On 29 October 2026, the Australian Securities and Investments Commission (ASIC) published Report 842 ASIC’s oversight of financial reporting and audit 2025–26 (REP 842). It follows ASIC’s separate report on superannuation funds (REP 841). From 1 July 2025 to 30 June 2026, ASIC reviewed 353 financial reports and 25 audit files. That is up from 15 audit files in 2024–25.

Responsible entities and scheme auditors should take particular note. In 2026–27, as part of its wider focus on private capital markets and the valuation of unlisted investments, ASIC will review the financial reports and audits of managed investment schemes.

Valuations under scrutiny

ASIC expects directors, trustees and responsible entities to make sure their financial reports are accurate, complete and transparent. This applies particularly to asset valuations, including private credit assets and unlisted investments. ASIC notes emerging signs of borrower stress and credit deterioration in private credit. It calls on all participants to challenge assumptions, refresh valuations and improve practices in line with its 10 principles on private credit. ASIC’s super fund findings in REP 841 suggest what to expect: there, ASIC criticised reliance on fund managers’ figures without independent valuations.

Areas for improvement: financial reporting surveillance

ASIC’s inquiries led a number of preparers to make, or agree to make, changes to their financial reports. ASIC found:

  • Risk disclosures in operating and financial reviews that were weak, generic or absent.
  • Impairment testing carried out at the wrong level of assets.
  • Assets measured at fair value without sufficient observable market data.

Areas for improvement: audit

ASIC found instances where auditors did not:

  • Obtain enough appropriate evidence.
  • Challenge valuation inputs, forecasts assumptions and discount rates.
  • Document significant judgements.

On investment valuations in particular, some auditors did not challenge key assumptions and calculations. Other auditors did not properly evaluate their experts’ conclusions on management’s fair value assessments.

Enforcement

Financial reporting and auditor misconduct are enforcement priorities for ASIC. In July 2026, ASIC wrote to all registered company auditors to remind them of their obligations. Since 1 July 2025, ASIC has brought Federal Court proceedings alleging serious audit failures. Applications to the Company Auditor Disciplinary Board have led to auditor registrations being cancelled or suspended.

Next steps

In 2026–27, ASIC will review the financial reports of 20 schemes and the audit files of 4 schemes, alongside its company and super fund reviews. The financial reporting reviews will focus on:

  • Revenue recognition.
  • Asset impairment.
  • The recognition and measurement of financial instruments.

ASIC will continue to choose audit files where it has concerns from its financial reporting reviews or about auditor independence, and also at random. It will monitor how auditors deal with its findings. Where necessary, it will consider issuing an audit deficiency report under section 50C(1) of the Australian Securities and Investments Commission Act 2001 (Cth).

ASIC reminds responsible entities to refer to ASIC’s 2026–27 focus areas.