Beyond the numbers | Edition 5

The Australian Securities and Investments Commission (ASIC) has released its focus areas for FY2026–2027, covering financial reporting, sustainability reporting and assurance.

• Financial reporting
  ASIC’s enduring financial reporting focus areas remain largely unchanged from 31 December 2025 and continue to focus on areas requiring significant judgement by preparers. These include asset values and impairment, revenue recognition, adequacy of provisions.
  As part of its focus on provisions, ASIC will also review disclosures relating to decommissioning and site restoration provisions against illustrative example D of AASB 137 Provisions, Contingent Liabilities and Contingent Assets. The illustrative example demonstrates how an entity might disclose information about plant decommissioning and site restoration obligations.
  The regulator also continues to focus on the sufficiency and appropriateness of disclosures and presentation in financial reports, including disclosures in the Operating and Financial Review (OFR), and subsequent events.
  Finally, ASIC reiterated its focus on non-lodgment of financial report by large proprietary companies.
• Sustainability reporting
  ASIC is progressing its review of 31 December 2025 sustainability reports and will continue surveillance activities as part of its FY2026–2027 program.
  The regulator has released its initial observations from the 259 sustainability reports lodged for the financial year ending 31 December 2025. Refer to “ASIC’s early observations on sustainability reporting” section below.
  ASIC has also indicated it will take a proportionate and pragmatic approach to supervision and enforcement as sustainability reporting requirements are phased in, while continuing to support implementation through guidance, FAQs, relief measures and educational materials.

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At its May 2026 meeting, the Australian Accounting Standards Board (AASB) continued redeliberating the application of AASB 18 Presentation and Disclosure in Financial Statements across superannuation, not-for-profit (NFP) and public sector entities.

Key decisions made by the Board include:

• NFP private sector entities (including universities): The AASB will develop an Exposure Draft to clarify how income and expenses should be categorised within AASB 18’s operating, investing and financing categories, particularly income recognised under AASB 1058 Income of Not-for-Profit Entities.
  The Board will also consider whether activities such as investing in assets or providing financing could constitute a main business activity, which may affect classification outcomes.
• Superannuation entities: The Board decided to retain the existing presentation framework in AASB 1056 Superannuation Entities, including the statement of changes in member benefits as a primary financial statement. However, selected AASB 18 requirements will still apply, including principles relating to labelling, aggregation and management-defined performance measures. The Board also decided to require a reconciliation of operating cash flows to profit or loss, while retaining existing policy choices for classifying dividends received and interest paid and received in the statement of cash flows.
• NFP public sector entities (excluding universities): Governments will continue preparing Whole of Government and General Government Sector financial statements under AASB 1049 Whole of Government and General Government Sector Financial Reporting rather than adopting the presentation formats in AASB 18. The Board also decided that entities may elect to apply certain AASB 18 requirements, including categorising income and expenses and disclosing management-defined performance measures, enabling regulators to continue prescribing reporting formats where appropriate. In addition, AASB 18’s labelling and aggregation principles will apply, entities may reconcile operating cash flows to profit or loss where relevant, and existing policy choices for classifying dividends received and interest paid and received in the statement of cash flows will be retained.
• For-profit public sector entities: The Board decided that for-profit public sector entities will apply AASB 18 and the revised AASB 107 Statement of Cash Flows without modification.

The Board will continue considering feedback on the remaining matters raised in ED 338 at a future meeting.

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The AASB met on 14 May 2026 to discuss several matters, including:

• AASB 16 Leases: The Board discussed feedback received as part of the post-implementation review of the Standard.
• Risk Mitigation Accounting: The Board acknowledged stakeholder interest in participating in regular discussions on the proposed hedge accounting model and decided to establish an AASB Risk Mitigation Accounting Discussion Group.
• Climate-related financial disclosures: The Board discussed ongoing developments relating to climate-related reporting requirements.

The AASB has also approved accounting standards to remove the ability of certain not-for-profit entities to prepare special purpose financial statements and to introduce a new Tier 3 not-for-profit reporting framework.

Although approved by the Board, these standards have not yet been published at the date of this publication:

• AASB 2026-2 Amendments to Australian Accounting Standards – Extending the Application of the Conceptual Framework and Limiting the Ability of Not-for-Profit Entities to Prepare Special Purpose Financial Statements
• AASB 1061 General Purpose Financial Statements – Not-for-Profit Private Sector Tier 3 Entities

These Standards will apply to annual reporting periods beginning on or after 1 July 2029.

