ASIC Asks Auditors to Undertake Self-Assessment

The Australian Securities and Investments Commission (ASIC) has asked Australia's six largest audit firms to undertake self-assessments and develop action plans to address audit quality and independence concerns identified through its supervisory work.

The request covers BDO, Deloitte, Ernst & Young, Grant Thornton, KPMG, and PwC, and follows ASIC's latest surveillance findings and a separate review of auditors' compliance with independence and conflict of interest obligations. ASIC said it will monitor the effectiveness of the firms' action plans, with Commissioner Kate O’Rourke calling for “meaningful and lasting improvements to independence practices.”

In its 2025–26 review, ASIC examined 353 financial reports and 25 audit files across 12 audit firms. The regulator also reported that ten companies made or agreed to make improvements to disclosures of material business risks following its inquiries. “Our surveillance found that some report preparers and auditors did not challenge significant judgements, including for revenue recognition, impairment and asset valuations,” O’Rourke said. “Getting these areas right is essential to providing investors with information they can rely on. Auditors need to be independent, obtain stronger evidence, challenge management assumptions and document their conclusions.”

ASIC issued 15 comment forms to auditors at 11 firms, detailing 42 findings involving insufficient challenges to management assumptions, inadequate audit evidence, and failures to document compliance with ethical, independence, and quality management requirements. ASIC also identified the large audit firms associated with individual surveillance findings, citing the importance of transparency and accountability.

ASIC will monitor remediation efforts in 2026–27 and expand its surveillance to include managed investment schemes. Financial reporting and auditor misconduct remain enforcement priorities, with ASIC highlighting recent court proceedings, disciplinary actions, and financial penalties against companies and auditors.