ASIC has set clear expectations of their focus areas for the 30 June and 31 December 2025 financial reporting period. Their ongoing surveillance aims to uphold transparency, credibility, and confidence in Australia’s financial system.
In this article our technical accounting experts explain what business leaders need to understand to ensure compliance.
Enduring ASIC Focus Areas for FY25–26
Asset Values and Impairment
As they have in prior years, ASIC is emphasising the importance of regular and robust assessment of asset values - especially for those assets most likely to be affected by tough economic conditions.
Impairment of Non-Financial Assets: Goodwill, indefinite useful life intangible assets, and assets not yet in use must be tested for impairment annually. Entities feeling ongoing economic pressure may need to evaluate other non-financial assets as well. Use valuation methods that are fit for purpose, with all assumptions clearly supported and cross-checked against other available data.
Market Capitalisation and Fair Value: Market capitalisation is not a catch-all fair value estimate, but it can be a useful reference or cross-check. If using peer company metrics, make sure the businesses are truly comparable and be mindful of the limitations.
Disclosure: Disclose all key judgements, assumptions, and estimation uncertainties in your financial reports, to provide users a clear picture of the thinking behind your numbers.
Property Values: Commercial and retail property valuations should reflect factors like remote work impacts, online shopping trends, tenant strength, and lease accounting requirements.
Expected Credit Losses (ECLs): When managing loans and receivables, use forward-looking, reasonable assumptions. Factor in a borrowers’ financial health, up-to-date ageing of receivables, and broader economic uncertainties. Transparent disclosure of estimation uncertainty and key assumptions is a must—especially for entities in the financial sector.
Other Asset Valuations: Ensure financial asset classification is appropriate (amortised cost or fair value), all cost factors are included for inventory net realisable value calculations, whether deferred tax assets are likely to be realised, and investments in unlisted entities are valued defensibly.
ASIC expects impairment testing to be performed regularly, using appropriate and well-supported methods, with clear and thorough disclosure of key judgements, assumptions, and uncertainties in financial reports.
2. Revenue Recognition
Correct and consistent application of accounting standards for revenue recognition remains a top priority. Organisations should ensure their policies accurately reflect revenue timing and substance, with all necessary disclosures provided.
3. Provisions and Contingencies
ASIC will continue to focus on the adequacy of provisions for liabilities, such as legal matters, onerous contracts and restructuring. Provisions and contingent liabilities should fairly present potential impacts and reflect current market conditions and legal circumstances.
4. Subsequent Events
Adequate disclosure (both quantitative and qualitative) should be included in Financial Reports for all material events occurring from the end of the financial year to the date of the signing.
5. Disclosures
ASIC remains vigilant on the adequacy of all disclosures in Financial Reports and accompanying information.
Other ASIC Focus Areas for FY25–26
1. Grandfathered Entity Reporting
ASIC now monitors financial report lodgement for previously grandfathered entities, following the removal of their exemption in 2022. Large companies that fail to lodge required reports will be pursued, and auditors are expected to notify ASIC of any non-compliance.
2. Sustainability Reporting Standards
From 1 January 2025, Group 1 entities meeting at least two of the following thresholds must prepare climate-related sustainability disclosures in line with AASB S2:
- Consolidated revenue of $500 million or more
- Consolidated gross assets of $1 billion or more
- 500 employees or more
ASIC will review these reports as part of its 2025–26 program, taking a practical approach during the transition. For detailed guidance, preparers can consult Regulatory Guide 280 (RG 280). We expect that this may then push down into Large Reporting entities in the near future.
Need Corporate Finance Guidance?
Complying with ASIC’s evolving focus areas is essential for maintaining investor and stakeholder confidence. If you require guidance on improving your financial reporting processes, audit readiness, or risk disclosures, the BlueRock team is here to help.
Get in touch via the form below to discuss how we can support your business in meeting all your ongoing regulatory and financial reporting requirements.
