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Reporting and audit update – Issue 3

Published

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:

ASIC launches educational modules to help smaller companies and report preparers with sustainability reporting requirements

In December 2025, ASIC partnered with the Australian Accounting Standards Board (AASB) in releasing its first set of educational materials to help smaller companies and report preparers understand and apply the foundational concepts underpinning Australia's new sustainability reporting requirements.

There will be eight learning modules on the sustainability reporting framework released in a couple of different formats. As of February 13 2026, ASIC has released PDF versions of the eight modules on our sustainability reporting webpage:

  • Module 1 sets out how stakeholders should engage with the materials and introduces the basics of the new sustainability reporting requirements in the Corporations Act.
  • Module 2 covers the basics of climate change.
  • Module 3 covers climate-related physical risks and how they may affect an entity.
  • Module 4 focuses on explaining climate-related transition risks and how they may affect an entity.
  • Module 5 introduces climate-related opportunities and shows how they may apply to an entity through practical examples.
  • Module 6 introduces emissions accounting and provides foundational knowledge on Scope 1, 2 and 3 greenhouse gas emissions.
  • Module 7 focuses on the process of climate-related scenario analysis.
  • Module 8 provides an overview of how entities might integrate climate risks and opportunities into governance and risk management processes.

These educational modules will be helpful to any report preparer new to the sustainability reporting requirements, as well as other stakeholders in the climate reporting ecosystem.

ASIC Commissioner Kate O’Rourke said, ‘We recognise many smaller companies may be concerned about what the sustainability reporting requirements mean for them. ASIC is committed to helping industry build the capability required to meet these important obligations.

‘Our new educational materials are designed to help stakeholders identify the climate-related risks and opportunities that may impact them. These foundational steps are key to meeting the sustainability reporting requirements.’

ASIC will provide more flexible delivery of content by offering all eight modules in an interactive format in the first quarter of 2026. ASIC will also hold a series of workshops supporting the release of the educational modules. Details on the workshops will be made available in quarter 1 2026.

For more information, visit Educational modules and view our sustainability reporting webpage. ASIC has also provided additional information for entities within the value chain of reporting entities, including small businesses and farmers, about sustainability reporting and what it means to them.

ASIC updates sustainability reporting and audit relief decisions register

In December 2025, ASIC updated the sustainability reporting and audit relief decisions register with three new entries.

As detailed in the register, ASIC made several in-principle decisions to refuse relief to entities seeking sustainability reporting relief for the following reasons:

  1. Four entities of a corporate group sought relief for one of the entities to prepare a sustainability report that includes the other three entities for the financial year ended 31 December 2025. We refused the relief as we were not satisfied that compliance would impose unreasonable burdens on the four entities. Allowing consolidated sustainability reporting would conflict with the connected information requirements under Australian Sustainability Reporting Standard AASB S2 Climate-related disclosure. In addition, the entities’ proposal to artificially consolidate without control did not meet the requirements for preparing consolidated financial reports under Australian Accounting Standard AASB 10 Consolidated financial statements.
  2. Three entities sought relief on the basis that their parent, an Australian partnership, would prepare a consolidated sustainability report for the Australian corporate group for the financial year ended 31 December 2025. We refused the relief as we were not satisfied that compliance would impose unreasonable burdens on the three entities. Allowing the partnership parent to prepare a consolidated sustainability report would also be inconsistent with the connected information requirements in AASB S2. In addition, the partnership was not a legal entity and could not be a parent under Australian Accounting Standards.
  3. An entity sought relief from preparing sustainability reports for the financial year ended 31 December 2025. We refused the relief as we were not satisfied that compliance would impose an unreasonable burden. The entity could have avoided administrative costs and complexity by preparing a consolidated sustainability report, but chose instead to defer under section 292A(2) of the Corporations Act 2001 (Corporations Act).

We encourage prospective applicants to review the sustainability reporting and audit relief decisions register before submitting a relief application. The register provides valuable insight into the factors we take into account during our decision-making process, as well as any conditions that we may impose.

We urge applicants considering applying for sustainability reporting relief to begin the application process before the applicable statutory deadline. Applications lodged close to the statutory deadline may not allow sufficient time for ASIC to fully consider your application and, as a result, could be refused. ASIC’s powers to grant relief are prospective, meaning that ASIC has no power to grant retrospective relief. Relief will not remedy any past breaches of the Corporations Act.

