Reporting and audit update – Issue 5

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

 

Key findings from ASIC’s 31 December 2025 sustainability report review

We have published our key observations from our review of a sample of sustainability reports lodged by Group 1 entities with a reporting year ending 31 December 2025. The findings are set out in REP 839 ASIC’s review of sustainability reports lodged for 31 December 2025.

Our review found that the quality, quantity and consistency of climate-related financial information in the market has improved following the introduction of statutory sustainability reporting requirements. We also found that entities have engaged in good faith with the sustainability reporting requirements, resulting in more meaningful consideration and disclosure of climate-related risks and opportunities.

Our report outlines eight key action items, building on the early observations published in May 2026, and provides reporting entities and advisers with practical guidance for preparing sustainability reports. Key action items include:

  • explaining how information in the sustainability report connects with relevant disclosures in the financial report
  • carefully considering whether quantitative information can be provided when disclosing current and anticipated financial effects of climate-related risks and opportunities, and explaining the approach taken
  • considering past events, current conditions and forecast future conditions when identifying climate-related risks and opportunities, as well as how the entity may be affected (whether directly or indirectly) across its value chain.

Our report also provides detailed observations, examples of better and less effective disclosure practices, and areas where disclosures can be improved across the core content areas of AASB S2 Climate-related Disclosures, as well as considerations of materiality and general disclosure requirements.

For more information on our review of the 31 December 2025 sustainability reports, see our media release here, 26-222MR ASIC observes improved sustainability reporting and notes areas for further development.

ASIC launches sustainability reporting video series

ASIC, in partnership with the Australian Accounting Standards Board (AASB), has released a series of sustainability reporting videos to help entities strengthen their understanding of the foundational concepts underpinning Australia’s sustainability reporting requirements.

Developed in partnership with the AASB, the University of Technology Sydney (UTS) and educational design agency Studio 3 Learning, the video series covers the key topics presented in ASIC’s sustainability reporting in-person workshops and virtual webinars held earlier this year. The videos respond to strong interest from attendees seeking to access that content on demand.

  • Module 1: Corporations Act and climate-related disclosure requirements
  • Module 2: Introduction to climate change
  • Module 3: Climate-related physical risks
  • Module 4: Climate-related transition risks
  • Module 5: Climate-related opportunities
  • Module 6: Emissions accounting
  • Module 7: Scenario analysis
  • Module 8: Governance and risk management

The video series completes our suite of educational materials. It complements the interactive e-learning modules and downloadable PDF briefs released earlier this year, covering the same foundational material in a concise format. These resources give users different ways to access and engage with the content.

Please visit our sustainability reporting webpage for the videos, educational modules and further information about the sustainability reporting requirements. The Next steps and further resources webpage also brings together a range of publicly available resources that may assist entities in preparing for, and commencing, sustainability reporting.

Financial and sustainability reporting and audit legislative instruments remade

In September 2026, following consultation with industry, ASIC made four legislative instruments to replace 19 legislative instruments that were due to sunset in October 2026. Two of the new instruments consolidate 17 financial and sustainability reporting and auditing instruments. This reduces the number of instruments users need to navigate and makes the available relief and its conditions easier to access and understand. The consolidated instruments generally maintain the substance of the existing relief while incorporating technical and drafting improvements.

The new instruments are:

  • ASIC Corporations (Annual and Half-year Reporting) Instrument 2026/468, which consolidates 14 relief instruments relating to sustainability and annual and half-year financial reporting obligations for companies, registered schemes, registrable superannuation entities, retail CCIVs and disclosing entities under the Corporations Act;
  • ASIC Corporations (Auditing) Instrument 2026/469, which consolidates three instruments dealing with auditor independence declarations and audit relief for certain large proprietary companies, and clarifies the notification requirements when a retail CCIV appoints an auditor;
  • ASIC Corporations (Qualified Accountant) Instrument 2026/734, which continues to specify which members of professional bodies are recognised as ‘qualified accountants’ for the purposes of issuing certificates that allow a person to be treated as a wholesale client or sophisticated investor under sections 708(8)(c) and 761G(7)(c) of the Corporations Act; and
  • ASIC Corporations (Auditing Competency) Instrument 2026/733, which approves the 202615 Auditing Competency Standard for Registered Company Auditors, as updated in September 2026, for assessing whether an applicant satisfies one of the requirements for registration as a registered company auditor.

Further information about these instruments is available in the media releases, ASIC issues consolidated reporting and auditing relief instruments, ASIC remakes qualified accountant legislative instrument and ASIC approves updated auditing competency standard, as well as on the Consolidated reporting and audit instruments webpage.

ASIC takes enforcement action on late and non-lodgement of financial reports

Financial reporting misconduct, including the failure to lodge financial reports, is one of ASIC’s 2026 enforcement priorities (25-273MR).  

ASIC has continued its data-driven surveillance to identify companies that have not lodged financial reports as required and engage with those entities to address outstanding non-lodgement.

Since our last newsletter, ASIC has issued infringement notices totalling $596,000 to fashion and beauty retailers and $594,000 to a supply chain logistics operator.

Fashion and beauty retailers pay $596,000 in infringement notices for failing to lodge financial reports on time

Mainfreight Group companies pay $594,000 in infringement notices

Since commencing our broad surveillance focused on late lodgement and non-lodgement of financial reports in August 2025, ASIC has issued a total of 27 infringement notices totalling more than $5 million for alleged financial reporting breaches.

