Ten things to remember for 30 June 2026 financial reports

Entities required to lodge financial reports with the Australian Securities and Investments Commission (ASIC) should be aware of ASIC’s focus areas for 30 June 2026 financial reports for its financial reporting surveillance program covering listed and unlisted entities, and registrable superannuation entities. ASIC will focus its surveillance efforts by:

• Monitoring areas where significant judgement is required, such as for revenue recognition, asset impairment, and recognition and measurement of financial instruments
• Reviewing disclosures for provisions for decommissioning and site restoration costs under AASB 137 Provisions, Contingent Liabilities and Contingent Assets against the new illustrative examples regarding uncertainties in financial statements (specifically illustrative example D of AASB 137), and
• Continuing to focus on non-lodgement of financial reports by large proprietary companies.

ASIC’s five enduring focus areas will also drive monitoring and enforcement, including for:

• Revenue recognition: Step 2 (Identifying separate performance obligations) and Step 5 (Recognising revenue when each performance obligation is satisfied). Also, ensuring revenue policies are not boilerplate but clearly explain how each revenue stream is recognised.
• Asset values: Paying attention to impairment of non-financial assets, property values, expected credit losses (ECL) on loans and receivables, financial asset classification, valuation of inventories and unlisted investments, the probability of deferred tax assets being realised, etc.
• Provisions: Recognising onerous contracts, leased property make-good, mine site restoration, financial guarantees given, and restructuring
• Subsequent events: Reviewing all events after the reporting date to determine whether they should be disclosed as ‘adjusting’ or ‘non-adjusting’ post-balance date events
• Disclosures: Paying attention to disclosure of significant estimates, judgements and other uncertainties in the financial report, not forgetting the Operating and Financial Review (including risk disclosure and non-IFRS information), avoiding boilerplate disclosures and ensuring what is disclosed is significant.

Lastly, Group 1 entities should note ASIC’s preliminary observations to improve the quality of their first mandatory sustainability reports for 30 June 2026.

Group 1 entities preparing and lodging financial statements with ASIC under Chapter 2M of the Corporations Act 2001 – your first mandatory sustainability report is required for the annual reporting period ending 30 June 2026. Climate-related disclosures are the first, and currently the only, component of mandatory sustainability reporting in Australia.

The required disclosures are contained in AASB S2 Climate-related Disclosures and are subject to a phased-in period of assurance. The table below outlines the four ‘pillars’ and key areas for climate-related disclosures.

This article addresses key questions about mandatory sustainability reporting in Australia. If you need further assistance, please reach out.

Other obligations for listed entity climate reporting

We remind Group 2 and Group 3 listed entities that before sustainability reporting in compliance with AASB S2 becomes mandatory, the Australian Securities Exchange (ASX) and the Australian Securities and Investments Commission (ASIC) expect disclosure of climate-related risks and opportunities using the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations. This applies to disclosure in the Corporate Governance Statement and the Operating and Financial Review. The same applies to smaller listed entities that may never have to prepare a mandatory sustainability report. 

The Australian Government has committed to reducing Australia’s greenhouse gas emissions

• 43% below 2005 levels by 2030
• 62 to 70% below 2005 levels by 2035
• Net zero by 2050.

Preparers need to consider the implications of these climate-related matters when preparing their 30 June 2026 financial statements. The International Accounting Standards Board (IASB) has published the following resources to assist:

• Educational materials summarising how companies must consider climate-related issues when applying IFRS® Accounting Standards. This includes when determining values for assets, liabilities, and provisions, and making disclosures regarding estimates and judgements.
• Illustrative examples showing how disclosures about uncertainties in the financial statements using climate-related examples can improve connections between the financial statements and other parts of the annual report (such as the sustainability report).

Please refer to our publications for a summary of these educational materials and illustrative disclosures. ESMA’s ‘Heat is On’ Report also provides real-life, practical examples to illustrate how entities can improve their climate-related disclosures for areas where climate matters are likely to have the greatest impact.

ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 (LI 2016/191) has expired and is replaced by ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2026/183 (LI 2026/183).

Key dates

• The new instrument, LI 2026/183, applies to financial and half-yearly periods ending on or after 30 June 2026.
• Superseded LI 2016/191 continues to apply for financial and half-years ending before 30 June 2026.

Scope

The scope of the new instrument has been extended to cover registerable superannuation entities (RSEs), including rounding under section 300C (remuneration reports of registered superannuation entities).

No explicit mention is made in the new instrument regarding rounding in sustainability reports; however, our article contains more information on this.

Call to action

If you are applying rounding in financial statements or directors’ reports for annual and half-yearly reports ending on or after 30 June 2026, even if only to the nearest dollar, please update references to the rounding instrument as follows:

• Delete references to ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, and
• Replace with the new instrument, ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2026/183.

Since the IFRS Interpretation Committee’s July 2024 agenda decision, listed entities disclosing segment information under IFRS 8 Operating Segments may be required to disclose more granular information regarding material segment income and expenses. The agenda decision does not add new disclosure requirements to IFRS 8, but clarifies what paragraph 23(f) requires regarding material items of income and expense disclosed in accordance with paragraph 97 of IAS 1 Presentation of Financial Statements.

