On 14 October 2026, the Australian Securities and Investments Commission (ASIC) issued the results of its second review into the financial reporting and audit of superannuation funds. In Report 841 Accounting for your super: Super fund financial reporting and audit 2025–26 (REP 841), ASIC’s review of 42 registrable superannuation entity (RSE) financial reports and six audits found persistent concerns around valuations.

Areas for improvement: Financial reporting surveillance

From its financial report reviews and surveillances, ASIC found:

  • Relying on fund managers. RSEs often relied on external fund managers for fair value information. For 26 of the 33 investments ASIC sampled, they could not produce a valuation model or an independent valuation report. ASIC wants RSEs to stop relying only on fund managers’ figures, to get independent expert valuations where practicable, to understand the underlying assets, and to make sure their oversight processes can pick up significant valuation risks.
  • Member liabilities. Four RSEs wrote down investments but did not reduce member liabilities until a later period. ASIC found this overstated liabilities and, in some cases, produced significant negative net assets. It also affected member statements, fees and minimum pension payments. ASIC found that to appropriately measure and report member liabilities, RSEs must measure member liabilities based on members’ accrued benefits at the reporting date and make adjustments for the impact of material valuation changes, assess events after the reporting date under AASB 110, and disclose the judgements they made.
  • Fair value disclosures. Disclosures for Level 2 and Level 3 assets remain high-level, with little detail on valuation techniques, unobservable inputs or look-through assumptions.

Areas for improvement: audit

ASIC found that auditors relied too heavily on:

  • Confirmations from fund managers, back-testing against audited accounts that were 6 to 12 months old, and benchmark comparisons that were not clearly linked to the assets.
  • Independent valuers’ reports, without properly challenging long-dated cash flow forecasts and valuation inputs.

ASIC also observed the following better practices:

  • One auditor, when testing the reasonableness of fair value movements in investments, explained and demonstrated an understanding of the underlying assets held within a sampled scheme. Before benchmarking performance against relevant market data, the auditor considered the specific characteristics and composition of the underlying investments. This approach enabled a more meaningful assessment of whether the reported fair value movements were reasonable in the context of the RSE’s actual investment exposures and market conditions. 
  • One auditor, when testing the valuation of internally managed investments, obtained independent confirmations directly from the investees verifying the RSE’s equity holding. They also assessed the accuracy of historical forecasts of dividend distributions, by performing look-back procedures and trend analysis (comparing actual dividend distributions with prior year’s forecasts).

Calls to action

ASIC makes three calls to action:

  • Superannuation trustees need to maintain robust governance and strengthen controls to ensure that valuations provided by external fund managers are reliable and support the accurate and timely measurement of members’ balances.
  • RSE auditors need to strengthen audit quality by obtaining persuasive audit evidence and exercising appropriate professional scepticism when auditing valuations of unlisted investments. 
  • Superannuation trustees and RSE auditors need to work together to improve audit quality, address practical challenges in accessing underlying asset information, and support auditors in obtaining sufficient appropriate audit evidence to form opinions on investment valuations.

Next steps

Given the importance of RSE financial reports and audits, ASIC is reporting its findings separately and in advance of its annual public report covering financial reporting and audit surveillance findings more broadly. ASIC will publish that report later in October.

In 2026–27 ASIC will review 20 RSE and 20 managed investment scheme financial reports and carry out eight audit surveillances. It will also work with the Auditing and Assurance Standards Board, which is developing guidance on auditing unlisted externally managed schemes, and with the Australian Prudential Regulation Authority to enhance the quality of RSE valuation practices.