We encourage auditors to ensure their clients lodge financial reports on time, including for the upcoming 30 June year-end reports. We also remind auditors of their obligations to lodge breach reports for outstanding lodgements: see RG 34 Auditor obligations: Reporting to ASIC.

ASIC expects companies and their directors to comply with their financial reporting obligations and will not hesitate to take action where they fail to do so.

Sustainability reporting relief decisions register update

Since our last newsletter, we have added a number of recent decisions to our sustainability reporting and audit relief decisions register and introduced a key issues taxonomy. The taxonomy helps prospective applicants to navigate the register and identify decisions involving similar circumstances.

Recent decisions have considered issues including reporting boundaries, group and consolidated reporting, changes in reporting status following acquisitions and restructures, and the application of the sustainability reporting requirements to joint venture and other complex group structures.

Recent decisions also illustrate some of the factors ASIC may consider when assessing whether compliance with the sustainability reporting requirements would impose an unreasonable burden or be inappropriate in the circumstances.

Entities considering relief should consult the sustainability reporting and audit relief decisions register before applying and lodge an application for relief as early as possible. The register provides guidance on the considerations that may influence ASIC’s decision and any conditions that may be imposed.

Entities should apply well before the relevant statutory deadline. Applications lodged close to, or after, that deadline may be refused if ASIC does not have sufficient time to properly consider the application. ASIC generally cannot grant retrospective relief once a breach has occurred.

For information about applying for relief, refer to Information Sheet 82 Apply for relief (INFO 82), Regulatory Guide 51 Applications for relief (RG 51), and Regulatory Guide 280 Sustainability reporting (RG 280).

Registered company auditors reminded of obligations as ASIC strengthens oversight

ASIC wrote a letter to registered company auditors reminding them of their legal, ethical and professional obligations, and the importance of protecting public confidence in the audit profession: Letter to registered company auditors: Compliance with auditor obligations.

Commissioner Kate O’Rourke’s letter reinforces the critical role auditors play in supporting confidence in Australia’s financial markets by ensuring that investors, consumers and other users of financial reports can rely on high-quality audit work.

The letter also reminds auditors of the findings and actions set out in Report 817 Building trust: Auditors’ compliance with independence and conflict of interest obligations (REP 817) and outlines the audit-related work ASIC is undertaking, including its ongoing surveillance of financial reports and audit files.

The letter comes as ASIC has commenced a separate surveillance of the Big 4 audit firms, examining internal complaints relating to auditors, audit staff and audit-related conduct within audit firms.

Auditor misconduct continues to be an enforcement priority for ASIC, as outlined in 25-273MR ASIC announces 2026 enforcement priorities. For more information, see 26-164MR ASIC reminds Registered Company Auditors of their obligations and outlines stronger oversight and Letter to registered company auditors: Compliance with auditor obligations.

ASIC continues work addressing greenwashing and sustainability-related claims

ASIC has continued to take action on greenwashing and sustainability-related claims, including court action and supervisory interventions targeting misleading, unsubstantiated or insufficiently explained claims.

ASIC sustainability-related cases

In August 2026, the Supreme Court ordered Fiducian Investment Management Services Limited to pay a $7.3 million penalty for a breach of responsible entity duties and misleading conduct in relation to its ESG fund (see 26-191MR Court orders Fiducian Investment Management Services to pay $7.3 million penalty over operation of ESG fund). 

The Court found that Fiducian failed to act in accordance with its duty of care and diligence as the responsible entity of the ESG Fund (Fund) and made statements that were liable to mislead the public about the ‘ethical’ or ‘socially responsible’ investment objectives of the Fund (ESG Statements) and that it would monitor the Fund to ensure its investments were consistent with the ESG Statements.

This is ASIC's fourth greenwashing civil penalty outcome and the first against the operator of a managed fund for failures in governance, compliance and oversight of ESG claims. This case is also significant because it involves findings about a responsible entity’s failure to uphold its duty to act with care and diligence in relation to ESG claims.

Surveillance and findings summary

ASIC's supervisory work continues to identify concerns about the presentation of sustainability-related claims in fundraising documents. During 2025-26, ASIC reviewed sustainability-related disclosures in prospectuses and pathfinder prospectuses across the mining and resources, construction, consumer products and investment management sectors.

ASIC's key concerns included:

  • unsupported or inadequately substantiated sustainability and ESG claims, including broad statements about an issuer’s sustainability leadership or ‘strong ESG credentials’ without adequate supporting evidence;
  • insufficient explanation of emissions reduction strategies, low-carbon activities and ESG investment screening processes;
  • inconsistent sustainability-related disclosures across regulatory documentation and other corporate materials; and
  • disclosures that emphasised positive ESG initiatives which lacked adequate disclosure of relevant risks, limitations or qualifications.

As a result of ASIC's interventions, seven entities amended, removed, qualified or provided additional disclosures regarding sustainability-related claims in their prospectuses. Outcomes included the removal of unsupported ESG statements, more detailed disclosure regarding ESG investment methodologies, more balanced discussion of climate-related risks, and improved substantiation of sustainability-related 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 and services (INFO 271).

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