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The 2026–27 Federal Budget proposed measures affecting financial and sustainability reporting, with direct implications for preparers, directors and auditors.

The proposals include:

• Increasing the monetary thresholds for large proprietary companies, doubling the consolidated revenue (to $100m) and consolidated assets (to $50m) criteria while retaining the 100‑employee threshold. Entities that fall below the new thresholds would no longer be required to lodge an annual audited financial report, a directors’ report, or a sustainability report.
• Consulting on three aspects of sustainability reporting:
  1. Clarifying the practical application of key concepts, including how the “undue cost or effort” threshold should be applied in practice, to improve consistency and reduce uncertainty;
  2. Adjusting assurance settings to ensure they are proportionate and operationally practical, particularly during early implementation years; and
  3. Setting clearer boundaries around supplier and value chain information requests, to help manage costs and complexity – especially for small businesses indirectly impacted through reporting by larger entities.
• Replacing existing deeds of cross guarantee with a simplified statutory process, making it easier to access financial reporting relief for wholly-owned entities in corporate groups.

The changes are subject to consultation and the passage of legislation through parliament.

No commencement date has been announced for these measures.

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ASX released its latest Supervision Update in May 2026, including the formal rebranding of ASX Compliance to ASX Supervision. The update also addressed sustainability-related disclosures following recent amendments to the Corporations Act 2001, which require certain ASX-listed entities to prepare and lodge annual sustainability reports alongside their audited financial statements.

Recognising that sustainability reports may contain cross-references to corporate governance disclosures, ASX confirmed that entities may lodge their corporate governance statement and Appendix 4G concurrently with their audited financial statements and sustainability report, rather than waiting until the release of the annual ‘glossy’ report, provided the disclosures comply with Listing Rule 4.7.4.

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The Australian Charities and Not-for-profits Commission (ACNC) released findings from its review of how charities, particularly those operating overseas, manage risks of funds being misused for terrorism financing. Most charities demonstrated sound governance, including risk registers, due diligence on partners and compliance with sanctions lists.

However, weaker practices were observed where charities underestimated risks or assumed low exposure based on location.  The ACNC emphasised the importance of robust controls, financial oversight and documented processes to safeguard funds.

Overall, the findings reinforce regulatory expectations around governance, risk management and record‑keeping, particularly for charities with international operations.

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ASIC has warned businesses about unsolicited business name renewal and company review notices that may appear to be official ASIC correspondence. While some third-party providers operate legitimately, others may seek payment or personal information fraudulently.

ASIC reminded businesses that official renewal notices are generally issued close to the due date through official ASIC channels.

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ASIC has warned that scammers are increasingly using fake crypto trading platforms to lure investors. These platforms often appear legitimate, using professional websites, fake endorsements and fabricated account balances to build trust. Victims may initially be able to withdraw small amounts, encouraging further investment, before access is blocked or additional payments are demanded.

Businesses providing virtual asset services, including exchanging money for crypto assets, must be registered with AUSTRAC and comply with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) obligations. Investors can verify whether a business is registered through AUSTRAC’s Virtual Asset Service Provider Register.

ASIC has reminded investors to remain cautious of unsolicited investment offers, promises of unrealistic returns and requests for crypto payments, and to verify trading platforms before investing.

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ASIC has released its early observations on sustainability reports lodged by Group 1 entities for the financial year ended 31 December 2025. While overall consistency has improved under the mandatory reporting regime, ASIC noted a number of areas for improvement, including:

• Avoiding the use of disclaimers that conflict with the statutory framework for sustainability reporting, as these may mislead users.
• Considering reasonable and supportable information when assessing climate-related risks, including past events, current conditions, and forward-looking expectations. Reports should also clearly disclose key judgements, assumptions, and sources of estimation uncertainty to enhance transparency.
• Avoiding the inclusion of excessive additional information that may obscure material climate-related disclosures.
• Ensuring that any cross-referencing to information outside the sustainability report continues to meet applicable disclosure requirements.
• Carefully assessing whether entities have climate-related targets, noting that this includes legally mandated targets, such as those arising under emissions schemes.

These early observations are based on a desktop review of a sample of sustainability reports lodged by listed entities. ASIC noted that the observations are intended to assist entities and advisers as they prepare sustainability reports for financial years ending 30 June 2026. ASIC’s final observations are expected to be published in the second half of 2026.

