On 7 October 2025, the Australian Securities and Investments Commission (ASIC) released Report 817 Building trust: Auditor compliance with independence and conflict of interest obligations (REP 817).
REP 817 is the second report in ASIC’s expanded program to enhance financial reporting and audit quality, following its earlier work in Report 816, Accounting for your super: ASIC’s review into the financial reporting and audit of super funds. Across this program, ASIC is sharpening its focus on how auditors challenge investment information—especially asset valuations—where impairment indicators or valuation pressures are in play.
Overview
ASIC’s review found that multiple auditors, across firms of all sizes, could not adequately demonstrate compliance with independence and conflict of interest obligations. Fifteen reviewed auditors were considered by ASIC to likely be in breach:
- Rotation Requirements: Auditor must not audit a listed client for more than five consecutive years. Nine auditors were found to be in breach of these requirements.
- Prohibited Relationships: Auditors must not hold certain relationships with clients. Five auditors were in breach of these requirements, including one auditor who was also an officeholder of the client.
- Non-Audit Services: An auditor must not provide a prohibited “non-audit service” (ie preparing tax calculations of current and deferred tax liabilities for an audit client that is a public interest entity). One auditor was in breach of this requirement.
Next steps
ASIC has commenced additional inquiries into potential breaches identified during the review. It will also release an annual report later in October covering its financial reporting and audit surveillance activities across companies and auditors. Looking ahead to 2025–26, ASIC has foreshadowed that it plans to expand its program by increasing the number of audit surveillances and specifically selecting files where independence risks may be heightened.