statements — the Australian equivalent of IFRS 18 — will replace AASB 101 for Tier 1 for-profit entities for annual reporting periods beginning on or after 1 January 2027. Boards and audit committees should begin preparing now.

AASB 18 introduces a structured income statement with mandatory categories (operating, investing, financing, discontinued operations, and income tax) and requires entities that use non-GAAP performance measures in public communications to disclose these in a single audited note. Auditors will be required to verify new subtotals, income and expense classifications, and reconciliations for management-defined performance measures.

Common Mistakes and Red Flags in Financial Reporting

ASIC's surveillance findings over recent years reveal recurring issues that auditors and preparers must actively work to avoid. Being aware of these common mistakes can help your organisation engage more productively with its auditor.

• Inadequate impairment disclosures — Failing to disclose the key assumptions, sensitivity analyses, and discount rates used in impairment models is a persistent finding.
• Overly optimistic going concern assessments — Management sometimes presents going concern assessments that are not adequately supported by cash flow forecasts or financing arrangements. Auditors must independently evaluate these assessments.
• Non-lodgement of financial reports — ASIC has intensified its crackdown on large proprietary companies that fail to lodge financial reports by statutory deadlines. Penalties can be significant.
• Inadequate related-party disclosures — Transactions with related parties, including directors and their associates, must be fully disclosed and assessed for arm's-length terms.
• Auditor independence breaches — ASIC's Report 817 identified independence and conflict-of-interest issues at major audit firms. Audit committees must actively monitor and manage auditor independence.

Australian Regulatory Context: ASIC, AUASB, and the Corporations Act

The audit regulatory framework in Australia is anchored in the Corporations Act 2001 (Cth), which sets out the requirements for financial reporting, auditor appointment, and auditor independence. ASIC administers these requirements and has broad powers to review financial reports, conduct audit file inspections, and take enforcement action.

The Australian Auditing and Assurance Standards Board (AUASB) issues Australian Auditing Standards (ASAs), which are legally enforceable for audits of financial reports under the Corporations Act. Key standards include ASA 570 (Going Concern), ASA 315 (Identifying and Assessing the Risks of Material Misstatement), and ASA 701 (Communicating Key Audit Matters in the Independent Auditor's Report).

For sustainability reporting, the Australian Sustainability Reporting Standards (ASRS) — developed by the AASB — set out the disclosure requirements that Group 1 entities must follow. The AUASB has issued ASSA 5000 General Requirements for Sustainability Assurance Engagements to govern the assurance work performed over these reports.

ASIC has also updated Regulatory Guide 34 (Auditor obligations: Reporting to ASIC) to reflect new laws regarding sustainability reporting, RSE audits, and corporate collective investment vehicles (CCIVs), as well as requirements to report attempts to unduly influence auditors and conflicts of interest. Regulatory Guide 260 (Communicating findings from audit files) has been updated to reflect ASIC's expanded powers regarding RSEs.

Questions to Ask When Choosing an Auditor in 2026

Selecting the right auditor is a critical governance decision. The following checklist will help boards and audit committees evaluate prospective auditors against the demands of the current regulatory environment.

• Are they a registered company auditor (RCA)? — Only RCAs registered with ASIC can sign audit reports for companies under the Corporations Act.
• Do they have experience with your industry and size? — Auditors with sector-specific expertise are better placed to identify industry-specific risks and apply appropriate audit procedures.
• Can they provide sustainability assurance? — If your entity is approaching Group 1 or Group 2 sustainability reporting thresholds, confirm the auditor has the capability and accreditation to provide assurance over sustainability reports.
• How do they manage independence? — Ask about their independence policies, rotation practices, and how they identify and manage conflicts of interest in line with APES 110 Code of Ethics for Professional Accountants.
• What is their ASIC audit file review history? — Auditors subject to ASIC review findings should be able to explain the issues identified and the remedial actions taken.
• Are they preparing for AASB 18? — Forward-looking auditors should already be advising clients on the transition to AASB 18 and the implications for financial statement presentation.
• What is their communication approach with the audit committee? — Effective auditors provide timely, clear communication of key audit matters, significant risks, and findings to the audit committee throughout the engagement.

How MyMoney® Can Help You Find the Right Auditor

Navigating the 2026–27 audit and reporting landscape requires an auditor with current technical expertise, strong independence practices, and the capacity to provide assurance over both financial and sustainability reports. Finding the right professional for your organisation's specific needs can be challenging.

MyMoney® connects Australian businesses, not-for-profits, and superannuation trustees with qualified, experienced auditors who understand the current regulatory environment. Whether you need a registered company auditor for your annual financial report, an SMSF auditor, or a specialist to provide sustainability assurance, our marketplace makes it easy to compare professionals and receive competing proposals.

Post a Brief to describe your audit requirements and receive proposals from qualified auditors, or Browse Auditors to explore professionals with the expertise your organisation needs. All information provided on this platform is general in nature and does not constitute financial, legal, or audit advice. Always engage a qualified professional for advice specific to your circumstances.