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

Entities to lodge sustainability reports online with ASIC using new Form 398

Form 398 Copy of sustainability report and auditor’s report is now available for companies lodging their sustainability reports online through the company officeholder, registered agent and auditor portals. The form must be completed and lodged together with the sustainability report (and the accompanying auditor’s report) for the financial year.

Companies should ensure that they lodge their annual financial report (and the accompanying auditor’s report) as well as the directors’ report for the financial year using Form 388 Copy of financial statements and reports.

Listed entities relying on ASIC Corporations (Electronic Lodgement of Financial and Sustainability Reports) Instrument 2016/181 may alternatively lodge their annual reports electronically with the relevant market operator (i.e. ASX, NSX or SSX).

Entities that are not required to prepare a sustainability report for a financial year under Chapter 2M of the Corporations Act can also use Form 398 to lodge with ASIC:

  • a sustainability report prepared as a condition of, or to obtain the benefit of, an exemption granted by ASIC under sections 340 or 341 of the Corporations Act, or
  • a sustainability report prepared on a voluntary basis – for example, to meet investor expectations.

Sustainability reports lodged with ASIC will be available on the public register at ASIC Connect using the company name search under Organisations & Business Names.

For more information about lodging sustainability reports, see How and when to lodge your sustainability report?

ASIC issues infringement notices to 12 large proprietary companies for alleged failure to lodge financial reports

In late 2025, ASIC issued infringement notices to 12 large proprietary companies for allegedly failing to lodge their FY24 audited financial reports on time.

The notices were issued as the result of a three-month surveillance following ASIC’s increased focus on non-lodgement of financial reports by large proprietary companies.

ASIC Commissioner Kate O’Rourke said: ‘Large proprietary companies are legally obliged to provide financial reports to ensure that those dealing with these businesses can make informed decisions.

‘ASIC calls on the directors of large proprietary companies and other entities with financial reporting obligations to proactively review their reporting obligations and ensure financial reports are lodged in a timely manner.

‘We also remind auditors of these entities to notify ASIC if they are aware or suspect that a company is not complying with its lodgement obligations.’

ASIC remains focussed on driving improved compliance by companies and other entities with financial reporting obligations. Financial reports play an important role assisting creditors and other users of the reports in making informed decisions when dealing with large companies.

Financial reporting misconduct, including failure to lodge financial reports, is an ASIC enforcement priority for 2026. We are undertaking further surveillance work relating to the compliance by large proprietary companies and other entities with financial reporting obligations in 2026.

Modified liability settings extended to protected statements in certain other reports under the Corporations Act

The Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025 passed both Houses of Parliament on 27 November 2025.

Temporary modified liability settings apply to certain types of statements (‘protected statements’) in sustainability reports and auditor’s reports on sustainability reports. This means that, for the duration of those periods, legal action in relation to a protected statement may only be brought by ASIC or by way of criminal proceedings.

The amendments to the Corporations Act extend these modified liability settings to voluntary sustainability reports under the Corporations Act, reports that are treated as sustainability reports under specific ASIC orders (relief condition reports) as well as to the accompanying auditor’s reports for both those reports: see s1707DA and s1707DB.

The amendments also extend the assurance requirements and ASIC’s directions power to voluntary sustainability reports under the Corporations Act and relief condition reports: see s342C(6) and s1707DA(4).

The amendments are intended to encourage entities to make climate-related financial disclosures, even if not required to do so under the legislation: see the Explanatory Memorandum to the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025.

ASIC Regulatory Guide 280 Sustainability reporting (RG 280) and ASIC’s FAQs on the review or audit of sustainability reports will be updated to reflect these changes.

RG 26 updated to reflect changes to auditor removal and cessation process for AFS licensees

ASIC has updated Regulatory Guide 26 Resignation, removal and replacement of auditors (RG 26) to reflect changes to the auditor removal and cessation process for Australian financial services (AFS) licensees.

From 16 June 2025, AFS licensees and applicants can use the new AFS licensing portal to:

  • apply for ASIC consent to remove an AFS licensee auditor, and
  • notify ASIC about an AFS licensee auditor appointment or cessation

The portal is integrated into the ASIC Regulatory Portal. AFS licensees should select the transaction ‘Notify ASIC or apply to ASIC about Australian financial services licensee auditor appointments’ located in the AFS licensing dashboard.

There is no change for an application for ASIC consent to resign as auditor of an AFS licensee. Form FS08 Application for consent from ASIC to resign as an auditor of an Australian financial services licensee is used for this purpose.

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