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ASIC and the AASB have launched a series of free online webinars aimed at supporting entities as they prepare for Australia’s mandatory sustainability reporting regime.

The webinars will focus on key concepts, including climate science, climate-related risks and opportunities, emissions accounting, scenario analysis, governance, and risk management. Three webinar sessions will be held in June 2026. The initiative forms part of a broader regulatory effort to build capability and readiness across the market, complementing existing guidance, e-learning modules, and in-person workshops.

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The International Sustainability Standards Board (ISSB) April 2026 meeting indicated continued expansion of the sustainability reporting framework beyond climate-related disclosures. The Board focused on developing guidance for nature-related disclosures, particularly how entities identify and report location-specific risks and opportunities.

Key tentative decisions include requiring entities to disclose the amount and proportion of assets or activities exposed to nature-related risks, as well as those aligned with nature-related opportunities. The ISSB is also considering additional guidance to support decisions on the level of detail and aggregation of disclosures, based on entity-specific circumstances.

The Board also discussed how entities should consider engagement with Indigenous Peoples and local communities when assessing nature-related risks, reinforcing broader stakeholder considerations in sustainability reporting.

New requirements and guidance may be issued through an IFRS Practice Statement, which will be subject to stakeholder consultation.

A podcast episode summarising the highlights of this meeting is available on the IFRS Foundation’s website.

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The ISSB May 2026 meeting continued its work on nature-related disclosures, with a particular focus on scenario analysis. The Board tentatively decided not to introduce additional requirements mandating the use of scenario analysis for identifying nature-related risks. However, it agreed to require disclosures on whether and how scenario analysis is used to assess the nature, likelihood and magnitude of risks and to identify opportunities, including transparency over key inputs, assumptions and scope.

The Board also progressed work on the identification of nature-related risks and opportunities, including potential alignment with frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD), including its “LEAP approach”. In addition, it reviewed feedback on proposed enhancements to SASB Standards to strengthen industry-based guidance.

A podcast episode summarising the highlights of this meeting is available on the IFRS Foundation’s website.

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At its May 2026 meeting, the International Accounting Standards Board (IASB) discussed projects including:

• Risk Mitigation Accounting: The IASB decided to extend the comment period to 30 November 2026, providing stakeholders with additional time to respond alongside ongoing fieldwork.

• Equity accounting: The Board tentatively decided that where losses exceed the investment’s carrying amount, investors should first recognise their share of profit or loss, followed by other comprehensive income. It also decided to withdraw the proposal to continue recognising losses once the investment is reduced to nil.
  For transactions with associates, the IASB introduced an accounting policy choice to recognise gains and losses either in full or on a restricted basis (excluding business transfers, which remain fully recognised), with aligned changes to IFRS 10.
  Enhanced disclosure requirements were also proposed, including policies and reconciliations of restricted gains or losses.
• Statement of Cash Flows and related matters: The Board proposed guidance requiring entities to align disaggregation in the statement of cash flows with related line items in the statement of financial position, with explanations where differences arise. It also introduced guidance on consistent labelling and required cross-referencing of notes across financial statements.
  For financing activities, the IASB proposed clarifying the disclosure objective and requiring a reconciliation of opening to closing liabilities, disaggregated in line with financial statement presentation.
  The IASB also confirmed it will not introduce specific disclosure requirements for ‘net debt’.
• The Board also discussed the status of its ongoing projects relating to:
  • Business combinations – Goodwill and impairment,
  • Intangible assets, and
  • Provisions and rate‑regulated activities.

A podcast episode summarising the highlights of this meeting is available on the IFRS Foundation’s website.

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The recording of our Financial Reporting Update, held on 26 May 2026, is now available on our website. In the webinar, our National Technical Director, Martin Olde, provided practical insights into the key financial reporting developments impacting 30 June 2026 year ends.

Our annual webinar covered:

• Key accounting standards and financial reporting changes for 30 June 2026;
• Other important changes and considerations for 30 June 2026 financial reporting;
• Applying mandatory sustainability reporting and which organisations will be affected;
• First impressions of the new AASB 18 presentation and disclosure standard; and
• Developments in not-for-profit financial reporting, including the new Tier 3 framework.

This webinar is recommended for Chief Financial Officers, Financial Controllers, and Finance Managers.

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