ASIC: Reporting And Audit Update

The Reporting and audit update covers regulatory developments in reporting and audit, including sustainability and financial reporting matters.

This Reporting and audit update contains the following articles:

An introduction from Commissioner Kate O’Rourke

The introduction of mandatory sustainability reporting in Australia represents the biggest change to reporting and auditing in a generation. ASIC is excited to launch our Reporting and audit update, a quarterly newsletter for report preparers, auditors, professional advisers, investors and consumers, and other finance professionals interested in keeping up to date with the regulatory developments affecting reporting and audit.

With a focus on sustainability and financial reporting and audit, we will include everything that’s relevant to preparers, advisors and users of reports. This includes our news and reviews of financial and sustainability reports prepared by registrable superannuation entities (RSEs), registered schemes and companies.

We look forward to keeping industry professionals informed about regulatory developments in sustainability, financial reporting and auditing.

Kate O’Rourke,

ASIC Commissioner

Voluntary climate-related disclosures reviewed

With the first round of mandatory sustainability reports due to be lodged with ASIC from March 2026, ASIC has reviewed a small sample of publicly available, voluntary climate-related disclosures.

ASIC considers the shift to mandatory reporting under the Corporations Act and AASB S2 will address many of the challenges of existing voluntary reporting practices.

Below, we share our observations to help entities as they prepare for mandatory reporting.

Scope 3 disclosures

As permitted by the standards, of the large companies we reviewed, most disclosed Scope 3 emissions by using a combination of direct emissions data received from suppliers and customers and secondary data such as industry averages.

Disclosure detail and quality

Our review of the voluntary disclosures, which we note was generally prepared under the recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD), not AASB S2 – found that:

disclosures were often repetitive, with key information about the management of climate-related risks and opportunities sometimes obscured, making it difficult for users to identify the key information
scenario analysis disclosures lacked detail about the underlying assumptions and dependencies relied on in the disclosures
where reporting entities had a transition plan, the related disclosures could have been more clearly linked to the entity’s targets, actions and strategies.

Find out more

ASIC will be pragmatic and proportionate in its approach as the mandatory sustainability reporting requirements are being phased in and as industry adjusts to the new requirements.

To learn more about the mandatory sustainability reporting requirements, visit ASIC’s sustainability reporting webpage.

Regulatory Guide 280 Sustainability reporting (RG 280) provides guidance to entities on preparing a sustainability report and how ASIC will exercise its powers under the law.

Register of sustainability reporting relief decisions

You can now view ASIC’s sustainability reporting and audit relief decisions, on our new Sustainability reporting and audit relief decisions register. This is where we publish the decisions made under ASIC’s exemption powers in the Corporations Act that relate to sustainability reporting and auditing matters.

The purpose of the register is to provide transparency about decisions ASIC makes when we are asked to exercise ASIC’s discretionary powers to grant relief under Ch 2M. Prospective applicants are encouraged to review the register before submitting a relief application as it will provide insights into the factors we consider in our decision-making process and conditions we may impose.

Examples of relief

Three unlisted wholly-owned entities of an RSE were recently granted relief from preparing stand-alone sustainability reports for one year. As the RSE will prepare consolidated sustainability reports (which includes the wholly-owned entities) in the subsequent financial year, ASIC was satisfied that the cost of preparing standalone, audited sustainability reports for a single financial year would impose an unreasonable financial burden on these entities.

Visit our Information Sheet 82 Apply for relief (INFO 82) to find out how to apply for relief, and for ASIC’s general approach to granting relief, see Regulatory Guide 51 Applications for relief (RG 51) and RG 280.

The Sustainability reporting and audit relief decisions register will be updated on a quarterly basis as new decisions are made (including where we refuse to exercise relief).

Educational materials to support sustainability reports

ASIC and the Australian Accounting Standards Board (AASB) are partnering with the University of Technology Sydney, and Sydney-based educational design agency Studio 3 Learning to develop educational materials explaining the core concepts underlying sustainability reporting in the Corporations Act. The materials will be aimed at Group 3 reporting entities that are required to prepare sustainability reports for the financial year commencing on or after 1 July 2027. It will also be of value to small and medium entities in the value chain of larger businesses and anyone who is new to sustainability reporting.

