On 1 July 2023, the Treasury Laws Amendment (2022 Measures No. 4) Act 2023 came into force, extending the financial reporting and auditing obligations under Chapter 2M of the Corporations Act 2001 (Corporations Act) to most registrable superannuation entities (funds).
Superannuation trustees are now required to lodge audited financial reports for each fund within three months of the end of the fund’s financial year with fees incurred for late lodgement. For most funds, the deadline will be 30 September 2024. Audited financial reports must include the financial statements and notes, directors’ declaration, auditor’s report and director’s report, which contains remuneration disclosure.
Signing off on financial reports is one of the key duties of a director. High quality financial reporting drives a culture of strong financial discipline, effective management and control of fund assets, and supports public confidence in superannuation. Trustee directors are required to take all reasonable steps to comply with, or to secure compliance with, financial record keeping and reporting obligations of funds under Part 2M.2 and 2M.3 as well as the auditor independence obligations under sections 324DAA, 324DAB or 324DAC.
The reforms also promote greater transparency by requiring trustees to make fund financial reports publicly available on the fund website and by giving ASIC the power to enforce compliance with the accounting and auditing standards as it has with other entities of economic significance (e.g. listed companies).
ASIC has built a new electronic transaction available in ASIC’s Regulatory Portal to accept lodgement of reports. To reduce regulatory burden for trustees and auditors, ASIC has worked with APRA to facilitate a single lodgement point, with trustees now able to lodge compliance reports required under APRA’s prudential standard SPS 310 Audit and Related Matters with ASIC at the same time as their audited financial reports. Once lodged, audited financial reports of superannuation funds will be publicly available free of charge on ASIC’s website.
Trustees will be subject to increased scrutiny on the quality of their financial reports in relation to superannuation funds. This year, ASIC’s financial reporting and audit surveillance program will be reviewing these financial reports for the first time. Where there are significant deficiencies in disclosure or concerns about possible material misstatements identified in the financial report, the superannuation fund will be subjected to a financial reporting surveillance. Auditors will also be subject to increased scrutiny on the quality of their audit work in relation to superannuation funds.
ASIC expects trustees to ensure financial reports are of high quality, containing useful and meaningful information to build public trust and confidence in the integrity of our financial system. Trustees should ensure that governance arrangements, processes and controls are in place and apply appropriate experience and expertise over financial reporting and the underlying processes.
