Check against delivery

Good afternoon, everyone and thank you for having me here.

Let me add my acknowledgements of the Traditional Custodians of the lands on which we’re meeting today and also pay respects to Elders past and present.

Thank you to the Group of 100 and CPA Australia for the opportunity to speak to you today.

Financial reporting and audit have long been part of ASIC’s work, but I think it’s fair to say that their significance to Commission discussions has grown considerably in recent years.

Certainly, since I started at ASIC, these issues are coming up around the commission table more and more often. So, it is very opportune that I’ve been invited to talk about these today.

Everyone in this room probably knows that ASIC has what is called a broad remit. And I’m frequently reminded that we have the broadest remit of any like regulator the world over.

We touch almost every part of Australia’s financial system: so that is across banking, superannuation, insurance, consumer credit, financial markets, corporate regulation and governance.

We also have oversight of some professions – registered liquidators in our insolvency work, as well as in relation to individual registered company auditors. But we don’t of course have jurisdiction in relation to audit firms and that’s an issue I’m going to come back to.

ASIC’s remit, despite that breadth, is likely to continue to expand in the coming period, and the government has flagged the possible inclusion of payment platform providers, digital asset providers, managed investment schemes, and – of particular relevance to this audience – a growing focus on audit firms, together with the reliability and assurance of sustainability disclosures. So that is some of the issues that may well be coming our way.

But few areas of that very wide remit are more fundamental to market integrity and the efficient allocation of capital than trusted and high-quality financial reporting.

That’s why we’ve identified strengthening financial reporting and audit as one of our five top strategic priorities. We put it in our corporate plan a month or two ago. And it’s also why we have identified financial reporting misconduct – including the failure to lodge financial reports – as an enforcement priority for this year.

It’s also why it’s important for me to prioritise events like this – places where I can share ASIC’s perspective on financial reporting, but as importantly, through the discussion that we’re going to have on the panel, I can hear from you about the issues that are of most concern and make sure that those views are fed back to the Commission to inform our ongoing work.

I am going to talk about two broad areas today:

• First is what ASIC is currently doing to lift the quality of financial reporting and audit,
• And second, given the central topic of today’s event being the future of financial reporting – I want to think about what the future might look like given the significant work underway to strengthen and modernise our financial reporting ecosystem.

Easier to deal with, harder to avoid

Now, before I turn to those topics, I want to mention briefly a theme that I’ve been developing since becoming ASIC Chair earlier in the year – and that is the work that we’re doing to make ASIC a regulator that is easier to deal with while being harder to avoid.

And when it comes to financial reporting and audit, we are working on both sides of that ledger.

We’re contributing to efforts to reduce the burden of climate reporting and to make that more efficient for you all, while at the same time we are working to ensure that the consequences of reporting and audit failures are harder to avoid for those who are engaged in wrongdoing. I am going to come back to those issues shortly.

ASIC’s work to lift the quality of financial reporting and audit

First, the work that we’re doing to lift the quality of financial reporting and audit.

We have a financial reporting and audit surveillance program. We’ve had it for a long time and it is a key aspect of our work and it helps us to identify emerging risks before they become systemic problems.

We’ve currently got three surveillances that are underway, each at various stages of completion.

The first is our sustainability reporting surveillance which is our first review of sustainability reports since the introduction of the statutory reporting requirements.

We published our findings a few weeks ago, and I think it’s fair to say that we were quietly pleased with what we saw.

The quality, quantity, and consistency of climate-related financial information have all improved.

And while yes, there do remain opportunities for further improvement, it’s evident from the findings that statutory reporting has not only resulted in heightened transparency, but it’s encouraged entities to engage more meaningfully with climate-related risks and opportunity, and we take that as a very positive sign.

We are going to be reviewing a sample of Group 1 June 2026 reports later in the year.

It is our expectation that we will see further improvements over time as more information becomes available and as people gain more experience and more confidence with the new regime.

Very soon, we’re going to be publishing two further reports:

• one is going to document the findings of our annual financial reporting and audit review of companies
• and the other, is the findings of our review of financial reporting and audit in the superannuation sector.

I very much encourage you and your teams to engage with the findings of those reports, but in summary, the key takeaways are simple:

• Firstly, accurate, accessible and reliable financial information is essential for business and markets to work well. It is not just good practice, of course it is the law.
• For those who are preparing financial information – they must do so carefully and fairly.
• And for those who are auditing that information – they must do so with skill, professionalism and independence.

Going forward, we are also going to be looking at the financial reports and audits of some managed investment schemes.

Managed investment schemes are an increasing part of what ASIC is looking at at present, because in particular of the potential for investor harm. And we're also seeing increasing numbers of investors accessing private credit through managed investment schemes.

We are particularly interested in the quality of the schemes’ financial reporting, especially their valuations. We’re also interested in the auditors’ processes in relation to valuations.

Now where we see problems with these surveillances, we will act and we have had some recent enforcement outcomes in this area.

Since August last year, so in the last 12 months or so, we’ve issued more than $5 million in infringement notices for late or non-lodgement of financial reports^[1], and we’ve secured several million dollars of court-imposed penalties, including more than $1 million against three public companies in a single day.

We’ve also got a number of court-related actions against a number of auditors, including civil proceedings against BDO and Federal Court proceedings against Auditeo Australia and two of the individual auditors over alleged serious audit failures linked to the First Guardian Master Fund.

That firm stance that we’ve taken on enforcement should send a clear message that financial reporting and auditing obligations are not optional, and we are actively enforcing them.

