Outcomes from ASIC’s latest financial reporting and audit surveillance

On 31 October 2025 ASIC released its findings from its program of work on financial reporting and audit from 1 July 2024 to 30 June 2025 (covering 30 June 2024 and 31 December 2024 year ends).

Findings and outcomes

As a result of ASIC’s financial reporting surveillance:

• 12 entities made (or will make) changes to their operating and financial review (OFR) to improve disclosures of material business risks. ASIC noted “a complete absence of disclosure about material business risks” in some cases
• Three large proprietary companies agreed to make changes to their financial reporting disclosures (due to not consolidating subsidiaries, omitting the cash flow statement or not disaggregating balance sheet totals in the notes to the financial statements)
• Two entities made (or will make) changes to their non-IFRS profit measures, particularly to provide a reconciliation to statutory profit
• Two entities made changes to recognition and measurement and presentation in their financial reports – arising from the presentation of employee benefit expenses and impairment.

ASIC also separately reviewed publicly available voluntary climate-related disclosures of 41 entities. Findings included:

• Disclosures were often repetitive with key information about the management of climate-related risks and opportunities sometimes obscured
• Scenario analysis lacked detail about the underlying assumptions and dependencies relied on in the disclosures
• Where entities had a transition plan, the related disclosures could have been more clearly linked to the entity’s targets, actions and strategies
• Forward-looking statements (where made) were predominantly qualitative in nature and lacked detail about how they translate into financial impacts for entities, their operations, prospects or assets.

In ASIC’s audit surveillance, findings predominantly related to revenue and receivables, impairment of asset values and investments and financial instruments. Other findings related to systems of quality management, audit documentation, fundamental audit requirements and auditor reporting to ASIC. Audit surveillance related to registrable superannuation entities (RSEs) is covered in a separate report.

Recommendations and ongoing surveillance

ASIC calls on audit committees, directors and preparers of financial reports to support quality financial reporting and audits based on these key foundational building blocks:

• High-quality and timely financial information, continuing ASIC’s expectation that entities have robust position papers with appropriate analysis and conclusions referencing relevant Accounting Standards
• Adequate resources, skills and expertise in the reporting process, again including comprehensive position papers, particularly in areas with significant estimation uncertainty and judgement
• Clear, effective communication with the auditor addressing risks affecting the information in the financial report
• Robust auditor selection.

ASIC has confirmed its ongoing surveillance activities will include:

• Financial reporting – A review of the financial reports of listed, public and large proprietary companies, and all RSEs not previously covered (with a focus on revenue recognition, asset valuation and estimation of provisions)
• Audit surveillance – Continuing the program and increasing the number of audit files reviewed to 25 (up 10), including 5 RSEs and 20 companies, including where financial reporting or auditor independence/conflict of interest concerns have been raised, and some selected on a random basis
• Non-lodgement – As previously announced, a project on non-lodgement by large proprietary companies
• Sustainability reporting – A review of the first mandatory sustainability reports for 31 December 2025 taking “a pragmatic and proportionate approach to supervision and enforcement”
• Enforcement – ASIC will continue to use its “full range of regulatory tools” to enhance audit quality, including taking enforcement or compliance action, where considered appropriate.
  

More information:

• ASIC media release 25-256MR ASIC highlights financial reporting and audit findings for FY 2024–25 as part of expanded program of work
• ASIC Report REP 819 ASIC's oversight of financial reporting and audit 2024–25
• ASIC Report REP 816 Accounting for your super: ASIC’s review into the financial reporting and audit of super funds
• ASIC media release 25-079MR ASIC announces financial reporting and audit focus areas for FY 2025-26
• ASIC media release 25-169MR ASIC increases its focus on lodgement of financial reports after finding poor compliance by grandfathered companies.

Provide your input to help progress towards the future Scope 2 standard

The Independent Standards Board of the Greenhouse Gas Protocol (GHG Protocol) has released a consultation on proposed amendments to the measurement of Scope 2 greenhouse gas emissions under the GHG Protocol standards. The consultation is open for public comment until 19 December 2025.

Summary

• Companies would continue to report their emissions in two ways: location-based and market-based. If implemented as proposed, Scope 2 greenhouse gas emissions would be calculated on a much more granular basis based on a hierarchy – this could require calculation of emissions based on hourly consumption in each subregion within an electricity market (where feasible)
• The proposals are a first phase of proposed updates to the Scope 2 standard, with a further consultation expected in 2026. Additional consultations on other aspects of the GHG Protocol are also expected
• The GHG Protocol changes are not expected to be finalised until late in 2027.
  