Five key takeaways

Five key takeaways from the agenda decision include:

1. Material items of income and expense to be disclosed as specified items under paragraph 23(f) of IFRS 8 are not limited to only unusual or non-recurring items.
2. Entities do not have to disclose, for each reportable segment, every line item of income and expense in the statement of profit or loss or otherwise disclosed in the notes.
3. The starting point for determining which material income and expense items to disclose in reportable segment information is basically all material income and expense items disclosed in the financial statements as a whole. Entities must then assess if any portion of this material income or expense item is material to a particular reportable segment.
4. An item of income or expense which is not material to the financial statements as a whole should nevertheless be disclosed under paragraph 23(f) of IFRS 8 for a reportable segment if it is material to an individual reportable segment.
5. Determining how much detail needs to be included for paragraph 23(f) disclosure is a matter of judgement that the entity should document (the agenda decision contains a detailed discussion on assessing materiality).

Our article provides more information on this topic.

There are two new amending standards that could potentially impact your 30 June 2026 annual financial statements. However, there is more to consider, which could impact 30 June 2026 half-years for the first time, and which could also drive your ‘new standards issued not yet effective’ disclosures for annual periods. In particular, AASB 18 Presentation and disclosure in financial statements is expected to affect all entities preparing Tier 1 general purpose financial statements. With the comparative period beginning on 1 July 2026 (1 January 2026 for half-year reporters), entities should have started their AASB 18 implementation projects by now. Our masterclass series on AASB 18 provides a practical, implementation‑focused approach to help you on your AASB 18 journey.

Standards applying for the first time to 30 June 2026 annual periods

There are two new amending standards that apply for the first time to annual periods ending 30 June 2026.

Standards applying for the first time to 30 June 2026 half-year periods

The following amending standards apply for the first time to half-year periods ending 30 June 2026.

Standards issued that are not yet effective

Entities preparing Tier 1 general purpose financial statements for the annual period ending 30 June 2026 must disclose the anticipated effect of new and amended standards issued, which are not effective at the reporting date (refer to AASB 108, paragraph 30). These are listed in the table below.

You can find more information about these amendments in the listed resources, or contact our IFRS & Corporate Reporting team for assistance. 

IFRS Interpretations Committee (the Committee) agenda decisions are those issues the Committee decided not to include on its agenda. Although not authoritative guidance, these decisions are regarded as being highly persuasive in practice. All entities reporting under IFRS® Accounting Standards should be aware of these decisions, as they could impact how specific transactions and balances are accounted for. Entities are generally expected to implement any resulting changes in accounting policies in the first set of financial statements following an agenda decision, although this timeframe may be extended where detailed systems and process changes are required.

Over the past eighteen months, the Committee has issued the following agenda decisions:

• Economic benefits from use of a battery under an offtake arrangement (April 2026)
• Accounting for prepaid transaction costs on financial instruments (February 2026)
• Embedded prepayment options in loan contracts (February 2026)
• Assessing indicators of hyperinflationary economies (July 2025)
• Revenue from tuition fees (April 2025)
• Recognition of intangible assets from climate-related expenditure (April 2025)
• Guarantees issued on the obligations of other entities (April 2025)
• Classification of cash flows related to variation margin calls on ‘collateralised-to-market’ contracts (February 2025).

Please ensure that your 30 June 2026 annual and half-year financial statements accurately reflect the conclusions outlined in these agenda decisions.

Because Australia has experienced low inflation levels for decades, many entities may not be aware of special accounting requirements when operating in countries with hyperinflationary economies and functional currencies.

When an entity’s functional currency is ‘hyperinflationary’, AASB 129 Financial reporting in hyperinflationary economies requires the financial statements (including any comparative periods) to be stated in terms of the measuring unit current at the end of the applicable reporting period. This is because the currency of a hyperinflationary economy loses a significant amount of purchasing power from one period to the next, such that presenting financial information based on historical amounts, even if only a few months old, does not provide relevant information to users of financial statements.

Please refer to our publication for more information.

Entities only need to disclose material accounting policy information for years ending on or after 31 December 2023. This also applies to Tier 2 entities preparing financial statements using Simplified Disclosures. The long laundry list of accounting policies, which merely repeat recognition and measurement requirements from the accounting standards, can and should be removed. 

Our article explains what accounting policy information is material and what is not.

The Australian Pillar Two Global and Domestic Minimum Tax (GDMT) laws and rules have been enacted and are effective for financial years commencing on or after 1 January 2024 for large multinational entity (MNE) groups in Australia. They introduce a new tax system that is separate from the Income Tax Assessment Act 1997 and must, therefore, be considered when entities calculate their tax liabilities at 30 June 2026 in accordance with the requirements of AASB 112 Income Taxes.

The legislation introduces:

• The income inclusion rule (IIR), a top-up tax payable by Australian parent entities of MNE groups where any of their subsidiaries have an effective tax rate of less than 15% (this only applies if there are no foreign parent entities of the Australian parent that have a substantively enacted IIR), and
• The qualifying domestic minimum top-up tax (QDMTT), a top-up tax where an Australian member of an MNE group has an effective tax rate of less than 15% (the QDMTT is credited against any IIR payable by the parent entity).

These rules apply to MNE groups with consolidated revenue exceeding €750 million for financial years beginning on or after 1 January 2024 (i.e. for years ending 30 June 2025 onwards).

In addition, the undertaxed profits rule (UTPR) will apply to financial years beginning on or after 1 January 2025 (i.e. for years ending on or after 30 June 2026). The UTPR acts as a backstop rule that allows Australia to apply a top-up tax on Australian entities in a large MNE group if the group has a parent entity in a jurisdiction that has not enacted IIR, the group's effective tax rate in that other jurisdiction is below 15%, and that jurisdiction has not enacted the QDMTT.

For years ending 30 June 2026, entities within an MNE group must assess and recognise Pillar Two tax liabilities for the IIR, QDMTT, and UTPR as appropriate.

Our article contains further information.