In May 2026 ASIC released its FY 2026–27 focus areas for financial reporting, audit and sustainability oversight as part of its integrated surveillance program and provided an update on findings.
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 and unlisted companies, registrable superannuation entities (RSE) and managed investment schemes (MIS).
- 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.
- be mindful that adverse economic conditions may create new or ongoing impairment indicators, requiring impairment testing of other non‑financial assets.
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.
ASIC has reiterated their focus on areas involving a high level of judgement. The basis and circumstances of management’s judgements on accounting estimates and forward‑looking information should be clearly disclosed in the financial report and supported.
Disclosures should
- include a description of the obligations and the expected timing of related outflows of economic benefits; and
- indicate uncertainties about the amount or timing of outflows and, where needed, the key assumptions about future events.
ASIC has also stated it will review disclosures by companies with decommissioning and site restoration provisions against new AASB guidance (Illustrative Example D in AASB 137 Provisions, Contingent Liabilities and Contingent Assets).
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.
A listed entity must disclose sustainability and climate-related financial information in the OFR where members reasonably need it to assess operations, financial position, strategy and future prospects.
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?
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 material sponsorship and advertising expenses.
This cohort remains part of ASIC’s surveillance program.
Entities must prepare an audited sustainability report with climate-related financial disclosures under the Corporations Act 2001 and AASB S2 Climate-related Disclosures if they:
- are required to prepare an annual financial report under Chapter 2M of the Act; and
- meet the s292A sustainability reporting thresholds for the financial year
ASIC continues to progress its review of 31 December 2025 sustainability reports as part of the 2025-26 surveillance program applying a proportionate and pragmatic approach during the phased implementation. ASIC will continue surveillance of these as part of their 2026–27 program.
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).
- Issued early observations on sustainability reporting ahead of 30 June 2026. Refer below for further detail.
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.
Sustainability
ASIC has reviewed the sustainability reports of a subset of Group 1 entities with financial years ended 31 December 2025 and shared its early observations ahead of 30 June 2026.
ASIC’s review assessed whether disclosures provide high-quality, decision-useful information compliant with the Corporations Act 2001 and AASB S2. It found improvements in both the volume and quality of climate-related information versus prior voluntary disclosures. ASIC also commented that standardised requirements were, in its view, driving more consistency and comparability. It highlighted the benefit of effective use of tables, diagrams and visual aids.
We set out ASIC’s key improvement observations.
Entities must not use disclaimers that conflict with statutory obligations as they may mislead or confuse users. At 31 December 2025 several entities included disclaimers in their sustainability reports that indicated users should not rely on the information contained in the sustainability report to make investment decisions, or that stated the entity took no responsibility for the accuracy or completeness of certain information.
Reasonable and supportable information for identifying climate-related risks includes past events, current conditions, and forecast future conditions. Examples were noted where entities previously disclosed impacts due to extreme weather events, but there were no disclosures in the current year sustainability reports on similar risks impacting prospects over the required time horizons.
Reports should clearly and effectively explain key judgements, estimates, assumptions and areas of measurement uncertainty. Some instances of disclosure of judgements were noted, however, there were also instances where users would be need to draw their own conclusions about why information was included or disclosed in a certain way.
Additional voluntary climate-related disclosures were not always distinguished from mandatory material climate-related financial information. ASIC reminded entities that index tables can be a useful tool for making this distinction.
When cross-referencing outside the sustainability report entities must meet cross-referencing requirements, including only to a report published for the same reporting entity and being available on the same terms and at the same time as the sustainability report. In addition, a cross-reference must refer to a precisely specified part of the other report.
ASIC reminded entities that the definition of climate-related targets include those required by law or regulation, such as the Safeguard Mechanism in Australia.
Other sustainability reporting insights
For the latest ASIC updates on other reporting topics, refer to these additional KPMG insights.
Contact our team
- Item 1
- Item 2
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