A future shaped now

But let me now turn to the future and the central topic of today’s event: the future of financial reporting.

And the first thing I’d like to say is that, to some extent, the future is already taking shape.

Significant work is underway to strengthen and modernise Australia’s reporting ecosystem and to make sure that it remains fit for purpose in a changing economy and the establishment of External Reporting Australia (ERA) is one example of that.

The ERA will help ensure that Australia’s standard setting framework has the flexibility it needs to respond to an evolving reporting landscape.

But beyond the ERA, there are three initiatives being worked through right now that have the broad objective of maintaining high standards of accountability and transparency while ensuring that our reporting framework remains effective, proportionate and supportive of productivity.

Those three initiatives include:

• Treasury’s consultation on the regulation of accounting, audit and consulting firms
• Treasury’s proposals to improve the efficiency of climate-related financial disclosures
• and the Productivity Commission’s review of non-financial business reporting requirements.

Regulation of accounting, auditing and consulting firms

Starting with Treasury’s consultation on the regulation of accounting, auditing and consulting firms. That consultation closed in mid-August.

And in light of what we have seen unfold with KPMG over recent weeks and months, it won’t surprise you that audit firms are certainly front of mind for ASIC at present.

Those allegations against KPMG have been well documented publicly. I’m sure you’re all familiar with them, and we consider them to be serious.

And that’s because of course, the relationship between a business and its auditor is one of immense trust. Businesses are required to open themselves up and share their most important and sensitive information with their auditors.

And the behaviours that are alleged appear to have broken that trust.

Now, after those KPMG matters came to light, we started a broad industry surveillance of the big four audit firms looking at the issues that have been raised in their internal complaints, including by whistleblowers and that’s because of the issues that had been raised by the whistleblower, allegedly in relation to the KPMG issues.

That sector-wide surveillance is ongoing, and we propose to share high-level findings of the surveillance before the end of the year.

At the same time, as I’m sure you’re aware, we’ve also commenced multiple lines of inquiry and formal investigations arising from the allegations that led to the KPMG Inquiry.

Now as the regulator in this area, we’re doing what we can to hold misconduct to account, but when it does come to the big auditing firms, our regulatory response is necessarily limited.

And that’s because, as it stands, the regulatory framework under which we operate focuses on individual auditors and individual engagements. And in our view – and we’ve said this publicly - we think this is inadequate for regulating the large multi-disciplinary firms that play such a critical role in Australian markets.

What all of that means is that many of the poor practices that are alleged and that we’ve been reading about currently fall outside our regulatory remit.

Because of this we welcome Treasury's consultation and we have made a submission that is broadly supportive of the reforms that the government is proposing, particularly in relation to an audit firm licensing regime and strengthened enforcement and disciplinary provisions.

We have been working and engaging with Treasury regularly in relation to these matters and we’re looking forward to seeing the outcomes of the consultation.

Improving the efficiency of climate-related financial disclosures

The second consultation paper Treasury has released relates to improving the efficiency of climate-related financial disclosures and we are also engaging significantly with Treasury in relation to these options.

We recognise that the sustainability reporting regime is an area where measures can be taken to provide clarity and certainty as the regime continues to be implemented.

And we are also doing what we can – through our guidance or our relief powers or other regulatory tools – to try to reduce the burden.

Beyond making the process more efficient, we are continuing to support industry in meeting the requirements of the regime – whether that’s through our education resources that have been produced jointly with AASB, our relief powers, our technical guidance, or simply through the approach that we have taken to enforcement, and that is being pragmatic and proportionate through this transition regime while it’s being fully implemented.

Reviewing the regulatory burden of non-financial business reporting

And then finally, the regulatory burden of non-financial business reporting and the Productivity Commission’s consideration of that.

We have always been sensitive to the regulatory burden of our work on businesses and indeed the ASIC Act requires us to make sure that our actions strengthen the economy, and don’t unnecessarily slow it.

The Government released a Statement of Expectations to ASIC recently which goes even further than that, and it places greater emphasis on our role to help unlock productivity and we are taking up that challenge in a number of ways.

That challenge is informing our regulatory approach in many areas.

We’re working closely with APRA and other regulators so we can streamline our industry engagement and we have a particular focus on reducing duplicative data and information requests.

Relevant to this audience, we’re adding to efforts to make climate-related financial reporting more efficient, and we are engaging with the Productivity Commission’s review on the efficiency of non-financial business reporting.

And while we admit that its relevance to ASIC is fairly narrow – only the climate-related reporting aspect falls within our remit – it does complement the work that I’ve already mentioned that we’re doing with the Council of Financial Regulators to streamline and simplify financial regulation.

We look forward to seeing where the Productivity Commission gets to, seeing the findings of their review and we stand ready to engage on efforts to reduce the regulatory burden of non-financial disclosure in any way that we can.

Conclusion

In closing, I think it’s fair to say there is real momentum behind efforts to improve and strengthen Australia’s reporting ecosystem. The establishment of the ERA and these multiple Government reviews and consultations are all evidence of that.

We think, combined, these efforts have the potential to help modernise financial reporting in Australia and strengthen trust in the information that drives our capital markets.

But regardless of all of that, of the evolving regulatory environment and these new institutional arrangements, one requirement of course does not change and that is that financial information must be accurate, accessible and reliable and ASIC will be doing its part in making sure that’s the case.

 

^[1] 26-188MR ASIC warns companies to lodge financial reports on time after Mainfreight Group pays $594,000 in infringement notices