E-learning modules will make up the educational program, covering topics including climate-related physical risks and transitional risks, emissions accounting, scenario analysis, governance and risk management. We are aiming to make the materials available this year, and then ASIC will focus on conducting face-to-face sessions with the AASB and University of Technology Sydney in the format of workshops and roadshows during 2026.

ASIC intervenes in misleading sustainability-related claims and conduct

As part of our ongoing supervision, ASIC has undertaken a range of sustainability-related interventions during the past financial year.

ASIC sustainability-related cases

Signalling ASIC’s commitment to protecting investment consumers, the Federal Court imposed a combined $34.7 million in civil penalties for three greenwashing cases we initiated.

In August 2024, Mercer Superannuation (Australia) Ltd was fined $11.3 million by the court. A month later, Vanguard Investments Australia was fined $12.9 million (24-213MR); and in March 2025, Active Super received a penalty of $10.5 million (25-042MR).

Surveillance and findings summary

During 2024-25, as part of ASIC’s general supervision, we reviewed representations made by companies and trustees about their sustainability claims and credentials.

Our key concerns were entities making:

unsubstantiated claims about the viability or feasibility of sustainability-related strategies, products or business models
claims about commitments to sustainability unsupported by identified specific actions, policies or processes, and
inadequate disclosures about environmental and climate-related physical and transition risks, particularly for companies in highly exposed sectors such as mining and resources and consumer staples.

As a result of our interventions, 15 companies and 4 superannuation trustees removed, retracted or revised statements about their sustainability claims and credentials across a range of disclosures, including prospectuses, websites, promotional materials and market announcements.

ASIC guidance on sustainability claims

Entities making any kind of sustainability-related claim should consider the guidance set out in Information Sheet 271 How to avoid greenwashing when offering or promoting sustainability-related products (INFO 271).

To view our key recommendations for avoiding greenwashing and sustainable finance-related misconduct and better practice examples, read our Report 763 ASIC’s recent greenwashing interventions (REP 763), and Report 791 ASIC’s interventions on greenwashing misconduct 2023-2024 (REP 791).

Financial reporting and auditor surveillance update

ASIC is now finalising its financial reporting and auditor surveillance work for 2024–25 and will publish its findings and best practice recommendations, during September and October. The three reports will cover auditor independence and conflicts of interest findings, RSE financial reporting and audit findings, and financial reporting and auditor surveillance findings.

1. Registrable Superannuation Entity financial reporting and audit

RSEs were required to lodge audited financial reports with ASIC for the first time in 2024. We are finalising our review of five RSE audit files and around half of all lodged RSE financial reports. We will review the other half of the RSE financial reports, as well as a selection of RSE audit files in our 2025-26 program.

Our focus areas for RSE financial reports and audits include:

the measurement and disclosure of investment portfolios, and
disclosure of marketing and advertising expenses.

Given that 2024-25 was the first year of RSE financial reports and audit surveillance, ASIC will publish a separate report on its RSE findings in late September 2025.

2. Auditor independence and conflict of interest obligations

During the past year, we engaged with 48 auditors about how they complied with the independence and conflict of interest obligations of the Corporations Act. We wrote to Australian registered auditors about the planned review, which is part of ASIC’s wider, ongoing work to improve the quality of financial reporting and audit in Australia.

Our surveillance included asking about auditor rotation, relationships between current and former members of audit firms and audited companies, long association and whether the provision of non-audit services may compromise independence or raise conflicts of interest concerns.

ASIC will publish the outcomes of this surveillance in October 2025.

3. Financial reporting and audits

Our surveillance of financial reports and audits focuses on areas where significant judgement from preparers of financial reports or auditors is required.

These include:

revenue recognition
asset valuation, and
estimation of provisions.

ASIC’s financial reporting and audit surveillance report for reviews conducted between 1 July 2024 and 30 June 2025 will be published in late October 2025.

We encourage all report preparers and auditors to review the findings of our report, which will appear with our other regulatory resources on our Reports webpage when available.

Newsroom highlights

Our online newsroom helps you stay informed about all of ASIC’s activities. Here, we recently featured the keynote address by Commissioner Kate O’Rourke, given at the Responsible Investment Association Australasia (RIAA) Conference, May 2025: Addressing financial system climate risk: A view from the regulator.

Visit the ASIC Newsroom to browse all speeches and announcements, past and current. You can also sign up on this page to receive emailed news alerts directly from the source.

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ASIC: Reporting And Audit Update - Issue 1