Any revisions to the GHG Protocol standards would need to be considered by the ISSB (and AASB) before the revisions would be operative in mandatory sustainability reports under the Corporations Act 2001 and AASB S2 Climate-related Disclosures.

In addition to the Scope 2 proposals, an additional consultation on consequential electricity-sector emissions impacts has also been issued.

More information:

• GHG Protocol Public Consultation – Scope 2
• GHG Protocol Public Consultation – Consequential Electricity-Sector Emissions Impacts
• GHG Protocol consultations
• Sustainability Standards Advisory Forum meeting agenda paper Working with the GHG Protocol (September 2025).

December 2025 model half-year report and updated Tier 1 models now available

The following model financial statements have been published:

• December 2025 model half-year report
  
  Stay informed with our comprehensive guide tailored for half-year financial reporting. This essential resource is designed for entities preparing half-year reports for periods ending on or after 31 December 2025 (including 30 June 2026).
  
  This publication can be accessed at this direct link
• Updated Tier 1 model financial report
  
  The document has been updated to include the December 2025 IFRS Illustrative Financial Statements.
  
  Clients can access this publication at this direct link.

ASX consultation and explanation of mandatory sustainability reporting

Public consultation

On 31 October 2025, ASIC released a public consultation on proposed changes to the ASX Listing Rules in response to the introduction of mandatory sustainability reporting under the Corporations Act 2001 for 31 December 2025 year ends. 

The proposed amendments would amend ASX Listing Rule 17.5 to preserve the current status quo so that trading in an entity’s securities will only be mandatorily suspended under the Rule if an entity fails to give the annual directors’ report, the statutory financial report or the auditor’s report to the ASX by the due date. Late lodgement of the sustainability report will not result in mandatory suspension (but may result in other compliance or enforcement actions).

Comments on the consultation close on 28 November 2025. The ASX expects to make the final rule amendments in December 2025 with an effective date no later than February 2026.

Interaction of sustainability reporting requirements with the ASX Listing Rules

In an accompanying Listed@ASX Compliance Update, the ASX notes that the Appendix 4E is not intended to accelerate the disclosure of sustainability-related information that would not have been required to be disclosed under the Appendix 4E requirements in prior years. Instead, the sustainability report is required to be lodged with the ASX in accordance with Listing Rule 4.5, which requires lodgement within three months after the reporting date. For the avoidance of doubt, Regulatory Guide 280 Sustainability reporting and AASB S2 Climate-related Disclosures require the sustainability report and the annual financial report to be lodged at the same time and to relate to the same reporting period.

More information:

• ASX Amendment to Listing Rule 17.5 - Public consultation on a consequential amendment to Listing Rule 17.5 following the introduction of mandatory sustainability reporting
• Listed@ASX - Compliance Update 12/25.

Proposed changes to AASB 18 and AASB 107 applicable to superannuation and not-for-profit entities

On 30 October 2025 the AASB published ED 338 Application of AASB 18 and AASB 107 by Superannuation and Not-for-Profit Entities and Operating Cash Flow Reconciliation (ED 338) for entities preparing Tier 1 general purpose financial statements.

The AASB is proposing changes to:

• Amend AASB 18 Presentation and Disclosure in Financial Statements and AASB 107 Statement of Cash Flows for application by superannuation and not-for-profit entities.
  
  Superannuation funds would be required to follow AASB 1056 Superannuation Entities in some areas and not-for-profit public sector entities would have an accounting policy choice to elect to not apply AASB 18 in certain areas
• Clarify how entities prepare the operating cash flow reconciliation to reflect the fact that superannuation and not-for-profit public sector entities may not present an operating profit subtotal in their profit or loss statements.

Comments are due by 27 February 2026. The AASB is expecting to hold a virtual roundtable in early February 2026 with further details to follow.

Revised Voluntary Tax Transparency Code published

The Board of Taxation has finalised its redesigned Voluntary Tax Transparency Code (VTTC) and issued a revised code in October 2025. The revised VTTC complements and minimises duplication with the Country-by-Country (CbC) reporting regime.

The redesigned VTTC will start for the year beginning 1 July 2026. Early adoption is optional.